Do Food Trucks Threaten Brick and Mortar Restaurants?

Over the last 10+ years, and especially since the outbreak of Covid-19 and required outdoor dining, the pop-up restaurant phenomenon known as “food trucks” have provided Americans a new and unique alternative to traditional brick and mortar restaurants. Offering a diverse range of gourmet cuisines at convenient outdoor locations such as urban lots and beer gardens, food trucks are enormously popular and are only becoming more so. In 2021, there were 32,456 food trucks operating in the United States employing some 38,000 people. With an annual growth rate of 3.4%, the industry collected $1.2 billion in revenue by the end of 2022.

However, not everyone is a fan. Many established restaurant industry players view food trucks as a competitive threat that are not subject to the same financial and regulatory burdens that they are. As evidence of this, they point to high startup fees and operational costs associated with running a brick and mortar restaurant. In many cases, they have effectively lobbied cities and localities to create or maintain restrictive parking and zoning ordinances, that in practice severely limit food truck operations. The major losers of these regulations are American entrepreneurs who face barriers to entry, and consumers who now have less options to choose from.

Now a new study by the Institute for Justice (IJ) called “Food Truck Truth” sets the record straight. The study analyzed 12 years of county-level census data to determine whether an increase in the number of food trucks corresponded with a decline in the number of brick and mortar restaurants. What researchers found was that not only was there no associated decline in the number of traditional restaurants, but an increase in the number of food trucks was strongly correlated with restaurant growth. Across the period of study, from 2005 to 2016, the “average county had 145 restaurants and just one food truck.” Yet, both sectors grew substantially during this time. For instance, the number of restaurants per county grew from an average of 133 to 157 while the number of food trucks grew from less than .73 per county to 1.7 by 2016.

Researchers also found evidence that the number of food trucks in one year had “no statistically significant” negative relationship to the number of restaurants in the next. In other words, the presence of food trucks did not harm the restaurant industry. In fact, the data suggests the opposite is true. Researchers did find a “positive” relationship between the two industries, suggesting it is possible for them to both coexist.

The study throws cold water on the idea that the rise of food trucks is detrimental to brick and mortar businesses. Instead it presents a strong case for why cities and localities should do away with protectionist policies that distort market signals and limit consumer choice. Such policies are inherently anti-competitive and discriminate against otherwise perfectly legitimate businesses.

Brick and mortar businesses have nothing to fear from healthy competition and should welcome the opportunity to expand current offerings and provide new services such as outdoor dining options and streateries. Likewise, cities and local governments should consider the possible benefits that come from the rise of the food truck industry. In addition to a potential new source of tax revenue and job creation, food trucks can serve as a major draw of people to urban areas, much in the same way that businesses like microbreweries do. Food trucks are increasing associated with the culture of several major cities like Austin and Portland, and can contribute to the overall growth of public tourism. This study makes it clear that everyone has the potential to benefit from food trucks. Government leaders should move quickly to lift all unnecessary restrictions on food trucks and let the market decide how best to meet consumer needs.

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