Cities Easing Up on Food Truck Regulations Shouldn't Be Off the Table

Eating food is not simply an act that is done for survival's sake. What we have seen even in the past few years is an increase of demand in gastronomy. This greater demand in gastronomy is pronounced in the food truck market. Food trucks are large vehicles with the capability of cooking and selling food. Food trucks have a few bits of allure. The trucks can move to the place where customers are located. They tend to offer more exotic food and do so at a cheaper cost than a restaurant since they do not have the same upkeep costs. Food trucks have also been found to be a safer option than restaurants because the trucks' kitchens are easier to manage due to their smaller size (Erickson, 2014). Being the mobile version of a restaurant, food trucks provide considerable competition in the foodservice market. From 2011 to 2016, food truck demand increased at a comprehensive annual growth rate (CAGR) of over 7 percent. While the food truck market is outpacing the rest of the foodservice market, food truck demand growth will be restricted by regulatory hurdles.

This trend is not only mentioned in a market report from global business intelligence leader IBISWorld, but also from a Chamber of Commerce report released in late March. The report also touches upon three main types of regulations that food truck owners face: permits and licensing to operate the truck, the day-to-day compliance, and annual compliance rules.

Unfortunately, occupational licensing is not unique to the food truck regulations. As I have pointed out in the past, occupational licensing creates a barrier to market entry, restricts employment, increases prices, creates social immobility, and is disproportionately burdensome for lower-income individuals. As for the compliance costs, the Chamber of Commerce found that food truck owners have to deal with 45 separate regulatory procedures over the span of 37 days, all of which costs an average of $28,276 a year. A Forbes article suggests that these regulations are limiting market entry as a result.

The regulations against food trucks are nothing more than a form of protectionism because well-connected restaurant owners don't want to deal with the competition of food truck owners, many of whom are small business owners. Much like Uber, food trucks are a disruptive innovation that offer lower startup costs and provide greater flexibility by going where the demand is highest. Food trucks are hardly the only business that are affected by zoning or occupational licensing or onerous regulations. Even so, they provide a great service to the American people at a lower cost. It's a win for those who want to start their own business or enter the food business, as well as a win for those who want comparable food at a lower cost than a brick and mortar restaurant. Since food trucks are regulated on the local level, each jurisdiction is going to have its unique challenges. This is not to say that there should be zero regulations because that would be impractical (see National League Studies here to see how to approach food truck regulations). At the same time, the Chamber of Commerce shows how that regardless of the city, food trucks could use less regulations so society as a whole can improve.