Risk Assessment in the Food Truck Industry:
It is imperative in the food truck industry, and any industry for that matter, that risk assessment is an accurate part of the financial picture. Investors will thoroughly analyze risks when assessing value and Return on Investment (ROI) for financing decisions. I have analyzed many risks associated with my business, Miss Fryday's Mobile Food Vending, and offered solutions to off-set such risks.
Employment and
Labor: The Fair Labor Standards Act sets rules and
provides guidance to ensure that employers in the United States do not violate
the rights of their workers.
Food Safety: All food service establishments including food
trucks must follow local and federal food safety laws in order to minimize the
chances of food poisoning outbreaks. The trucks and their commercial kitchens
or commissaries are also regularly inspected by the health department to assure
Food Code compliance.
Insurance: There are many risks associated
with running a food truck. One way to manage operational risks is through
having liability, auto and workers compensation insurance.
Worker Safety: All food truck businesses
must provide a safe working environment to reduce the risk of employee injuries.
The Occupational Safety and Health Administration enforce laws and provide
recommendations for ensuring an injury-free
Wastes: It is Miss Frydays
responsibility to recycle and properly dispose of any waste; garbage, grease,
water and food. Each venue has clearly marked bins for each item of waste and
we will need to follow protocol to ensure that we are doing our part in
respecting our environment.
Miss Frydays business environment operates solely outside and each venue
presents a different environment. Our
business will be conducted out of our food trailer. The biggest environmental
risk which we have no control over is the weather. While we will be vending
only during the months of May through October, rain poses as our biggest
threat. Miss Frydays will provide seating with an awning in hopes of attracting
new customers.
Process Risks:
Our most important business processes will be marketing and customer
service. These are really important to our business as we will gain popularity
through word of mouth and social media. With a business like this, you may or
may not have repeat customers. In some cases, you may never see the same people
twice. Therefore, it is imperative to do it right each and every time. A happy
customer will spread the word about good service. The use of social media
allows customers to know where we will be vending next; this will help us build
a group of potential loyal customers.
The important factors that are required to help us successfully deliver
our products and service are hiring and training the right people. Our people
are what make us. They can either make or break our reputation. These processes
will be managed through direct owner involvement and evaluations. At least one
of the owners will be present at each event. If neither owner can be present we
have appointed a step in manger, Cindy Fowler, Nick’s mom, to take on that
role.
Information for Decision Making Risks:
Miss Frydays will need to keep accurate financial data, specific costs
and revenues per event, attendance at each event and note customer preferences.
We will keep our financial data up to date with the use of Quick Books and a
hired CPA. Financial data will be logged and analyzed monthly. After each event
Miles and Fowler will sit down and list the pros and cons of that event and
make process changes if needed. The potential hazards we may face if records
are not kept up to date are:
· Over-spending- ordering too
many supplies that may not be used. It is important to not have a lot of excess
supplies at the end of each event as we do not keep food- we order per event.
Tracking history will be useful in future projections.
· Pricing too low- it is
important that we keep an eye on revenues and costs as we are not in the
business to lose money. If our prices are too low we must look at them and
consider other options- (raising prices, finding new suppliers, or start using
generic brands).
· Getting into the right
venue- it is important that we track history from past events to help us decide
if some events need to be dropped from our route. We know that any event will
require us to vend at least 3 years to really know if it is worth keeping on our
route.
Potential hazards of not keeping good records and constantly analyzing
where we have been and where we are going could mean potential failure.
Strategies and Plans for Managing Major Risks
Our plan to manage major risks is to keep up to date records in Quick
Books and keep close communications with our CPA. Key risks can be avoided as
long as we gather data and make all necessary changes. We will continuously
look for ways to better our processes and act accordingly. It could mean looking
at new suppliers, changing our prices, or eliminating events that don’t
generate required revenue.
Other major risks are that of safety- for both the customer and the
employee. Miss Frydays will always provide a safe working environment; this
means keeping floors free of grease and other foods, having first aid kits on
hand, access to fire extinguishers, an up to date fire suppression system and
proper use of high voltage power cords. Customer safety is important as well-
we will keep our site free of litter and excess clutter, allowing hassle free
access to our trailer. We have insurance to protect both employees and
customers.
