Through the years, the popularity of food trucks exploded from coast to coast, with many trucks serving high-end fast food to taste savvy consumers.
Customers are able to access Twitter and Facebook to track their favorite catering trucks’ daily location as well as specials. Catering companies like Kogi BBQ combined the use of Twitter as a real time marketing and promotional tool and Internet based bulletin to “Tweet” customers with the latest menu items and truck locations.
But Adam Davidson with the New York Times claims the street-vendor market in the city of New York is a failing business model.
Davidson blames the demise of food trucks on New York’s numerous and conflicting regulations mandated by the departments of Health, Sanitation, Transportation and Consumer Affairs.
According to City Councilman Dan Garodnick, it’s nearly impossible (even if you fill out the right paperwork) to operate a truck without breaking some law. Trucks can’t sell food if they’re parked in a metered space, or if they’re within 200 feet of a school, or within 500 feet of a public market.
And Davidson points out enforcement is highly erratic. Trucks in Chelsea are rarely bothered, but in Midtown South, where there’s a need for more lunch options, the N.Y.P.D. has a dedicated team of vendor-busting cops.
“One month, we get no tickets,” said Thomas DeGeest, the founder of Wafels & Dinges, a popular mobile-food businesses that sells waffles and things. “The next month, we get tickets every day.”
Davidson claims DeGeest had two trucks and five carts when he decided he couldn’t keep investing in a business that was so vulnerable to overzealous cops or city bureaucracy. “Instead, DeGeest reluctantly decided to open a regular old stationary restaurant.”
Davidson concludes that the food-truck business in New York is a classic case of bureaucratic inertia, and says many of the rules governing location were written decades ago. In the ’80s, the city capped the number of carts and trucks at 3,000 (plus 1,000 more from April to October).
A permit for a food cart or truck is not transferable, but Andrew Rigie, executive director of the N.Y.C. Hospitality Alliance, said that vendors regularly pay permit holders something like $15,000 to $20,000 to lease their certificates for two years. “Legally, the permit holder becomes a junior partner in the new business.”
Davidson explains that the biggest winner in NYC’s current system is an obscure type of business known as an authorized commissary. By city law, every food cart and truck must visit a licensed commissary each day, where a set of mandated cleaning services can be performed.
These commissaries also sell and rent carts and sell vendors food, soda, ice cream and propane. Many commissary owners make extra money by acting as brokers, facilitating the trade of permits, which is a $15 million-a-year business. These commissaries have essentially formed an oligopoly.
As a result, Davidson notes they have little incentive to compete aggressively by offering different kinds of food. “No wonder we have an oversupply of hot dogs and knishes and nowhere near enough waffles and falafels.”
Davidson comments that a small group of New Yorkers — owners of commissaries and physical restaurants — are highly motivated to lobby politicians not to change things.
Davidson mentions that in Portland, Oregon, the city has made the procedure for starting a business remarkably easy. He found this Web site listing the carts and trucks operating there.