How to value a food truck?

Valuing your food truck

Valuing your food truck might seem like a challenging task but in most cases, it’s fairly straight forward. Let’s break it down together. These are the factors to consider while valuing your food truck:

  • For how much did you buy your food truck?
  • How much did you spend on changing the layout of your food truck and upgrades/renovations?
  • Amortization cost or the depreciated value of your food truck.

 

Amortization is basically done to calculate the depreciated value of the food truck. Depriciation is done for fixed assets to spread out the cost incurred and to factor the usage of the asset into it’s current market price. Let’s say the food truck cost you $100,000. Now, assume your intended usage period/accounting life to be 10 years. So the amortization every year would be $10,000 ($100,000/10). This means that if you’ve used the food truck for two years already, the equipment value is now roughly $80,000 ($100,000-$20,000 for two years). This is calculated to remove the cost of obsolescence, general wear and tear, and the organic decline in an asset’s value over time. You can use a free online amortization calculator to arrive at a more accurate number. The industry standard for depreciation of trucks averaging around 6000 kgs or 13,000 pounds in weight, is between 5-7 years.

 

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Valuing your equipment

Now, let’s go ahead and value the equipment inside your food truck. The factors you need to consider while doing this are:

  • How much did you spend on the equipment inside your food truck?
  • How much did you spend on upgrades/repairs of the equipment?

 

Similar to what we did on top, let’s now amortize the cost of the equipment. For example, if the equipment cost you $10,000. Assume your intended usage period to be 10 years. So the amortization every year would be $1,000 ($10,000/10). This means that if you’ve used the equipment for two years already, the equipment value is now approximately $8,000 ($10,000-$2,000 for two years). According to the National Restaurant Association in America, catering business owners upgrade/renovate every 6 to 8 years. The industry standard for food preparation and serving equipment is 12 years.

 

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Valuing your food truck business as a whole

And for the value of the food truck business as a whole, you’ll have to also consider:

  • How much do you sell?
  • What’s the margin on your sales (Selling price of food – Cost price of ingredients)?
  • Revenue vs Profit?
  • Do you have a fixed place you operate from (consistent stream of revenue)?
  • Do you heavily depend of events and festivals (average number of events and/or festivals a month X average revenue per event/festival)

 

To make your listing lucrative and ensure that the value you’re asking for is justified, it’s a good idea to make a simple financial report of your earnings. This shows the income generating capacity of your food truck as a business. You can use Smartsheet for a free balance sheet template or Quickbooks for a small fee of $12 for more elaborate book-keeping. This way, you can also assign a price to your social media accounts and include that as a value-add in your food truck for sale. The interested buyer might be further attracted to your listing and ready to pay more (get ready to attract higher bids with this quick tip) to be able to readily take over your food truck business without any downtime on establishing a brand, web design, the associated social media accounts and following.

It also might be beneficial to mention if you have any valuable licenses/permits and any other contracts that you possess or are part of. Are these contracts and permits transferable? The more detail you provide, the more credible your listing will be. Each of these factors will contribute to the value of your food truck and help maximize the overall value of your business. If you’re just selling the assets (the food truck and the equipment), then the selling price of the food truck or food trailer will be calculated using only the two categories mentioned above.

 

Easy online tools to help you value your food truck

These steps above will help you understand and analyze the RETURN ON INVESTMENT! You can also use user-friendly free tools online such as Fleet Dynamics and ROI calculator for a quick value assessment. For a more comprehensive understanding of the current value of your food truck, Fleet Complete is a great option.It’s also incredibly important to look at other listings of similar food trucks. You should check various other websites where people put up their food trucks for sale. There are lots of interested buyers for used food trucks. The websites that show these used food trucks listings are Craigslist, Ebay, Marktplaats and Alibaba. There are also various groups on facebook that have listings of used and new food trucks for sale. You can search for similar listings based on brand, year built, model, transmission and size to get a rough estimate of the asking price you should be quoting. You can search for keywords like “food trucks for sale”, “food trailers for sale”, “food truck for sale near me”, etc. (you get the idea) on Facebook as well as Google to find a ball park estimate of the value you can sell for.You can also of course speak to dealerships near you to understand competitive market pricing of similar food trucks.

And last but not least, if you need any help with any of the steps above, feel free to write to us at sales@karpatiatrucks.com or give us a quick call on +31 619337513 and our financial experts will help you figure out the right price for your food truck.

 

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