Author: Sam J. Shaner.
Last night, on my walk home from a party, I found myself standing in line on the side of a food-truck with several of my fellow “intoxicated” students. I got to the front of the line and in seconds had a delicious, filling sandwich that cost barely any money. I walked away from the truck, as always, with a big smile on my face and a full stomach.
It’s not unusual for people to get hungry after consuming a “large amount” of alcohol. Knowing this common information, a restaurant called Famous Franks, also known by Purdue University students as “Fat Franks”, has successfully targeted this market and filled a major niche. This is obviously not any ordinary restaurant. It operates out of a truck and only is available on Thursdays, Fridays, and Saturdays late at night (around 10pm till 4 am). Many people may question this strategy and feel that such a business could never be successful, but Famous Franks’ plan is actually very smart.
They are targeting college students who are hungry and intoxicated and this situation most commonly occurs on Thursday, Friday, and Saturday nights. Therefore, there is no reason for them to waste money on the overhead of being in operation from Sunday to Wednesday. Since they are only open three days a week, there is also really no reason for them to have a brick and mortar location either. With this being said, they are able to greatly reduce their expenses by serving their customers out of a truck, rather than leasing an expensive building. Also, Fat Franks parks right outside of the bars on Chauncey Hill (popular area with a bunch of bars at Purdue University). This gives the restaurant direct contact with their target market and allows for Fat Franks to receive as much business as humanly possible.
Besides money for gas and the ingredients for their food, Fat Franks has very few other expenses to account for. It is not only the strategy of the restaurant that is different, but the menu items are also incredibly unique. Since Fat Franks is targeting drunk, hungry college students, they sell “drunk food.” For example, whenever I eat at Fat Franks, I always order “The Texan”, which is roast beef, bacon, mozzarella sticks, French fries, and BBQ sauce all on a large hot dog bun. This may sound gross, however the combination of the foods together is delicious and incredibly filling (especially if you are under the influence). Fat Franks also offers this food at very low prices. Most of the menu items are under $7, making everything very affordable for college students.
By taking into account their location, operating hours, menu items, and prices, Fat Franks is able to obtain maximum profits with minimum expenses. They are able to limit their expenses by being open only on the weekends and operating out of a truck, while they receive tons of profits through unique, cheap menu items and a great location. Well, Franks is definitely not alone in capturing this consumer market segment. Food-trucks are mushrooming all over the country. Even though it is not a new idea, such trucks have been selling cheap food for years. But, what is changing is how these trucks are innovating, providing a variety of food, focusing on quality and getting technology savvy (see attached list). Many of these trucks are using twitter to inform their followers of their location. They are also using facebook and location based apps to reach their customers. Here is a list of 25 popular food trucks from around the country (Reference: NYMag.com). They exemplify good food at a very reasonable price.
Besides, giving competition to fast food chains like Taco Bell and McDonalds, they are also making a dent to the mainstream restaurant business. In todays financially strapped economy, middle-class consumer is becoming highly sensitive to how they spend their money. The rich continue to go for fine-dinning and the poor flock McDonald like eating location. But the vast majority of the population (middle-class) has to choose between a $10-20+ restaurants vs. other cheaper options. In such situation, food-trucks make perfect sense – they are cheap, convenient and good. Above all, with technology, its easy to spread the word, gain credibility and create a ‘cool’ buzz around something like a Food-truck.
To conclude, if you are planning on setting up a restaurant, starting a food-truck or have other innovative concept, you might want to consider the following ground rules and methods to determine the location/strategy (source: About.com). All these strategy are equally important for any type of restaurant:
Population Base – Are there enough people in the area to support your business? For example, is the restaurant location in the heart of a thriving downtown shopping district, or along a busy freeway? There needs to be enough people who live in the area, or pass through the area on a regular basis to keep you busy. To determine the population base of a particular area, you can do a site study. However, these can cost up to $25,000. Most people looking at their first restaurant don’t have enough money in their budget for a professional survey. A less expensive method to determine the population base of certain area is asking the local chamber of commerce and town office for more information.
Parking – While parking might not be an issue for a food-truck, it can be a big factor for other restaurant. Having enough parking space to accommodate all the seats in the restaurant is critical. Ideally, a new restaurant location should have its own parking lot. If that isn’t an option, is there public parking near the restaurant location. In case of a food-truck, they just need to ensure enough space for people stand, while waiting for their turn.
Accessibility – There’s a reason that major restaurant chains are often located near highway and freeway exits: It makes them accessible for customers. Motorists can reach the restaurant without fighting traffic or driving out of their way. Most successful restaurant locations (but not all) are easy to find. In case of a food-truck, it is critical to find the perfect spot to operate out of. They need to ensure they are close to major businesses or high traffic area.
Visibility – This goes along with accessibility and is very important for new restaurant locations. People have to know the restaurant is there. This is why property prices in downtown districts and developed strips are higher than other areas. They offer a level of visibility that can bring in a great deal of walk-in business. For a food-truck, they might want to drive around to gain visibility; after all they are mobile restaurants. But, their business is directly proportionate to how visible they are.
So, before you open a new food joint, please consider whom you are targeting and what’s the best way to reach them.
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