How to Start an Ice Cream Truck
There was nothing more exciting than hearing the sound of the ice cream truck driving through your neighborhood as a kid. While ice cream trucks bring joy and much-loved traditions to kids each summer, they also bring potential business opportunities. Starting an ice cream truck business can be a rewarding business, especially if you enjoy interacting with children and families. Plus, if you have an idea to make your truck stand out from the competition, you could enjoy a strong business powered by plenty of repeat customers.
Business Overview
Ice cream trucks offer convenient, tasty products to customers. Unlike brick and mortar ice cream parlors, trucks can travel to a variety of locations and offer more of a grab-and-go service. While quickly serving customers is a priority, trucks can also offer custom-made products, like sundaes and milkshakes. Some trucks offer pre-packaged ice cream bars and treats, while others essentially act as full-service ice cream parlors on wheels.
Because they are mobile, ice cream trucks may market to customers in many different locations. Beaches and festivals are popular options, but some trucks also do private events like employee appreciation days and parties. Many trucks park and remain in one place, but others may take a more mobile approach, traveling regular routes through neighborhoods.
With food trucks growing in popularity, competition within the ice cream truck industry is increasing, too. When designing your business model, look for a way that you can make your truck stand out. Consider offering specialty products or a special experience, like hand-dipped and custom-topped ice cream bars, to appeal to customers. Stocking products that other trucks don’t have, like dairy-free ice creams, can encourage repeat business when your truck follows a reliable route or can frequently be found in particular locations.
Industry Summary
According to IBIS World, the street vendors industry, which includes ice cream trucks, experienced a 3.4% growth from 2015 to 2020. Though the COVID-19 pandemic led to a decline in 2020, the industry experienced robust growth during the rest of the five-year period. This growth was due to increased demand for unique foods.
IBIS World predicts that the ice cream business industry in the United States will rebound from the decline caused by the pandemic and experience growth from 2020 to 2025. Multiple factors, including renewed interest in food trucks, increased consumer spending, and the recovery of the economy, will all contribute to this growth.
Industry Trends
The ice cream industry is evolving, and an ice cream truck that can embrace some of the newest trends can stay competitive and appeal to consumers. According to Barry Callebaut, classic flavors like vanilla and chocolate are hugely popular, but there’s increased demand for low-calorie ice creams that consumers can enjoy with less guilt. Similarly, non-dairy ice creams allow consumers who are on specialty diets to enjoy this treat. Some consumers are now seeking out ice creams that have added health benefits, including ingredients like probiotics, protein, fiber, and even CBD.
While healthier options are on-trend, rich indulgences are also gaining in popularity. An ice cream truck may want to offer indulgent mix-ins for both ice creams and milkshakes to take advantage of this trend. Savory or salty add-ins, like potato chips and salted pretzels, are popular at the moment. Customization options are also increasingly valued. Trucks can embrace this trend by offering personalized dipped and topped bars, and sundaes and shakes that are made to order.
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Target Market
An ice cream truck’s target market will partially depend on its business model. On a more general basis, a truck will market to consumers looking for convenience – that market can consist of kids and adults in a specific location, like a beach or festival. If an ice cream truck adopts a specialty, that can further define its target market. A truck that offers rich mix-ins and more premium options will have a different target market than a truck that offers pre-made ice cream bars and treats to beachgoers.
Checklist for Starting an Ice Cream Truck
Starting an ice cream truck can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write a Business Plan
Once you’ve come up with an idea for your business, you’ll need to write out an ice cream truck business plan. This business plan will outline key elements of your business, your target market, your profit margins, and how your business will be a financial success. A bank will require you to have a business plan to secure funding. Additionally, multiple sources have found that having a business plan increases the chances of success.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for an ice cream truck, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
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The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3:Â Choose the Business Name
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 4: Select Your Location
An ice cream truck isn’t tied down to any one location, which can be a benefit. You’ll still need to determine the towns that you want to operate within and apply for permits within each town. Certain locations, like food festivals and fairs, may require you to attain additional permits.
Related:Â Choosing a business location
Step 5: Apply for Business Licenses and Permits
Operating an ice cream truck will require multiple licenses and permits. In addition to the general business registrations, such as a business license, sales tax permit, and others that are required by your town, you’ll need to apply for a food service permit and pass health inspections from the local health department. You may also need additional vendor permits that are specific to the location where you will be selling.
Also, check with your local Department of Motor Vehicles to see what licensing is required for your truck to operate as requirements will differ from one state to another.
Related:Â Common business licenses, permits, and registrations by state
Step 6: Find Financing
Start-up costs for an ice cream truck business can be high, so finding financing will be an important task in getting your business up and running. To get a business loan, a borrower will need to have good credit and personally invest their own money toward 15-25% of the start-up costs. A strong, detailed business plan can also help when securing financing.
Related:Â Finding the money to start a business
Step 7:Â Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
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Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get Your Marketing Plan in Place
A strong marketing plan can contribute to an ice cream truck’s success. Common marketing techniques include using Facebook, Instagram, and Pinterest social media accounts to announce locations and new ice cream flavors, radio advertising, online advertising, and more. Ice cream trucks that offer a premiere experience can encourage customers to tag the truck in social media posts.
Related:Â Low-cost ideas to market a new business
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Step 9: Get Business Insurance
There are several types of insurance to consider when starting an ice cream truck. A few of these include:
– General liability insurance helps to protect the business if a customer is ever injured while buying from the truck or the food truck serves.
– Worker’s compensation insurance offers coverage that protects the business if an employee is ever injured while working.
– Commercial auto insurance protects the business if the ice cream truck is ever involved in an accident.
The cost to insure an ice cream truck will vary depending on factors like the value of the truck and the number of employees on staff. To get the best idea of what to budget for insurance, request quotes from multiple insurance providers. When comparing those quotes, consider not only how the premiums compare but also the differences between coverage exclusions, coverage limits, and deductibles.
Related: What types of insurance does an ice cream truck need?
Step 10: Hire Employees
It may be possible to run a smaller ice cream truck business without hiring staff, but operational hours will be limited. As the business grows, hiring employees can help with that expansion. According to ZipRecruiter, ice cream truck drivers earn an average of $34,579 per year, though salaries can range from $16,000 to $65,500.
A business that hires employees will also need to include other expenses, like paid time off and worker’s comp, in its budget.
Related:Â Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your ice cream truck is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
StartingYourBusiness.comHow much does it cost to start an ice cream truck?
The cost to start an ice cream truck business will vary depending on factors like the size of the truck purchased and whether the business owner buys a used or new truck. Startup costs can be significant, especially when buying a brand-new vehicle, but a commercial vehicle loan can reduce initial out-of-pocket costs.
Some common startup costs for an ice cream truck business include:
– Ice cream truck
– Equipment like freezers, blenders, fudge warmer, etc.
– Inventory like ice creams, ice cream cones, bowls, etc.
– Signage
– Working capital to cover the first few months of salary, insurance, gasoline, etc.
How much can an ice cream truck owner make?
According to a 2019 survey performed by Food Truck Empire, mobile ice cream vendors bring in an average of $200 to $300 in gross sales per day during the summer. Survey respondents noted monthly gross incomes of approximately $5,000. Once accounting for expenses, monthly incomes averaged $2,500.
Keep in mind that many factors will affect an ice cream truck’s profits. Holidays and weekends are high income-generating times, and this business is largely seasonal. A truck owner who works almost daily during the summer months can take advantage of the increased business and drive up income. Booking special events, like birthday parties, can also help to boost profits. Being this is a mobile business, if you can create a consistent ice cream truck route or set up at big events, profits will increase as well.
The type of ice cream you sell will also affect profits. Prepackaged ice cream (also referred to as ice cream novelties) is the easiest type of ice cream to sell as there is minimal food handling and inventory management. Scooped or soft-serve ice cream can be sold at a higher price (and profit), though there is more work and potential waste. You can even set yourself apart from the competition by making your own ice cream.
Because ice cream trucks are a seasonal business in many areas, it’s essential to consider other ways to make money in the off-season or find ways to make summers profitable enough to carry the business through the rest of the year.
What skills are needed to run an ice cream truck?
Running an ice cream truck doesn’t require a business degree, but certain skills and experiences will be helpful in running this type of business.
Foodservice and handling experience. Experience working in the food service industry is valuable in this field. An ice cream truck owner will need to understand food handling and storage safety procedures, and previous experience in the field can make this easier.
Mechanical and technical skills. Some mechanical and technical knowledge can be useful when servicing and troubleshooting the truck and the machinery, including the freezers, on board.
Customer service skills. With strong customer service skills, a truck owner can build a rapport with customers, encouraging repeat business.
Management experience. If a truck owner decides to expand into a multi-truck operation, experience in hiring and training staff will be valuable.
Are there grants to start an ice cream truck?
It’s extremely rare to find a grant to start an ice cream truck. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for an ice cream truck
The NAICS code for an ice cream truck is 311811.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
