The Business Times

Food trucks 'are no longer a novelty'

Published Wed, Feb 6, 2019 · 09:50 PM
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ENTICING hungry customers and luring celebrity backers, food trucks have been quickly expanding nationwide for the last decade. But in pioneering cities such as Austin, Texas, and Portland, Oregon, the industry is feeling growing pains as fickle customers move on and regulators clamp down.

So entrepreneurs are finding new locations to park their mobile restaurants. Last October, a development team created a new dining concept in an up-and-coming neighbourhood of Charleston, South Carolina. Called the Container Bar, it features a bar constructed from a shipping container with space for four food trucks that rotate daily.

"Charleston has a reputation of being a culinary mecca, but it is unique in that there are no spaces for food trucks to congregate," said Brad Creger, one of three Container Bar owners. The others are Mike Veeck, president of the Charleston RiverDogs, a minor league baseball team, and actor Bill Murray.

"One need go no further than Austin or Portland to see how food trucks have evolved into the culinary culture," Mr Creger said. "Charleston is a little behind in that regard, but we're catching up very quickly."

Portland may be the aspirational model for many cities in the early stages of building a food cart scene. But being a pioneer has its own challenges. A surge in new construction over the past couple of years has forced the closing of several food cart pods on former parking lots. Concern about the closings came to a head last fall with the news that the city's flagship food cart venue, the Alder Street pod, would be shuttered this summer to make way for the city's first five-star hotel.

"One hundred and thirty food carts are under threat to vanish," said Daniel Huerta, owner of Portland food truck Churros Locos. "We are losing the culinary fabric that makes up Portland." Street food vendors have been in big cities for decades. But a newer breed of entrepreneurs surfaced around 10 years ago as a scrappy response to the recession - it is far easier to secure startup capital for a cart than a restaurant.

Since then, it has morphed into a nationwide urban development and culinary business phenomenon. Revenue from food carts reached US$2.7 billion in 2017, according to a US Chamber of Commerce study.

But as the industry matures, challenges are emerging. In some areas, owners are building mini empires, adding second or third trucks as well as brick-and-mortar restaurants. But elsewhere, regulatory and market pressures are creating a tough operating environment for vendors. Oversaturation and changing culinary tastes are also concerns. "For the first three years, it was great," said Sarah Hannon, former owner of the Midway Food Park in Austin, where the number of food carts grew 600 per cent from 2010 to 2016. Ms Hannon opened the park in 2013 and had 40 vendors on a waiting list at one point. But as the trend took off, other property owners realised they could "shave off a corner of their parking lot and give a food truck space," she said. Ms Hannon charged US$1,500 a month; her competitors charged US$500.

Last year, she shuttered the 10-cart pod, turning it into an event space. "I think the food truck buzz has worn off," she said.

Kirk Francis, co-owner of Captain Cookie & the Milkman, a mobile bakery in Washington, echoed that sentiment. Mr Francis and his wife, Juliann, started in 2012 with one truck; they added a second one a year later and two more the next year. During the first year of operation, business grew fivefold. The cart experienced 20 per cent to 30 per cent growth every year after that until last year, when sales were mostly flat.

"Food trucks aren't dying, but we are no longer a novelty," Mr Francis said. The trend for curbside lunch vending is down 50 per cent from its peak three years ago, he said, and to stay afloat, many carts - there are around 450 in the Washington area - have diversified into catering and events.

In addition to the trucks and a catering operation, Francis operates two brick-and-mortar bakeries in Washington and is about to open another in Raleigh, North Carolina. Without his catering operation, Mr Francis said, "we would be in a terrible situation right now." Generally speaking, food trucks adhere to one of two business models. Austin and Portland are unusual in that stationary carts are on private property.

In most other cities, food trucks travel to different locations depending on the time of day and regulatory restrictions. As competition intensifies, these regulations have become a thorn in the side of many food truck operators, who say permit rules favour restaurants over trucks.

The Illinois Supreme Court last month heard a case filed by Laura Pekarik, owner of the Cupcakes for Courage food truck in Chicago, who claimed that city laws favoured brick-and-mortar restaurants over food trucks. The Institute for Justice, a non-profit group that represented Ms Pekarik, has five food truck cases pending, said the group's senior communications director, J Justin Wilson.

"This is perhaps the most clear-cut case involving food trucks," Mr Wilson said, "because the city is willing to make the one argument that lurks behind all other anti-truck regulations - that a city can legally favour one type of business, restaurants, over another - food trucks." NYTIMES

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