Diary of a New Food Truck Owner, Part 3: Commercial Real Estate Is Expensive

Diary of a New Food Truck Owner is an ongoing series where we talk with Meg Hilgartner, co-owner (with Siri Skelton) of a fledgling San Francisco mobile soft-serve ice cream business called Twirl and Dip. In this installment, Meg and Siri go looking for real estate, and decide a truck is in their future.

We had our first soft-serve machine, and we were working on the recipes; now it was time to find a place. Early on, we'd bagged the idea of a truck because it wasn't practical. I love ice cream trucks, I think they're cute, and we thought it'd be a fun thing to do, driving around this truck playing "The Entertainer." But there are permit hassles, and we'd have to hire employees because someone would have to be on the truck selling while other people were in the kitchen making food. And on a truck we couldn't have as many flavors as we wanted; we'd hoped to have three double machines side-by-side serving six flavors and three twirls, plus a dedicated vegan machine. You have to have space for that many machines. So a truck wouldn't work.

When we started looking at storefronts, November of 2009, the economy was so lousy we thought we'd be able to find something cheap. "It's a renter's market!" we kept hearing. But there is no such thing as cheap real estate in San Francisco. We'd done research, asking friends who own restaurants, so we knew we needed a real restaurant kitchen, with a range and hood for ventilation so we could make the ice cream mixes and the other stuff we needed. We didn't want a lot of sit-down area, though, like a restaurant has, and it turned out it was tough to find a spot with a suitable kitchen and without a big dining room. Oh, and, of course, we didn't have enough money.

The original plan was to find a space for $3,000 a month.
We found an agent from walking around in a neighborhood we liked, and we met with him and he said, "You get what you pay for." So we modified the business plan, and went up to $4,000 a month. And still we were seeing places that were in terrible neighborhoods, or they were completely gross, and they'd need an $100,000 investment to fix them up to have what we needed.

We found a couple of spots we could afford, but these weird problems crept up.
One we looked at, the real estate agent advised us that we'd have to pay to put in handicapped bathrooms. No way could we afford that. Another place we liked, we went to the planning department to check out the address, and we found out it was just inside a zone where the rules said there were no more specialty food stores allowed. So that was out. Stuff like that kept happening. And the agent was pushing us to go to five-and-a-half.

Could we afford to go up still more on the rent?
We did the numbers, calculating what we'd make if we weren't that busy, if we were somewhat busy, and if we were slamming busy. And even if we were slamming busy every hour we were open, we just couldn't do it. Kitchen spaces are priced assuming a sit-down restaurant will be there, with people spending $20 or $50 a head. We would have people spending maybe $8 if they get a sundae AND a drink. The numbers didn't add up.

And no way could we pay ourselves less. There's a calculator online that shows you the minimum amount you need to live in San Francisco and that's what we had figured into the business plan. About $400 a week. No wiggle room there.

It looked like it wasn't going to work.
It was Christmastime, and we both went off to our separate corners for a week to think about it. I was so depressed. We couldn't do this. The numbers didn't add up. But slowly over the holiday I started to consider the idea of a truck again. If we let go of our dream of seven flavors, could we make the truck work? I did some preliminary numbers. I guess Siri was doing the same thing. Because on January 2, the next time Siri and I got together, we just looked at each other and said, practically at the same time: "We have to get a truck."