NYC: The Rise & Stall of Food Trucks

Treats Truck owner Kim Ima says tougher new city rules make good parking spaces harder to find. Photo by Buck Ennis

By Lisa Fickenscher | Crain’s New York

Treats Truck owner Kim Ima says tougher new city rules make good parking spaces harder to find. Photo by Buck Ennis

The Urban Oasis Traveling Organic Café called it quits earlier this year. The owners, George and Elaine Karaisarides, are selling their “completely renovated” vehicle on Craigslist for $55,000. It was straining their relationship, the couple wrote on their blog, and a city clampdown on food trucks only compounded their pressures.

“There are plenty of people who are seriously questioning the viability of this business,” said David Weber, president of the 10-month-old New York City Food Truck Association and co-owner of Rickshaw Dumpling Bar, which owns four trucks and two restaurants.

The Karaisarides’ experience is just one measure of how hard the hip and nascent food truck industry has fallen this year. It’s partly a victim of its own success. Operators complain about too much competition from each other, and brick-and-mortar restaurants are crying foul—and calling the cops—when the trucks park on their doorsteps, siphoning customers.

But the most devastating blow to the industry has been what truck owners describe as onerous city regulations, in particular, a parking rule that prevents the trucks from doing business in most commercial districts.

Nowhere to go

The obscure parking rule has been on the books for decades, but earlier this year, a judge ruled that the regulation that bars vending from metered parking spaces applied to food trucks. Given that almost all parking on midtown Manhattan streets is metered these days, the ruling saw trucks lose their most lucrative spots, where they had built up a following of loyal customers practically overnight.

Since May, when the parking rule began to be enforced, the Food Truck Association has seen its members’ revenues drop by as much as 70%. Three truck operators have gone out of business, shrinking the association’s membership from 31 to 28 operators running 45 trucks. (Mr. Weber estimates that there are another 30 vehicles that are not part of the association, for a total of 70 or so trucks in the city.)

It’s an abrupt turnaround for a business that was busting at the seams just a year ago, with new, eager entrants like Derek Kay, who rolled out Eddie’s Pizza Truck in 2010.

“There was an explosion of new trucks at that time,” said Mr. Kay.

The first trucks, typically run by tenacious entrepreneurs—many who see them as a stepping-stone to brick-and-mortar restaurants—started cruising city streets around 2007. They quickly garnered attention and customers, spawning 250,000 Twitter followers and recognition in the 2011 Zagat Survey. Some of the most popular trucks were also among the early adopters, including Rickshaw Dumpling, Wafels & Dinges and Schnitzel & Things. The momentum seemed to be on the operators’ side as their reputation for being savvy and cool attracted even more trucks to the streets.

Today, the scrappy industry is fighting back. The association hired a lobbying firm, Capalino and Co., to ask city agencies and City Hall to address not only the parking issue but a host of other regulatory burdens, including new employee licenses that can take up to eight weeks to obtain.

“We are making a lot of progress in talking to every city agency that deals with this industry and to City Hall itself,” said Mark Thompson, senior vice president of Capalino.

Mr. Thompson said that Deputy Mayor of Operations Cas Holloway has been the most involved in these discussions and that a solution to the regulatory issues would be reached by the busy spring food truck season.

“We are working to better balance the needs of these vendors with other curbside uses,” said a Department of Transportation spokesman.

The Food Truck Association has proposed allowing food trucks to pay two times the muni rates that everyone else pays and to limit the trucks to one per block. Another idea involves creating a trial network of food truck parking spots throughout the city.

Separately, the association is in discussions with real estate owners to create lots where a group of trucks can park, similar to the one Rockrose Development opened in Long Island City, Queens, in August.

While they wait, most truck owners are still doing business in metered parking spaces, but they have moved to neighborhoods where enforcement is lax. “There are areas in Chelsea, Flatiron and the Upper West Side, but none of them are what I considered my bread-and-butter neighborhood,” said Kim Ima, owner of the Treats Truck, which had enjoyed robust sales at 38th Street and Fifth Avenue and at 45th Street and Sixth Avenue. “I have to live in a gray area.”

Many of the trucks have also branched out into catering special events like bar mitzvahs, weddings and corporate parties, or they have even entered the food-cart business.

Switching gears

Eddie’s Pizza, for example, recently opened two pushcarts in Washington Market Park in TriBeCa. Mr. Kay has a five-year permit with the city to operate pushcarts in the park.

“I felt that, with what was unknown about the future of food trucks, it would be best to have a permanent spot,” said Mr. Kay.

Ms. Ima, who was at the forefront of the industry, starting her truck business in 2007, is opening her first store in Carroll Gardens, Brooklyn, early next year. She signed the lease before the city began chasing trucks out of metered parking spaces—or before she knew how limited her cash flow would become.

“Would I open a truck business today?” she asked. “There’s no way. I’m doing everything I can to keep this thing afloat.”