Long Run Costs and Economies of Scale - Excercise 5-5

A business that I think would be a neat business and potentially a profitable one would be to open up a food truck restaurant.  This would just be a small business for myself with one truck and two people working the truck.  This would target a small market of industrial workers in select industrial areas of Calgary.  I know from experiance that in these areas there is not a lot of choices for place to eat.  Consumers are limited to brining a lunch from home each day, driving out of the area or at least a bit of a distance away to get to a place to eat, and for those who do not drive they may have one or two choices that are within walking distance to their office.  I would like to target these ares of the city to provide these consumers with an alternative to the normal lunch choices they are exposed to. 

One of the main long term expenses of opening a food truck would obviously be the truck itself.  These run a high price and the payments on this vehicle would also contribute to some of the fixed costs of the business.  Other fixed costs would be the insurance, rent/mortgage payments on your prep-work station (most likely in my home) and as well and the business license to operate the truck.  Some other major costs to keep in mind would be the labour, cooking utensils, food and serving supplies. 

I believe that a food truck in Calgary's industrial areas could be a success because of the demand for more food choices and variaty.  I would have set days that I would be in certain areas of the city and each time I was in those areas I would park in a different area.  Posting the times and position of my truck would be key, but with technology now I can easily start a web page and email notifications for consumers to look and see where I would be that day and at what times.  The joy of having a mobile restaurant would be the ability to switch up the locations and this can target those people that do not drive and would need to walk to your location or those people that would just like to try something new. 

A similar business I found was Fiasco Gellato here in Calgary.  They used to operate out of a single location on 17th Avenue but due to the weather and the short summer season in Calgary and the rising costs of have a stationary location they closed down their locations and opened up a food truck.  They have they same types of major expenses that I would have with a similar type of business.  Their strength is that they not only sell from the truck in the warmer months but they also offer whole sale to businesses to carry their gellato year round.  Due to their product the truck has an even smaller market than my lunch food truck would as consumers would most likely not line up on a nicer winter day to buy gellato, they would be more likely to line up for a warm lunch. 

Image from: http://www.yycfoodtrucks.com/meet-the-trucks/fiasco-gelato-truck/ Information on Fiasco Gellato from: http://www.fiascogelato.com/