You may not realize it but knowing the value of your entire food truck business is extremely important including whatever appliances, equipment and utensils you own as part of the business. If you’re looking to sell your mobile kitchen, learn how to value your property correctly in order to get the best price ever. How? Look for sellers online that are selling the same brand you have so you can compare prices. Both age and condition of your equipment affect their present market value.

Likewise, your net income, assets and liabilities are other vital determinants of the value of your mobile business. Besides revenues, there are still more factors to consider. Therefore, you need to hire a financial analyst so as to come up with a fair market value of your possessions.

This business evaluation from a professional can result in a highly realistic valuation and you can be assured that there’s going to be “no-strings-attached” involved. In other words, if you were left to do the task on your own, you might not be fair or neutral since it will be emotionally hard on your part to do the valuation yourself.

Valuing your Food Truck: 3 Factors to consider

To ascertain the holistic valuation of your unit, the following are the questions most likely to be asked by your financial professional:

• For how much did you purchase your food truck?
• How much did you spend for the upgrade or renovation on it?
• What is the depreciated value of your business or its amortization cost?

Speaking of amortization, it refers to the series of amounts you pay back in order to reduce your loan principal. In essence, your series of loan payments can help you compute the depreciated value of your food truck.

Depreciation is computed for fixed assets so that you can spread out the cost incurred and include the utilization of those assets into its existing market price. In this case, your fixed assets include your vehicle, all your equipment and furniture, if any.

A simple calculation would be:

$100,000 – cost of food truck upon purchase

10 years – approximate intended use

Solution: $100,000 divided by 10 = $10,000 per year

$10,000 x 5 years = $50,000

This means that after 5 years of use, your business is now roughly valued at $50,000. Why 5 years? This is because the industry standards for depreciation of trucks with an average weight of about 6,000 kgs or 13,000 pounds, is between 5 and 7 years.

Depreciation Rate on a Truck

What does it mean when you say truck depreciation? Well, it means a devaluation or the organic decrease in its value over time, taking into account the general wear and tear incurred in between. According to a study in 2018, pickup trucks were found to have the lowest depreciation rates of all vehicle divisions. Its 5-year depreciation is pegged at 41.3% while other classes of vehicles and passenger cars are at 51.9% and SUVs are at 54.1%. Such figures are considered higher depreciation rates.

Truck depreciation is calculated to be from 15% to 25% per year for the first 5 years as a general rule. At the close of 5 years, your vehicle will just be valued at nearly one-third of the amount you have spent on it.

How about semi trucks – do you think they have value? Of course, they do. As a rule of thumb, semi trucks generally lose most of their value after the first 5 years but in reality, these types of vehicles hold value well in comparison with other classes of vehicles.

Valuation on your Equipment

As we said earlier, all things related to your food truck business are greatly valuable. So, if we already know how to compute the value of the truck itself, it’s equally important to do a valuation on the equipment inside your kitchen-on-the-go. These are the questions to ask yourself in order to come up with some estimated figures:

• How much did you spend on the equipment?
• How much did you spend on repairs or upgrades on the equipment?

Just like how we did the food truck valuation, now let’s amortize the cost of those equipment.

$10,000 – equipment cost 

10 years – approximate intended use

Solution: $10,000 divided by 10 = $1,000 per year

$1,000 x 5 years = $5,000

This example shows that if you have been using those things for 5 years, their value shall have become $5,000. For the food preparation and serving equipment, the industry standard according to business insiders is 12 years. This means to say that business owners upgrade their equipment every 6 to 8 years based on what the National Restaurant Association in America has observed.

Depreciation Rates of Equipment Per Year

Different types of equipment vary in their annual depreciation rates. If the food preparation and serving equipment has a life expectancy of 12 years, light trucks weighing below 13,000 pounds have only 4 years while that of heavy trucks and trailers with a weight beyond 13,000 pounds have 6 years. Light and heavy trucks fall under the category of automotive equipment.

Now that you’re learning about how food trucks and equipment depreciate, you might be interested in opening up a mobile business. Know where to find reliable used food trucks for sale. Visit UsedVending for the widest selection in the US and North America.