Why a food truck may prove to be a solid commercial real estate investment

On Behalf of | Sep 2, 2016 | Real Estate Transactions

For most people, the term commercial real estate investment invariably conjures up visions of significant amounts of money being put into office buildings, retail establishments and other large-scale developments. While this is by no means inaccurate, it’s important to understand that it can also encompass other smaller ventures, including those in the food industry.

In fact, a commercial real estate investment in the food industry doesn’t necessarily have to be in a traditional brick and mortar establishment, but could be in the street-food industry or, by extension, the food truck sector.

While some might be quick to dismiss the viability of commercial real estate investments in the street-food industry, consider that it’s a $1 billion dollar per year industry that saw growth of 8.4 percent from 2007 to 2012. As encouraging as this is, consider also that the food truck sector saw even better growth of 9.3 percent from 2010 through 2015.

Those still unconvinced that food trucks are a viable investment, especially when compared with a traditional restaurant, might want to consider that statistics show that 25 percent of all new restaurants ultimately close their doors in the first year of operations while an astounding 60 percent ultimately close their doors within three years.

Furthermore, statistics shows that while the outlays for opening a traditional restaurant — utilities, inventory, rent, staff, etc. — can be anywhere from $250,000 to $500,000, the typical cost of opening a food truck — truck, licensing fees, staff, inventory, etc. — can cost $25,000 to $115,000.

This isn’t to say, however, that a food truck is a worry-free or guaranteed commercial real estate investment for budding entrepreneurs. Indeed, experts indicate that it will require not just time and energy, but a creative menu, shrewd marketing and a solid business plan, especially in hyper-competitive markets like New York City.

If you would like to learn more about commercial real estate — transactions, investments, etc. — or have questions about a business law-related issue, consider speaking with a skilled legal professional who can provide answers and solutions.