The Manhattan Institute’s Economics21 recently moved offices, and, among other perks, the new location puts us close to one of the designated food truck areas in Washington D.C.
The bevy of options brings some welcome variety to the lunch hour, but food trucks could be even more numerous. A recent study found the District of Columbia fared second-worst out of 20 major cities when it comes to food truck regulations. Cities across the country should make it easier for entrepreneurs to start and operate food trucks, giving residents more tasty options and supporting the local economy.
At first glance, it might seem that food trucks would be able to navigate the regulatory process easily. They only have to get a permit, pass inspections, go to an area of town food trucks are allowed to operate, and get to work. However, as the recent report from the Chamber of Commerce reveals, food truck owners have to steer through a complicated labyrinth of requirements before they can serve a single Banh Mi sandwich or Korean BBQ taco. Across the 20 major cities analyzed, the average food truck requires 45 separate regulatory procedures spanning 37 business days over the course of the year. In addition, operators are required to spend an average of $28,276 on associated fees.
The index ranked cities on three categories that span the regulatory process: obtaining permits and licenses required to start a food truck, complying with restrictions regarding day to day business, and annual compliance rules regarding the operation of the food truck.
The three worst-performing cities are not surprising: San Francisco, Boston, and Washington D.C. The onerous regulatory framework for food trucks is similar to these cities’ regulation of other businesses. However, the best performer is a surprise. Along with Denver and Orlando, cities that generally operate with a lighter regulatory touch, Portland tops the index.
Recognizing the opportunities for mobile food vendors, and the contributions they could make to the local economy and food scene, Portland officials fostered a permissive regulatory environment that was easy to navigate and had relatively low fees. The annual compliance cost for operating a food truck was $5,410 in Portland, and compliance only required seven procedures and trips. At the other end of the spectrum, related operating fees in Washington D.C. were $29,382, and 16 procedures required 32 trips. This variation encapsulates just one of the three categories, but shows the extent to which the surrounding environment can facilitate or impede the food truck industry.
Regulatory barriers might partly be motivated by concern from traditional brick and mortar restaurants that a new source of competition would literally eat into their market share. Although this is possible, The Economist noted in a report on food trucks last year that growth in food trucks was correlated with growth in other restaurants.
Seattle and the surrounding areas saw the number of restaurants increase 16 percent from 2010 to 2016 even as the number of food trucks more than tripled over the same period. Travis County, which includes Austin, saw the number of food trucks skyrocket 600 percent, the highest of any of the areas analyzed. Over this same period, the restaurant count grew by 18 percent.
Food trucks are a booming business across America. They offer lower startup costs, more flexibility to go to areas where demand is highest, and other advantages that could reduce barriers to entry to the food industry. However, those barriers depend to a large extent on the regulatory framework in place in cities, which vary significantly between cities. Cities should reduce these barriers to make it less onerous for people to start and operate a food truck. Doing so would generate more jobs, revenue, and give people more options.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on Twitter @CharlesHHughes.
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