ISE11/14-15

• In the 2015-2016 Budget Speech, the Financial Secretary unveiled his idea to introduce food trucks in Hong Kong, with the aim of adding food diversity to the city. Food trucks have a long presence in the United States ("US"). In large cities like Los Angeles, New York, and San Francisco, it is estimated that there are over a hundred food trucks in operation. Other places like Australia and Singapore are also keen on the food truck initiative.
• Introducing food trucks to Hong Kong is perceived to bring various benefits. Apart from offering people more dining choices, it may also serve as a gateway for entrepreneurship, provide job opportunity, and help enliven the community environment. This issue of Essentials gives a brief account of the development of the food truck market in the US, Australia and Singapore.

The food truck market in the United States

• Food truck eateries have long been a common sight in the US. In recent years, the gourmet food truck market has grown in popularity. According to an industry research, sales revenue in the food truck market has grown at an annual rate of 9.3% over the past five years. The rise was considered attributable to the changing consumer preference towards unique and affordable gourmet cuisine during downturn years. Its relative lower start-up cost was also a motivating factor. According to a food truck survey, a food truck business generally requires about US$55,000 to US$75,000 (HK$426,800 to HK$582,000) in start-up cost, compared to the average of US$250,000 to US$500,000 (HK$1.94 million to HK$3.88 million) for a "brick-and-mortar" food business. Running a food truck business is therefore an easier way for people, especially the youth, to try out new ideas.
• In the US, regulations governing food trucks differ between cities. In addition to food and public safety requirements, food trucks are subject to varying degrees of vending restrictions. For instance, in San Francisco, food vending cannot take place in any residential district, whereas in the city of New York, vending is banned in certain commercial areas and streets. Some cities, e.g. Chicago and San Francisco, have even put an outright ban within certain distance of a "brick-and-mortar" restaurant to avoid direct competition. Such rules, however, have been criticized for depriving food trucks of the opportunity to flourish.
• There are advocates that food truck operators should be given the freedom in choosing the operation location and time, which is conducive to the building of a customer base and thereby more successful business. Los Angeles' approach to regulating food trucks is considered more favourable to the food truck operators. The city imposes neither restrictions on the operation time nor anti-competitive rules. Hence, some trucks may serve breakfast only while some others may operate only at nights. The operational freedom and flexibility enjoyed by the food truck operators help explain the strong market presence of food trucks in the city.

Food truck programme in Sydney, Australia

• In Australia, cities like Adelaide, Melbourne and Sydney are keen on promoting food trucks to enrich the city life. Specifically, the City of Sydney has launched a food truck programme as part of its strategy for its blueprint, Sustainable Sydney 2030, with the aim of providing high quality and affordable take-away food options in the city centre. The programme began with a trial run during 2012 to 2014. A trial evaluation was conducted, with a view to measuring the public response to the initiative and determining whether there was a new market for food trucks.
• The local government received a total of 32 applications for the food truck trial. There were two stages of assessment and the applicants were evaluated based on a set of criteria including business capability, food safety compliance, food concept and environmental sustainability. Nine food truck operators were finally selected to participate in the trial, with each offering a different cuisine, e.g. organic food, vegetarian dish and Asian fusion. To promote the new initiative, the local government has specifically developed a smartphone application – Sydney Food Trucks – to allow customers to check real-time information on truck locations, operating hours and menus on their mobile devices.
• According to the trial evaluation, the start-up cost of the food trucks ranged from A$78,000 to A$150,000 (HK$468,000 to HK$900,000). Food truck operators were allowed to trade on government-owned roads and in designated off-street zones (e.g. parks and squares). Based on the feedback, food truck operators preferred off-street vending to on-street vending because the former provided guaranteed parking which made them more convenient to operate. During the trial period, each food truck received an average of 1 700 customers every month. As customers were largely supportive of the initiative, the programme is now running on a permanent basis with 20 food trucks currently operating in the city. A food truck design panel has been set up by the local government to review the food truck concept designs of new applicants.

The case of Singapore

• The concept of eating on wheels is not new to Singapore. The first trial scheme could be dated back to 2003. At that time, over 30 permits were issued by the Urban Redevelopment Authority to allow mobile food and beverage trucks to operate in five car parks, selling cooked and packed food such as sandwiches, spring rolls, and dim sum during designated morning peak hours. Yet according to news reports, a majority of the operators have withdrawn from the business over the years due to the high cost involved in operating a food trucks and in complying with the stringent rules governing food trucks.
• In Singapore, running a mobile food vending business is subject to a set of operational requirements. For instance, every food truck must have a central back-up kitchen to supply food and drinks to the truck. Similar to other food establishments, all food handlers working in a food truck must attend and pass a hygiene course. Besides, operators cannot set up tables and chairs to allow customers to dine on site. Compared with a traditional food establishment, starting a mobile food business is not getting any easier, as operators need to seek separate approval from the relevant authorities (e.g. National Parks Board) for site rental, after obtaining a Food Wagon licence from the National Environment Agency.
• The lack of a single government agency to coordinate food truck applications and the high compliance cost with the relevant regulations are considered barriers to developing a food truck business in Singapore. Nevertheless, using food trucks to enliven the public space remains an initiative of the Singaporean government. The Singaporean government has since 2014 allowed food trucks to operate along the waterfront promenade at the Marina Bay, one of the landmarks in Singapore, to provide visitors with more dining options. Individuals or companies may apply to operate food trucks on a per-day basis or for a term up to 12 months, at a rate of S$53.5 (HK$300) per day and S$267.5 (HK$1,500) per month respectively.

Observations

• Each place under study has different rules governing food truck operations based on the local circumstances. Nevertheless, providing convenience, operational flexibility and freedom, as the case of Los Angeles, tend to increase the desire and motivation of food truck operators, and hence explaining the thriving of the market in the city. In contrast, more stringent entry barriers or operational rules will likely give rise to a smaller-scale market. As the case of Singapore, food trucks are not seen as a popular dining choice.
• The City of Sydney has developed a comprehensive plan towards the promotion of food trucks. In assessing food truck applications, an array of attributes from food truck design, cuisines, to environmental sustainability were evaluated. It also conducted a survey to gauge views of food truck operators and customers during the trial, and made use of technology to promote the initiative by developing a dedicated mobile application. The result of the initiative is rather encouraging, with the number of food trucks rising from nine to 20 within several years.

Prepared by Tiffany NG
Research Office
Information Services Division
Legislative Council Secretariat
28 April 2015