The food truck business stinks in New York City, writes Adam Davidson in this week’s New York Times Sunday Magazine. The business model’s not the problem. Food trucks let budding entrepreneurs get into the restaurant business at a fraction of the cost of opening a brick-and-mortar establishment. But in New York, the regulatory morass makes it “nearly impossible (even if you fill out the right paperwork) to operate a truck without breaking some law,” according to Davidson.
And that’s just to run a regular, run-of-the-mill food truck, the kind that’s existed for decades. What if you were doing something more disruptive—like selling 40-pound packages of raw meat out of the back of refrigerated trucks? What kind of bureaucratic fat would you have to cut through then?
To find out, I called Mike Conrad, the chief executive officer of Washington-based Zaycon Foods. Since 2009, the company has been buying truckloads of meat from processing plants, driving the shipments to church parking lots across the 48 contiguous states, and selling the meat in bulk quantities to bargain-minded buyers.
Conrad says that buying Zaycon’s bulk packages can save customers anywhere from $2 to nearly $20 a pound compared with grocery store prices, depending on whether they’re buying boneless skinless chicken or wild salmon. And by cutting distributors and traditional retailers out of the supply chain, Conrad says Zaycon’s meat is fresher than what most people are used to eating.
Two crucial ingredients in Zaycon’s secret sauce? First, the company presells the meat online, so it doesn’t have to lay out its own money before taking hold of a shipment. Second, the company doesn’t handle the meat—neither to clean it nor to break down large containers into smaller portions.
The preselling model made the company cheap to start—Conrad says he and his brother bootstrapped Zaycon on about $1,500. Because the company doesn’t open the packages it receives from meat processors, Conrad says the USDA considers it a “pass-through” entity—and treats Zaycon as it would FedEx (FDX) or UPS (UPS), or any other company shipping meat products.
In theory, that should make Zaycon’s regulatory experience relatively hassle-free. It isn’t: “The problem you have in this country is every county has its own king,” says Conrad. He means local health departments don’t always follow the federal government’s lead when it comes to Zaycon. Some municipalities treat the company as a restaurant, and require the company’s workers to get food service permits. Others have charged Zaycon inspection fees.
This isn’t to say Conrad’s spin on the food truck business stinks. Quite the opposite. He says the 24-employee company has 240,000 registered customers, and recently sold 1.65 million pounds of chicken breast over an eight-week period. He notes the company has been profitable since its inception, with revenue up from $440,000 in 2010 to $10 million last year.