Thursday, 7 January 2016

(Food) Truckin'

Reader Donald emails, on Wellington Food trucks:
Cafe owners in Mirimar are upset over the intrusion of food trucks on "their patch".

So, of course, they want their privilege entrenched.

Are the predators exploiting loopholes to steal livelihood from the cafe owners? Mostly no with a little bit of yes.

For a start food truck proprietors have to play by the same food safety rules as anyone else which means they pay the same fees to their local council as the cafe owners. They have to have the same equipment and fittings (depending on their products) and, in some cases, they actually have to have an unseen "home base" for food preparation and storage that is also registered etc. Some jurisdictions also require mobile operators to pay for an extra mobile traders licence on top of food premises registration. So the legal environment is identical for both groups.

The main overhead item that differs is rent. Of course you have to factor in that food truck operators buy their trucks outright. A truck that complies with food safety regulations and has the necessary equipment in it will still start at $50K and still require all the normal operating costs. But that is nothing compared to what cafe owners are paying in monthly leases. So we get back to the meta-problem: property prices. My experience of the industry (retailing at a market and supplying cafes) suggests that high lease costs force cafe owners into a business model that they would not necessarily choose. Generally they have to generate a lot of revenue just to pay to be the lease. This usually means 7 day operation which means lots of staff and all the hassles that involves. Even then there's not much profit to be made. Cafes tend to go for the safe options in terms of food offerings; they have to sit under the bell curve to ensure the revenue to pay the lease etc.

So although some food trucks will just serve coffee and sandwiches others can afford to try something specialised and drive to the pockets of the market that prefer Peruvian deep-fried guinea-pig to a ham sandwich. And the truck operators can make a living without working 7 days a week or having the hassle of employing staff.

The $1,000 permit for outdoor seating is the interesting statement. This "permit" will be one or more of three things. It may be a "licence to occupy" which is between the business and the Roading department of the council for occupying part of their street. More likely it is a resource consent (issued by Planning) for undertaking an activity in a public space. What really complicates matters is if the cafes have a liquor licence (issued by Environmental Services) as well in which case the confusalator is turned up to 11. Food trucks will never, ever get a liquor licence so that is out of the equation but many (most?) cafes do. And what is not clear from this story is where the trucks are parking and setting up their tables. If it is a private parking area then the permit/consent may be moot anyway.

Actually, operating a food truck is not a great job. Remember this is Wellington we are talking about: the weather can be atrocious and custom fickle. But they survive because they can deliver some things to their customers that static cafes generally can't. But if the regulatory environment and cost structures were more friendly to cafes food trucks might quietly disappear.
If the food trucks really are eating standing restaurants' lunches, rents in truck-friendly locales should be dropping relative to spots that aren't convenient for food trucks. Do we have any evidence on it? Do restaurants ultimately bear the incidence here, or owners of land in truck-convenient locations?

The RNZ story is here. Neat Places' listing of some Wellington food trucks is here. Here's the story of one of them. Here's the story of another.

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