Comprehensive business plan for a sustainable food truck.
I created this plan for my MBA in Sustainable Business. While the business never came to fruition, I hope it may inspire some of you to venture to start your own food truck business. Just make sure it is sustainable! :)
1. Running Head: KARMA TRUCK BUSINESS PLAN
The Karma Truck: A Business Plan
2012 Capstone Project
Kristin McGinnis
Marylhurst University
Prepared for SUS 598: Integrated Capstone Project
Instructor: Gregory Worden
March 18, 2012
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2. KARMA TRUCK BUSINESS PLAN 3
Table of Contents
Copyright page................................................................................................................................ 2
Acknowledgements......................................................................................................................... 8
Executive Summary...................................................................................................................... 10
Karma Truck Business Plan.......................................................................................................... 12
History of Food Trucks............................................................................................................. 12
Modern Food Trucks................................................................................................................. 12
Detailed Description of the Karma Truck Business ................................................................. 13
Vision Statement....................................................................................................................... 13
Mission Statement..................................................................................................................... 13
SWOT Analysis ........................................................................................................................ 13
Business Model Canvas............................................................................................................ 15
Customer Segments .................................................................................................................. 16
Key Activities ........................................................................................................................... 16
Key Resources .......................................................................................................................... 17
The Truck.............................................................................................................................. 17
Key Partners.............................................................................................................................. 18
Stakeholders.............................................................................................................................. 19
Market Definition.......................................................................................................................... 19
Consumer Preference................................................................................................................ 20
Healthy & Local Food .............................................................................................................. 21
Food Truck Trends.................................................................................................................... 23
Starting a Food Truck Business................................................................................................ 24
Demographics & Psychographics of Customer Segments........................................................ 25
Food Truck Market Size & Location........................................................................................ 26
Current, Emerging, and Potential Competitors......................................................................... 27
Value Proposition.......................................................................................................................... 29
Value Proposition...................................................................................................................... 29
Sustainability............................................................................................................................. 30
Key Activities ............................................................................................................................... 31
Daily Management of Food Truck............................................................................................ 31
Sample Weekly Schedule. .................................................................................................... 32
Delivery of Products & Services............................................................................................... 33
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3. KARMA TRUCK BUSINESS PLAN 4
Products & Services Offered .................................................................................................... 35
Menu ..................................................................................................................................... 36
Branded items. ...................................................................................................................... 36
Composting services. ............................................................................................................ 37
Disposable serviceware......................................................................................................... 38
Composting truck-side.......................................................................................................... 40
Customer Relationships & Channels ............................................................................................ 41
Marketing Four C’s................................................................................................................... 41
Customer Solution .................................................................................................................... 42
Customer Cost........................................................................................................................... 43
Convenience for Customer ....................................................................................................... 43
Channels & Communication with Customer............................................................................ 43
Advertising and marketing strategy...................................................................................... 44
Marketing Three P’s ................................................................................................................. 46
People........................................................................................................................................ 47
Procedures for maintaining accounting records.................................................................... 47
Hiring and personnel policies. .............................................................................................. 48
Process: ..................................................................................................................................... 49
Physical Evidence..................................................................................................................... 50
Environmental effects. .......................................................................................................... 50
Social effects......................................................................................................................... 50
Financial Forecast ......................................................................................................................... 52
Pricing Strategy/Cost Structure................................................................................................. 52
Revenue Streams....................................................................................................................... 52
Projected Break Even Point ...................................................................................................... 53
Start-Up Funds Requested from Bank or Investor.................................................................... 54
Monthly Operating Expenses.................................................................................................... 54
Fixed expenses...................................................................................................................... 54
Facility and truck expenses................................................................................................... 55
Commissary expenses........................................................................................................... 56
Salaries & wages................................................................................................................... 56
Workers compensation.......................................................................................................... 57
Variable Expenses..................................................................................................................... 57
Projected Income Statement ..................................................................................................... 58
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4. KARMA TRUCK BUSINESS PLAN 5
Proposed timeline.................................................................................................................. 59
Monitoring, Evaluating, and Revising.......................................................................................... 60
Conclusion, Reflection, and Implications for Further Study........................................................ 62
References..................................................................................................................................... 63
Appendices.................................................................................................................................... 70
Appendix A: Food Truck Features & Details........................................................................... 70
Appendix B: Food Truck Picture.............................................................................................. 71
Appendix C: Current, Emerging, and Potential Competitors ................................................... 72
Appendix D: Colorado Crop Calendar ..................................................................................... 73
Appendix E: Sample Breakfast Menu....................................................................................... 74
Appendix F: Sample Lunch Menu............................................................................................ 75
Appendix G: Branding Item Expenses per Year....................................................................... 76
Appendix H: Disposable Serviceware Comparison.................................................................. 78
Appendix I: Disposable Serviceware from Eco Products, Inc.................................................. 80
Appendix J: Unit Cost.............................................................................................................. 81
Appendix K: Break-Even Analysis........................................................................................... 82
Appendix L: Start Up Costs...................................................................................................... 83
Appendix M: Usage Calculation of Disposable Serviceware................................................... 84
Appendix N: Income Statement Year One, 2013 ..................................................................... 85
Appendix O: Income Statement Years Two through Five (2-5), 2014 through 2017 .............. 86
Appendix P: Sales Increases by Year & Through Business Life Cycle ................................... 88
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5. KARMA TRUCK BUSINESS PLAN 6
List of Tables
Table 1: Business Model Canvas.......................................................................................................15
Table 2: Internal & External Stakeholders .........................................................................................19
Table 3: Sample Weekly Schedule.....................................................................................................32
Table 4: Marketing Branding Sales, Year 1 .......................................................................................53
Table 5: Monthly Fixed Expenses, Year 1 .........................................................................................55
Table 6: Monthly Variable Expenses, Year 1.....................................................................................57
Table 7: Karma Truck Launch Timeline ............................................................................................59
Table A 1: Current, Emerging & Potential Competitors.....................................................................72
Table A 2: Branding Items, Start-Up Needs & Costing......................................................................76
Table A 3: Year One Branding Items; Estimated Amount to be Sold & "Cost of Goods Sold" ...........76
Table A 4: Year Two Branding Items; Estimated Amount to be Sold & "Cost of Goods Sold"...........76
Table A 5: Year Three Branding Items; Estimated Amount to be Sold & "Cost of Goods Sold".........77
Table A 6: Year Four Branding Items; Estimated Amount to be Sold & "Cost of Goods Sold"...........77
Table A 7: Year Five Branding Items; Estimated Amount to be Sold & "Cost of Goods Sold"...........77
Table A 8: Recycled Content Cutlery Costing....................................................................................78
Table A 9: Plant Starch Cutlery Costing ............................................................................................78
Table A 10: Plantware Cutlery Costing..............................................................................................79
Table A 11: Disposable Serviceware from Eco Products, Inc.............................................................80
Table A 12: Unit Cost Calculations ...................................................................................................81
Table A 13: Average Menu Cost .......................................................................................................82
Table A 14: Cost Breakdown for Break-Even Analysis......................................................................82
Table A 15: Details on Break Even-Analysis, including Contribution Margin & Margin of Safety.....82
Table A 16: Start-Up Costs................................................................................................................83
Table A 17: Usage Calculation of Disposable Serviceware ................................................................84
Table A 18: Income Statement Year One, 2013 .................................................................................85
Table A 19: Income Statement Years Two through Five (2-5), 2014 through 2017.............................86
Table A 20: Sales Increases by Year & Through Business Life Cycle................................................88
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6. KARMA TRUCK BUSINESS PLAN 7
List of Figures
Figure 1: Karma Truck with Tag Line .................................................................................................9
Figure 2: SWOT Analysis .................................................................................................................14
Figure 3: Industry Statistics on Employee Size (Author's Image) .......................................................27
Figure 4: Value Proposition...............................................................................................................30
Figure 5: Sustainable Value Proposition ............................................................................................31
Figure 6: Karma Truck Daily Activity Breakdown.............................................................................33
Figure 7: Branded Marketing Items ...................................................................................................37
Figure 8: Marketing 4-Cs ..................................................................................................................42
Figure 9: Marketing Mediums ...........................................................................................................44
Figure 11: Marketing Strategy...........................................................................................................46
Figure 12: Marketing 3-Ps.................................................................................................................46
Figure 13: Karma Truck Employee Breakdown .................................................................................47
Figure 14: Employee Benefits ...........................................................................................................48
Figure 15: Life Cycle Process of Food...............................................................................................49
Figure 16: Life Cycle Process of Non-Food.......................................................................................49
Figure 17: Karma Truck Business Footprint (Author’s Image)...........................................................51
Figure A 1: Truck Features (Author's Image).....................................................................................70
Figure A 2: #16 Mobile Kitchen Step. ...............................................................................................71
Figure A 3: Colorado Crop Calendar .................................................................................................73
Figure A 4: Sample Breakfast Menu..................................................................................................74
Figure A 5: Sample Lunch Menu.......................................................................................................75
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7. KARMA TRUCK BUSINESS PLAN 8
Acknowledgements
First and foremost, I would like to acknowledge the fellow students who have been of the
utmost help to me throughout my graduate school journey at Marylhurst University: Julia Hall,
Keith Logan, and Kelsey Pauxtis-Thomas. My learning throughout the majority of my classes
was enhanced and maximized because of these three wonderful individuals. I would also like to
acknowledge the students who assisted in the peer review process for this business plan: Kerry
Mohondro, Westley Paxton, and Bann Mattson.
Secondly, I would like to thank the wonderful professors who aided in my learning
throughout my career at Marylhurst University, namely Darrel Burrell, John Cusack, and Greg
Worden.
Finally, I would like to thank my client, Rich Sabatowski, for providing valuable
feedback and guidance throughout the final process of completing this capstone.
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8. KARMA TRUCK BUSINESS PLAN 9
The Karma Truck
Food with Flavor & Flair
That is good for YOU and the PLANET!
Figure 1: Karma Truck with Tag Line
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9. KARMA TRUCK BUSINESS PLAN 10
Executive Summary
Research shows that consumers are demanding healthy food that is affordable, accessible,
and convenient. The Karma Truck will fill the needs of working professionals by providing a
food truck that is mobile and can travel to different parts of the Denver Metro Area. The Karma
Truck will provide attractive and flavorful food that not only satisfies the palate, but also
provides healthy and sustainable alternatives to what can be found elsewhere at other quick-
service restaurants (QSRs) or fast food establishments. Additionally, the service is quick,
convenient, and friendly.
The food truck trend has gained nationwide attention and popularity over the past five
years and predictions show a growing trend. Due to the dismal competition of food trucks in the
Denver Metro Area, the economic potential for the Karma Truck is great. Combine this with the
exceptional food of admired Chef Raul Salazar and the creative and well-managed marketing
strategies; the return on investment for the Karma Truck is impressive.
The founder of “The Karma Truck” created this five-year business plan to secure start-up
funding and to educate stakeholders and employees of the company’s vision, plans, and
processes. The company is still in the planning phase and intends to launch by Spring 2013. The
Karma Truck is not only concerned with the traditional bottom line, but the triple bottom line
(3BL) as well, which includes economic, social, and environmental concerns.
The Karma Truck anticipates year one sales of $200,987. In year one pre-bonus earnings
before interest, tax, depreciation and amortization (EBITDA) of 10% is expected. During the
growth stages of the business, years two through four, the profit margin is expected to increase to
27% in year two, 16% in year three, and 19% in year four (these are all percentages pre-bonus
and pre-EBITDA). Through the maturity stage, years four through ten, a steady 19% profit
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10. KARMA TRUCK BUSINESS PLAN 11
margin is expected. The Karma Truck expects a net income of $20,000 in year two and three,
$40,000 in year four, and $30,000 each year after. In order to help finance start-up costs and the
first year's operating, marketing, and payroll expenses, the Karma Truck owners are looking to
secure a one-time investment of $115,000.
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11. KARMA TRUCK BUSINESS PLAN 12
Karma Truck Business Plan
Food trucks are a hot trend in the United States. Over the last five years the food truck
industry has gained national consumer attention and research shows that the trend will continue
to grow. Food trucks have evolved over the past few centuries to what we see driving the streets
today.
History of Food Trucks
Mobile food, street food, street vending, and mobile street vending are all words to
describe the food truck industry. Loose terms used to describe food trucks are roach coach or
taco truck, but professional literature does not use these terms. Although only becoming a
mainstream industry in the last five years, mobile food has been around for centuries. In the
United States (U.S.) in the late 1800s, the “chuck wagon” was where cowboys gathered,
transported, prepared, and served their meals (Thompson, 2012). The wagons were fitted with
special compartments that helped to preserve food and keep it fresh for longer. The tail-end of
the chuck wagon had a flap that was lowered over a fire to cook food (Thompson, 2012; The
Food Truck Market, 2011).
Mobile food continued its journey to urban cities and military bases, where carts fed
hungry workers or military personnel. Since the 1960s, food vendors have been found in busy
cities selling hot dogs or tacos, and residential areas have come to know and love the sound of an
ice cream truck (The Food Truck Market, 2011).
Modern Food Trucks
Savvy food trucks, as they are seen today, have been transformed to implement the latest
in kitchen technologies combined with the convenience of a motorized truck (Mobile Food
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12. KARMA TRUCK BUSINESS PLAN 13
Vending, n.d.). Trendy food trucks are now seen all over the country with modern, delicious
cuisines that are comparable to the best restaurants.
As this report will demonstrate, the Denver market shows a strong demand and consumer
interest for food trucks. At the current time the competition is minimal and there is strong
opportunity for emerging food truck businesses.
Detailed Description of the Karma Truck Business
The Karma Truck is a mobile food business that provides a food service to customers by
driving to and parking in given locations where the consumer can then walk up to the truck’s
window to order the food, wait for it to be prepared, and then enjoy the meal. Only food that is
good for the body and the planet will be served at the Karma Truck, but always with flavor and
flair.
Vision Statement
The Karma truck helps the working people of the Denver Metro Area live more
productive, happier, and healthier lives by providing quick, healthy, delicious and well prepared
food, served with good karma and a smile. The Karma Truck aspires to teach the community
that eating healthy and sustainably is both simple and affordable.
Mission Statement
To become the most popular food truck in the Denver Metro Area by providing quality
customer service and by serving the tastiest, healthiest, and most sustainable food available on
wheels, all for a reasonable price.
SWOT Analysis
It is the responsibility of the Karma Truck owners to understand and utilize all its
strengths within the market to capitalize on as many opportunities as possible. Environmental
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13. KARMA TRUCK BUSINESS PLAN 14
scanning of local, regional, and national food trucks, business and consumer trends will ensure
that the Karma Truck stays ahead of the competition. At the same time, the Karma Truck must
also be conscious that internal weaknesses and external threats exist. Working proactively and
monitoring the variables in a timely manner will ensure that challenges to business operations are
met and surpassed with efficiency and effectiveness.
Figure 2: SWOT Analysis
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14. KARMA TRUCK BUSINESS PLAN 15
Business Model Canvas
Table 1: Business Model Canvas
Key Partners
Managing Partner
Chef Partner
Joint ventures
Eco Products
Inc…paper and
plastic, silverware, etc
Organic food supplier
Collaborations with
Sustainable Food
Denver, Metro Denver
Farmers Market and
Colorado Fresh
Markets
organizations.
Key Activities
Food Preparation
Food Service
Marketing
Retail
Value Propositions
Convenience; speed of
service
High Quality Healthy Food
Accessibility
Consistency
Price
Sustainable
Offering your clients
consistently high quality
sustainable food, at a
reasonable price with
maximum convenience.
Customer Relationships
Personal Assistance with providing a sense of community.
Conduit for creating a sense of community surrounding the
truck
Medium customized, consumer, customer based
business….retail client and relationship driven.
“Friends….” Anti-McDonalds
Customer Segments
Niche Market: Health-conscious
consumer; LOHAS
Health conscious, good food
wanting, office workers who
desire speed, friendliness,
convenience and health.
Geographic specificity: North
Denver Highlands area,
Downtown Denver, Uptown
Denver, and the Denver Tech
Center in Greenwood Village,
CO.
Key Resources
Physical: Truck, High
Quality Food
Human: Key Chef;
Key Marketing
Manager
Intellectual: Internet
marketing platform
Intellectual: Brand
Channels
Communication: Blog, website, social media, flyer,
advertisement in papers, farmers market coalition
Distribution
Singular vehicular distribution truck
Sales: Face to face at the truck.
Cost Structure
Value Driven
High quality ingredients, quality & personal service
High fixed costs, vehicle costs
Revenue Streams
Income from sale of food on the truck
Income from sale of branding items
Fixed Menu pricing
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15. FOOD TRUCK BUSINESS PLAN 16
Customer Segments
The Karma Truck caters to a niche market: the health conscious consumer. More
specifically, the market segment that is used to describe these individuals is known as LOHAS,
which is an acronym for Lifestyles of Health and Sustainability. This market segment is
“focused on health and fitness, the environment, personal development, sustainable living, and
social justice” (LOHAS, 2010, para. 1).
The Karma Truck also targets customers that wish to have a healthier diet but claim they
do not or cannot due to affordability and accessibility. The service and product provided by the
Karma Truck are tailored to the health conscious consumer who is looking for a meal that is
accessible, convenient, and prepared quickly. The service times and location for the food truck
have been designed to serve primarily the traditional 8am-5pm business person. Providing
breakfast and lunch service, the menu and service style meets the needs of working people that
have limited time to grab a healthy meal. The geographic location of the target customer is the
North Denver Highlands area, Downtown Denver, Uptown Denver, and the Denver Tech Center
in Greenwood Village, CO.
Key Activities
The key activities for a food truck business involve the food preparation, food service,
and marketing. Marketing falls into a few areas of the business model canvas, but it is primarily
a vital key activity because unlike a business with a traditional store-front, the food truck is
mobile and does not stay in the same place. Daily marketing is an absolute necessity to
communicate to the customer where they can find the truck at any time. Without robust
marketing strategies, there would be limited food sales and food preparation would go to waste.
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16. FOOD TRUCK BUSINESS PLAN 17
Retail items will also be for sale at the food truck, such as: reusable bags, reusable water
bottles, and t-shirts. These items not only promote sustainability, but promote the Karma Truck
as well. Customers who bring their Karma Truck-branded reusable bag or water bottle when
they purchase a meal will receive a discount.
Key Resources
The food truck business plan includes physical, intellectual, and human elements. The
physical elements include the truck itself, complete with the kitchen equipment: refrigeration,
holding, and cooking equipment. High quality food is another physical element that is
imperative to running the business. Intellectual elements include the Karma Truck brand
strength and an Internet marketing platform with connections to customers. All elements of the
Internet marketing platform will be used on a daily basis to connect with current customers and
to gain new customers. The owners, who will run the operations of the truck, are the key
resources that fall under the human element. The President/Marketing Director and the Vice-
President/Chef have 25 years combined experience which demonstrates the valuable intellectual
element vital to a successful business.
The Truck.
The truck will be designed and built from All A Cart Manufacturing, Inc. in Columbus,
OH. The price of the truck will be $69,890. The truck is a hybrid-electric vehicle. According
to Easton Corporation, a leader in hybrid technologies for commercial vehicles, the definition of
a hybrid is “a vehicle that uses two or more distinct power sources to move” (Eaton Corporation,
2102, para. 2). Eaton Corporation explains that the creation of a hybrid commercial vehicle
involves “[combining] a vehicle’s traditional internal combustion engine with an electric motor
or a hydraulic launch assist system to move the vehicle forward and then through regenerative
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17. FOOD TRUCK BUSINESS PLAN 18
braking the system recharges itself” (Eaton Corporation, 2102, para. 2). See Appendix A for
details on the truck’s features and Appendix B for a picture of the actual food truck.
Key Partners
The business will have two partners: the President who will manage all business and
marketing, and the Vice-President, who is also the Executive Chef. Raul Salazar, the Vice
President/Chef, has 15 years of management and culinary experience in all types of cuisine,
including upscale fine-dining. The local Denver Westword Paper has recognized the
extraordinary talents of Chef Raul Salazar. Chef Salazar brings forward world-class culinary
skills, as well as exceptional management, organization, and communication skills.
The managing partner, Kristin McGinnis, has 10 years of front of the house (FOH)
restaurant management experience, ranging from catering to quick service to fine dining.
Bringing forth well-rounded experience and expertise in administration, marketing, finance, and
management, Ms. McGinnis is a valuable human asset to the business. Furthermore, she is
obtaining a Masters of Business Administration degree in Sustainable Development from
Marylhurst University in June 2012.
Further key partners include collaborations with suppliers, local sustainable
organizations, and competitors. Collaboration goes hand in hand with sustainability, yet requires
more long-term focus (Rosen, 2011). Networking and collaborations are relationships that must
be valued, nurtured, and grown. Karma Truck will collaborate with as many local sustainable
organizations, for-profit or non-profit, as possible. For instance, Sustainable Food Denver,
Metro Denver Farmers Market and Colorado Fresh Markets organizations are key connections
and collaborators.
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18. FOOD TRUCK BUSINESS PLAN 19
Stakeholders
Table 2: Internal & External Stakeholders
Internal Stakeholders
Stakeholder Organizational Impact Priority
Kristin McGinnis Stakeholder/President/Marketing Director 1
Raul Salazar Stakeholder /Vice-President/Chef 2
To Be Determined (TBD) Investor/Bank 3
External Stakeholders
All A Cart, Inc. Food Truck Manufacturer 1
TBD Local & Organic Food Supplier 2
TBD Commissary 3
Eco Products, Inc. Disposables Supplier 4
TBD Hourly Staff 5
Alpine Waste & Recycling Composting Service 6
Factory Direct Promos Branding Items 7
Market Definition
The literature review for this business plan is focused on customer motivators and drivers
for how they make food purchasing decisions. The objective of the research obtained and
analyzed is to support the environmental scan of the market and competition, ensuring that the
Karma Truck is strategically positioned in the marketplace for success. The literature review
will touch on consumer preference, willingness to pay, healthy and local food, food truck trends,
starting a food truck business, the demographics and psychographics of customer segments, the
market size of the food truck industry, and current and emerging competitors.
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19. FOOD TRUCK BUSINESS PLAN 20
Consumer Preference
When running a food establishment, business owners and marketing directors must
understand what drives their consumers purchasing habits’. Even beyond price, “each consumer
must choose a) where to shop and b) what to purchase once there,” states Thilmany, Bond, &
Bond (2008, p. 1303). In recent years, increasing interests in sustainability have begun altering
food purchasing trends. The word “Locavores” even became the New Oxford American
Dictionary’s word of the year in 2007 (Thilmany et al., 2008). The definition from Oxford
Dictionary online reads: “a person whose diet consists only or principally of locally grown or
produced food” (Oxford University Press, 2012, para.1). Consumers are now thinking and
inquiring more about what they put into their bodies; eating locally or organically are only two
examples.
The psychological theory examining this behavior is known as perceived consumer
effectiveness (PCE) and is analyzed in the report by Thilmany, Bond, & Bond (2008). PCE
seeks to measure the extent to which a consumer believes his/her actions alone will achieve a
given goal. Thilmany et al. carried out studies on PCE and grouped the survey respondents by
their shopping preferences: direct occasionally, direct always, or no preference. This was
determined by where the respondents conducted their primary, secondary and seasonal purchases
and whether they purchased their food direct from the source occasionally, always, or had no
preference. More than 50% of survey respondents fell into the ‘direct occasionally’ category,
whereas 30% were classified as ‘direct always’ and 20% had no preference (p.1305). The survey
summarizes that ‘direct always’ respondents were motivated by supporting local businesses, as
well as the marginal impact of nutrition and freshness of the food products.
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20. FOOD TRUCK BUSINESS PLAN 21
One conclusion drawn from Thilmany, et al. (2008) is that certification programs, such as
the United States Department of Agriculture (USDA) organic program, are less effective than
buying direct from the source, especially with ‘direct always’ consumers. This is due to the
complex food and purchasing chain and the perceived trust of the product.
Similar literature by Blake, Mellor, & Crane (2010) explain that “place” is an important
part of the food system, or food chain. Place “helps to define what foods are consumed and how
people value and engage with these foods” (Blake, et al., 2010, p.412). This report also analyzes
the effects of convenience on consumers’ food purchasing, referencing Retail Restructuring and
Consumer Choice by Jackson and his colleague. The research concluded that consumers view
convenience as an important component of a shopping experience. The consumes surveyed
stated that convenience meant “being able to purchase everything at one time, being able to park
easily, being close to home, or being on the way to or from some destination where they must be
for some other activity” (Blake, et al., 2010, p.413). Although the people surveyed for this
article are from the United Kingdom, the data is nonetheless relevant to purchasing habits of
consumers in the United States.
Healthy & Local Food
The healthy food movement has gained attraction in the last decade thanks to such
documentaries as Food, Inc. and books such as In Defense of Food by Michael Pollan (Kenner,
2008; Michael Pollan, 2010). Michael Pollan’s mantra is to eat real food, “the sort of food our
great grandmothers would recognize as food” (Michael Pollan, 2010, para. 2).
The documentary Food, Inc., in particular, has lifted the veil on the production of many
of the food produced in the United States (U.S.). Food, Inc. touches on three main U.S. food
production companies: Monsanto, Smithfield, and Tyson. These companies are notorious for
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21. FOOD TRUCK BUSINESS PLAN 22
using marketing and branding to depict a picture that shows happy workers and well-cared for
animals that are treated humanely and are fed meals as nature intended (i.e. grass for cows).
Marketing of companies such as Monsanto, Smithfield, and Tyson creates a picture of a
company who is doing its part to take care of the environment. Food, Inc. showed the public that
this could not be further from the truth. In the film, journalist and author Eric Schlosser states
that there is a “world deliberately hidden from us” (Kenner, 2008).
Through the documentary, Americans were encouraged to vote with their forks every
time they sat down for a meal. Meaning, if Americans continue to demand healthy food that has
been produced responsibly, socially and environmentally, then food producers will be forced to
listen or they will be pushed out of the marketplace.
Eating trends among Americans have already changed for the better. Food trends for
2012 show that American’s are increasing their demand to know where their food comes from –
the farm to fork journey, as it is also referred – and are demanding food that contains less sugar
(Lempert, 2011).
Time Magazine states that, “[among] food purists, ‘local’ is the new ‘organic,’ the new
ideal that promises healthier bodies and a healthier planet” (Cloud, 2007, para. 3). With
increasing knowledge of sustainability, consumers are starting to think more about what they put
into their bodies and how their food purchasing decisions affect the planet.
Water and food scarcity issues have gathered global attention. Vast amounts of water
and land are required to grow food and raise livestock. Agriculture alone demands 100 times
more water than a human requires for personal use (Lenntech, 2009). Chronic hunger is
currently affecting 15% of the worlds’ population and with the population to reach 9.1 billion by
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22. FOOD TRUCK BUSINESS PLAN 23
2050, continued solutions for sustainable food production must be found (IFAD, 2011; GWP,
2010). Eating locally is just one way to help ease the pressures of commercial agriculture.
Food Truck Trends
Studies and reports reveal that the food truck trend is one that is here to stay. The food
truck movement was hottest in the year 2010. The trend was highlighted by emerging television
shows, such as The Great Food Truck Race on Food Network. In 2012, food trucks will remain
a strong trend according to Barclay (2011) from NPR online. According to the article by
Barclay, “Here comes the food trend lists,” 59% of the customers surveyed in a recent National
Restaurant Association survey stated that they would likely visit a food truck.
Likewise, Barker (2011) from USA Today also supports the hypothesis that food trucks
will likely continue to be a hot trend in 2012. Upscale, trendy food trucks will be the ones to
survive, not “construction-site coffee wagons and roach coaches,” states Barker (para. 4).
Lempert (2011) of Supermarket news concurs with the trend of food trucks continuing strong.
Lempert explains that food trucks are a solid business, not just because of convenience, but
because they provide a sense of community. With more than 30% of the U.S. workforce
consisting of independents, Lempert explains that they are looking for a “shared food
experience” and do not want to eat alone. A food truck fills this void, as customers gather to eat
and talk in a casual and convenient setting. Social communities such as Yelp, Foursquare, and
GoWalla show that individuals are enjoying joining in on “groups.” Combine this with an
activity that everyone must partake in every day – eating – and you have a successful
combination. Lempert also presents that ethnic food trucks are a top trend for 2012. Additional
trends are also presented that will be incorporated into this business model. The trends include:
Rising food costs
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23. FOOD TRUCK BUSINESS PLAN 24
Baby boomers remaining as the largest food influencers and purchasers
Farm to fork awareness increasing with emphasis on a personal connection with
the farmer
Consumers are looking for products that contain less sugar (Lempert, 2011).
Furthermore, Barclay (2011) indicates another trend for 2012 is vegetable desserts, which is
incorporated into the food truck menu.
Starting a Food Truck Business
Tanyeri (2011) offers many tips on opening up a successful food truck business. The tips
include:
Do not go cheap on the truck or the equipment inside
Focus on one or two key menu items that differentiate the brand and do not get
too carried away with offering too many items
Ensure that the food meets the clientele, meaning it should be “tasty, simple,
filling, and affordable”
Do not rip-off another business’ idea
Make sure to play fair when choosing where to park the food truck as to not
tarnish the business name
Rely heavily on social media as a means to communicate to consumers (p. 29).
Conversely, Flandez (2009) suggests that new food truck business owners buy a used
truck rather than forking out a lot of capital on a new truck. This Wall Street Journal article does
not discuss the pros and cons of spending money on a new truck, as Tanyeri (2011) explains
when details are given that in the long run it is wiser to not be cheap on the main asset of the
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24. FOOD TRUCK BUSINESS PLAN 25
business: the truck. Tanyeri explains that the truck will be out operating in the elements, where a
flat tire, car accident, or a propane tank going down can happen at any time. Unlike a restaurant
that has other means of operating if one component breaks down, if the food truck breaks down
in any one way, it has to be closed for business part or all of that day. Flandez offers additional
advice for starting up a food truck business. Similar to Tanyeri, Flandez also advises that
location is key, expanding further to explain that some food truck owners even purchase a
parking lot so that they are guaranteed their “real estate” for operating the business. This way,
no one can “steal” your parking spot and customers always know where you are. Lastly, both
Flandez and Tanyeri explain that social media is an absolute must for any food truck operator.
Due to the fact that the business is mobile and can literally move anywhere, it is vital to keep
consumers updated frequently (on a daily basis, or more) on where they can find the truck.
Although the inception of the mobile food business in the U.S. began with cowboys, it
has been transformed over the last century. The food truck in the 21st
century is now a complex,
well-respected business model. All of the literature reviewed for this business plan supports the
background, design, and implementation of a solid food truck business plan.
Demographics & Psychographics of Customer Segments
Based on surveys of the 215 million adult population in the United States, the LOHAS
market is estimated at 41 million adults, or one out of four adults (LOHAS, 2010). The City and
County of Denver, not including surrounding suburban areas, has a population of 554,636. Of
this population, 24.5% are 19 years and younger, bringing the total adult population to 418,750
(Area Connect, LLC, 2012). Using the LOHAS statistics, this deduces the LOHAS population in
Denver to 104,687 adults.
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25. FOOD TRUCK BUSINESS PLAN 26
Denver is known as one of the “thinnest” cities in the United States. Although many
cities report that their adults have weight issues, less than 20% of adults in Denver are reported
as being overweight. Denver also has one of the highest populations of baby boomers in the
nation, only less than two cities: Anchorage, AK and Santa Fe, NM (Home to Denver, LLC,
2011). Both of these demographics show an affinity towards eating healthy. The median
income of the Denver population is $39,910 and the number of men is almost exactly equal to
the number of women (Home to Denver, LLC, 2011).
Food Truck Market Size & Location
The U.S. Census Bureau codes the industry statistics for mobile food services as NAICS
722330. The most recent census conducted on this industry was in 2007 (US Census Bureau,
2011).
According to the 2007 U.S. census, there were 1,930 mobile food service establishments
which generated $570,063,000. Of these establishments, the annual payroll was $113,654,000
for 6,706 paid employees, which yields an average of $16,948 per employee. Of the 1,930
mobile food service establishments, only 1,143 are operated for the entire year, generating
$121,922,000 of the $570M (US Census Bureau, 2011). See Figure 3 below for a pie chart of
the industry statistics on employee size.
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26. FOOD TRUCK BUSINESS PLAN 27
Figure 3: Industry Statistics on Employee Size (Author's Image)
Most establishments are run with a single employee, 42.1% to be exact, whereas 16.4%
operate with two employees, 15.2% with three to four employees, 7.8% operate with five to six
employees, and the trend continues to decrease as the number of employees goes up. These
percentages are based upon only the establishments that operate year round (US Census Bureau,
2011).
Current, Emerging, and Potential Competitors
There are approximately eighteen (18) competitors in the local Denver food truck market.
The majority of food trucks in the Denver are all very new to the marketplace, most being
established after the year 2009. Of these, only seven (7) are direct competitors of the Karma
Truck. The trucks that are considered indirect competitors are trucks that operate solely for
private events or that their concepts do not match that of the Karma Truck. The price average for
most food trucks ranges from $2 to $7, and some trucks menu items go as high as $9. The main
issue found with the majority of food trucks, regardless of their level of competition threat, is
Industry Statistics on Employee Size
One Employee
Two Employees
3-4 Employees
5-6 Emplyees
7-8 Employees
10-14 Employees
15-19 Employees
20-49 Employees
50-99 Employees
100+ Employees
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27. FOOD TRUCK BUSINESS PLAN 28
that it is difficult to track down where the food trucks are currently operating. Only some food
trucks have websites and Facebook pages, of which most are only occasionally kept up to date.
This is a major concern, yet an advantage for the Karma Truck, because even if the brand name
of the truck is well known, tracking down where to locate and buy their products is a challenge.
As a consumer, if the product cannot be located in a reasonable amount of time, they will go
elsewhere. Additionally, only some trucks have links to other pages, such as Yelp (see Appendix
C for specific details per truck).
The direct competitors of the Karma Truck include: Steubens, Biscuit Bus, Pince Tacos,
and Biker Jims, The Denver Cupcake Truck, and Pizza on the Platte Mobile. The concepts of
each of these food trucks is geared around comfort food. Surprisingly, the strongest competition
is the food trucks that have emerged most recently. Steubens and Biker Jims both entered the
marketplace in 2011 and have solid marketing and brand recognition. This is in part due to their
sister brick-and-mortar restaurants also located within the Denver metro area. This is also true
for the Biscuit Bus, which also has a restaurant under the same name. Even though the name
says “dessert”, the The Denver Cupcake Truck is a direct competitor because they also sell
sandwiched and salads, target working business people, and have well-organized marketing
strategies using their website, Facebook, Twitter, and other means.
The indirect competitors are: Gastro Cart, Brava Pizzeria della Strada, Sugar Lips Mini
Donuts, The Crepe Crusaders, and Walnut A-Go-Go. The Gastro Cart and Brava Pizzeria della
Strada are not mobile trucks, rather they are mobile food carts that move around the downtown
Denver area during the week. Sugar Lips Mini Donuts sells only donuts and although Walnut A-
Go-Go is listed on the Denver Food Trucks Website there were not any other reference as to
where the business can be found. From the name, The Crepe Crusaders, it would appear that
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y
t C
opp y
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yp
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N
o
tto
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D
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oto
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too
Do No
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C
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28. FOOD TRUCK BUSINESS PLAN 29
they are a direct competitor, as they also serve breakfast. This truck only does private events,
however, so this would not threaten the market of the Karma Truck.
There is one emerging competitors that the Karma Truck should be mindful of: Blue
Bear. This truck serves sustainable food that is also comfort food, such as locally-sourced bison
lamb-sliders, and chicken drumettes. They also have a lower price point than the Karma Truck,
with prices averaging $3 to $4.
Value Proposition
By offering healthy and sustainable food at a competitive price, the Karma Truck
provides the solution of convenience to consumers in the Denver area. The value proposition
also reaches beyond the consumer, providing sustainable solutions to many of the environmental
and social problems that are present on a local, national, and global level.
Value Proposition
The Karma Truck is a value-driven business that provides convenience, accessibility, and
consistently high quality sustainable food at a reasonable and competitive price. The Karma
Truck provides convenience and accessibility to the customer in two ways: by driving directly to
their place of work and by providing healthy meals prepared quickly that can be eaten with the
community surrounding the truck or taken with them back to their workplace or home. The food
truck will also provide food that is consistent in quality and price. Consumers can rely on the
Karma Truck to provide food that is affordable, fresh, high quality, trendy, delicious, and
sustainable.
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29. FOOD TRUCK BUSINESS PLAN 30
Figure 4: Value Proposition
Sustainability
The Karma Truck has the potential of having significant positive social and
environmental impacts in and around the Denver area. The Karma truck will help reduce
automobile emissions on the consumer end, by reducing how many consumers have to drive to
pick up their morning or afternoon meal. The Karma Truck, using a hybrid engine, will also use
fewer emissions to bring the product to the consumer.
Providing sustainable food options, sustainable disposable serviceware, eco-friendly
branded items, and composting will educate consumers and promote sustainable habits within
the Denver area.
Value
Convenience
Accessibility
Friendly
Sense of
Community
Resonable
Price
Quality Food
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30. FOOD TRUCK BUSINESS PLAN 31
Figure 5: Sustainable Value Proposition
Key Activities
This section will provide details of all key activities of the Karma Truck. Each key
activity has been strategically planned to meet the demands of consumers, sustainability
demands, demographics, and trends within the food market and food truck market. Furthermore,
the President has strategically planned activities to optimize on competitors’ weaknesses and to
be more attractive than the strengths of competitors.
Daily Management of Food Truck
The Karma Truck will operate for breakfast and lunch service every day but Sunday. The
truck will operate in rotating locations Monday through Saturday. The location for breakfast will
vary from the location for lunch every day to maximize the potential customers and sales for the
day. Each week will not be the same, as there are 35 different locations where the Karma Truck
Sustainability
Sustainable
Food
Hybrid Truck
Composting
Compostable
& Post-
Consumer
Serviceware
Eco-Friendly
Branded
Items
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31. FOOD TRUCK BUSINESS PLAN 32
can legally operate in Denver County. The daily and weekly schedule will be revised based on
sales and consumer demand.
It will take approximately three to six months for the President to determine and weigh
out the best operating locations for the truck. After this time, the Karma Truck will make a set
two-week schedule for customer ease and revenue maximization.
Sample Weekly Schedule.
Table 3: Sample Weekly Schedule
Day Breakfast Location Lunch Location
Monday Tamarac & I25 (SW 163) Yale & Colorado Blvd, University Hills
(SE 115)
Tuesday 18th
& Downing, adjacent to St.
Joseph’s Hospital (NE 002)
52nd
& Federal, adjacent to Regis
University (NW 046)
Wednesday Exposition & Colorado Blvd.,
Belcaro Shopping Center (SE 062)
Cherry Creek South & Colorado Blvd,
Cherry Creek Shopping Center (SE 049)
Thursday 1st
& Lowry, East Lowry (SE 032) Mississippi & Havana (SE 199)
Friday University & I25, adjacent to
Denver University (SE 086)
Broadway & Alameda (SW 029)
Saturday Colfax & I25, East (SW 004) 26th
& Zuni, South Highlands and adjacent
to Mile High Stadium (NW 011)
The Karma Truck will maximize customers and sales by strategically choosing parking
locations that pair with popular Denver events, such as the Taste of Colorado, concerts, Bronco’s
games at Mile High Stadium, Rockies’ games at Coors Field, and so forth. The Karma Truck
will also work private events, upon request.
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32. FOOD TRUCK BUSINESS PLAN 33
A kitchen will be rented for the majority of the food preparation (prep). The remainder
of the food prep will be done on the truck during operating hours. Breakfast operating hours are
from 8am-10am and lunch from 12pm-2pm.
Immediately following lunch service, clean-up will be conducted and the truck will be
refilled with gas. After the truck has been parked for the night, administrative items will be
taken care of, this includes: food purchasing by the chef and marketing duties and supplies
purchasing by the manager.
Figure 6: Karma Truck Daily Activity Breakdown
Delivery of Products & Services
The Food Truck Guide by the City & County of Denver (2011) provides specific rules
and regulations to operating a food truck in Denver. Within City and County limits of Denver, a
food truck can be parked a) on the street, b) on private property, c) in a public park, or d) as part
of a large public event. A business license is required for each of these areas and a zoning permit
is required if operating at any location more than 30 minutes. Furthermore, the truck may only
5am-
7am
• Food
Prep/
Travel to
Location
8am-
10am
• Breakfast
Service
10am-
11am
• Food
Prep/
Travel to
location
12pm -
2pm
• Lunch
Service
2pm-
3pm
•Clean
Up/Drive to
Overnight
Park
3pm-
4pm
• Admin/
Marketing
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33. FOOD TRUCK BUSINESS PLAN 34
be parked in approved zoning areas. If operating for less than 30 minutes a zoning permit is not
required and the truck can be parked in any area, regardless of zoning.
The approved zoning areas for Denver include: all downtown areas except “Golden
Triangle, Arapahoe Square and Civic Zone Districts (D-GT, D-AS, D-CV)”, and other locations
throughout the city in zones “S-CC, S-MX, E-RX, E-CC, E-MX, and C-MX, industrial, and OS-
B” (City & County of Denver, 2011, p.3). Zoning areas do not include residential areas. The
complete list of approved zoning sections where the Karma Truck will operate are:
A. 18th
& Sherman, Uptown (NE 001)
B. 18th
& Downing, adjacent to St. Joseph’s Hospital (NE 002)
C. 17th
& York, adjacent to City Park (NE 003)
D. 26th
& Welton, Five Points (NE 024)
E. 26th
& Zuni, South Highlands and adjacent to Mile High Stadium (NW 011)
F. Interstate I-25 (I25) & 32nd
, East Highlands (NW 017)
G. 29th
& Speer, West Highlands (NW 018)
H. Pecos & 52nd
(NW 045)
I. 52nd
& Federal, adjacent to Regis University (NW 046)
J. Colfax & Monaco (SE 008)
K. 8th
& Monaco (SE 015)
L. 6th
& Broadway (SE 023)
M. 1st
& Lowry, East Lowry (SE 032)
N. 6th
& Yosemite, West Lowry (SW 033)
O. Cherry Creek North & Colorado Blvd, Cherry Creek Shopping Center (SE
040)
P. Cherry Creek South & Colorado Blvd, Cherry Creek Shopping Center (SE
049)
Q. Leetsdale & Monaco (SE 058)
R. Leetsdale & Quebec (SE 058)
S. Exposition & Colorado Blvd., Belcaro Shopping Center (SE 062)
T. University & I25, adjacent to Denver University (SE 086)
U. Colorado & I25 (SE 094)
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34. FOOD TRUCK BUSINESS PLAN 35
V. Evans & Monaco (SE 097)
W. Yale & I25 (SE 104)
X. Yale & Colorado Blvd, University Hills (SE 115)
Y. Hampden & Monaco (SE 122)
Z. Hampden & I25 (SE 124)
AA. Hampden & Happy Canyon (SE 124)
BB. Tamarac & I25 (SW 163)
CC. Alameda & Havana (SE 190)
DD. Mississippi & Havana (SE 199)
EE. Colfax & I25, East (SW 004)
FF. Colfax & I25, West (SW 005)
GG. 10th
& Osage (SW 013)
HH. Broadway & Alameda (SW 029)
II. Morrison Road between Sheridan & Federal (SW 036)
The complete zoning map for each of these areas can be found in the attached appendices. The
folder labeled “Appendices: Zoning Maps” contains the relevant PDF files.
Furthermore, city and county regulations state that the food truck may operate for a
maximum of four consecutive hours in one location, and only between the hours of 8am and
9pm. In addition, only one mobile food operation may be in one zoning area at a time and it
must be at least 200 feet away from any other food or drinking establishment, which includes
other food trucks (City & County of Denver, 2011).
Products & Services Offered
The Karma Truck will provide fresh, high quality, sustainably produced and sourced
produce and meat products. The Karma Truck will make every effort to limit any food that was
produced using Genetically Modified Organisms (GMOs). Eating food that contains absolutely
zero GMOs is no easy task, as shown by the popular blog A Month without Monsanto, where
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35. FOOD TRUCK BUSINESS PLAN 36
author April Davila tracked her daily life by eating no food containing GMOs and using no
products using GMOs (Davila, 2010).
Produce will be sourced from all local Colorado farms. Additionally, the menu will be
geared around the seasonality of local produce (see Appendix D for the Colorado Crop
Calendar). Meat will be limited on the menu. Any meat that on the menu will be locally
produced, humanely raised, and ensured that the animals are not fed any artificial hormones or
antibiotics.
Menu
There will be two tiers of menu pricing: “Green” and “Greener”. “Greener” items will be
less expensive as they have a lower carbon footprint than menu items on the “green” menu. As
shown by Appendix E, for breakfast, the price of menu items under the green menu will be $6.00
and menu items that are greener will be priced at $4.00. The greener menu for lunch will be
$7.00 and the green menu will be two dollars more at $9.00 (see Appendix F). While customers
are inherently programmed to make many of their food purchasing decisions due to price,
through the Karma Truck’s menu offerings, the consumer is given a price incentive to eat
“greener.” Reference Appendices E and F for sample breakfast and lunch menus.
Branded items.
The Karma truck will sell eco-branded products, as part of the marketing strategy and to
increase awareness of sustainability. The eco-branded products include: reusable canvas bags,
stainless steel reusable water bottles, and t-shirts. Factory Direct Promos will provide these
products; the company is Global Organic Textile Standard (GOTS), Fair Trade, and ISO 9001
certified (Factory Direct Promos, 2012; International Working Group on Global Organic Textile
Standard, 2010). Purchasing price details and estimated usage for the branded items can be
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36. FOOD TRUCK BUSINESS PLAN 37
found in Appendix G, Table A2-A7. The Karma Truck logo will be fixed on each of the items
shown below.
Bamboo
Biodegradable
Bags
25 oz.
Stainless Steel
Bottle with
Carabineer
Eco Shirts
Figure 7: Branded Marketing Items
Composting services.
To support, encourage, and teach more sustainable habits, composting services will be
available at the Karma Truck. The services are not only for the customer to dispose of food
waste and other compostable materials, but also for the kitchen’s use and reducing the overall
carbon footprint of the Karma Truck.
Mojo (2001) noted that approximately 26.9 million tons of food waste is sent to landfills
annually, according to the U.S. Environmental Protection Agency’s (EPA) 2003 Municipal Solid
Waste Characterization (p.291). Additionally, over 15 million tons of paper packaging and over
10 million tons of plastic packaging are sent to landfills each year (Mojo, 2001, p.291).
Through eight years of research and testing, the American Society for Testing and
Materials (ASTM) developed criteria and labeling standards for compostable products. The
criteria are as follows:
Disintegration: Materials must disintegrate rapidly under composting conditions,
so that they are not visible in the finished piles, nor do they wind up on the
screens.
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