The duration of your food trailer’s survival is dependent on your truck’s sales. If the forecast sales aren’t high enough to signify a decent level of profitability, your truck may not make it through the year. Investors and lenders find forecast sales imperative to whether or not they provide you with loans or investments, which is why you must present your forecast sales in your business plan.
But for most, the idea of forecasting sales is alien. It’s a concept that you may have learned in a college course, but have forgotten about ever since. So, how do you begin? First off, there’s no straight formula that you can use to project the sales for your truck, so your forecasts are dependent on well-informed guesses, as well as facts about the market. In your business plan, it’s traditional to provide a sales forecast for the first three years and then to show sales growth in the next two.
There are three main components of forecasting sales for your food truck business. They are as follows:
You can do this one of two ways – both are easy, so don’t panic. The first way to estimate customer numbers is by determining one or two other food trailers that cater to the physical areas that you’re looking to serve. In this way, you can get an idea of how much catering truck customers frequent these trucks per day, and use an average of your findings to forecast a number of how many customers you’ll have.
The second way, which you should use in combination with the first, is to figure out how long it takes your kitchen staff to prepare one meal. You should being timing from the moment the customer places the order to when the transaction is completed. Remember, in the real world you won’t only have to prepare one meal at a time, so it may be useful to time how long it takes to serve a meal when the truck has to process a few orders at a time. Once you have how long it takes to serve a meal, you can calculate the amount of meals that are possible to serve during the day (or shift).
Be conservative in your estimations. Remember that your truck will be unlikely to hit or maintain sales at the maximum amount of people per day. After you have your approximations, use 75% of this number to make your sales forecast.
2. Estimating average spending per customer.
Spending per customer will differ depending on the meal being served (breakfast, lunch, dinner) and also on the day of the week that it’s being served. In order to estimate the average spending per customer for your catering truck, break the analysis down by days of week and by meal times. If you serve lunch and dinner Monday through Saturday, list out the days of the week along the top of a grid, and put “lunch” and dinner” in a column along the left-side of the grid.
To estimate spending, add all the prices of your meals – for lunch or dinner, separately – together and take the average. Then multiply each of these averages by the estimated customer count in part one, and add these two numbers together. You’ll end up with a total for each day’s sales. For example:
Lunch Count x Lunch Avg. Spend + Dinner Count x Dinner Avg. Spend = Total
You may even decide to take this one step farther by separating food sales from beverage sales.
3. Estimating sales for the year.
So, after using steps 1 and 2, you end up with a weekly sales projection. While some business owners simply multiply this number by the number of weeks in a year, it is wiser to divide yearly sales by seasonality – if you’re located in an area where the temperature tends to change. To do this, simply repeat steps 1 and 2 for each season, and then multiply each finding by the number of weeks per seasons, and then add these numbers together.
So, now that you know how to forecast sales for your food trailer business, it’s important to know how to project sales growth over the next few years. In general, healthy businesses tend to grow about 10-20% per year. To stay conservative with your projections, add 10% sales growth to your current year’s sales forecasts. So, if you expect to make $200,000 this year in sales, add 10% (or 200,000 x .1). The number you are left with is your sales growth projection for the following fiscal year.