“Food Trucks Harm Restaurants”: A Testable Theory

Despite Chicago’s anticompetitive rules, Laura Pekarik’s Cupcakes for Courage food truck is a success. It now has two brick-and-mortar locations.

Food truck opponents have alleged that food trucks substantially harm restaurants and have often successfully persuaded city councils to impose restrictions on them. But are the arguments raised against food trucks true? And are policies restricting food trucks truly good for communities?

Opponents’ assertion is more than just a debate point—it is, in fact, a testable theory, which can be formulated quite simply: “Food trucks harm restaurants.“ The theory rests on the idea that food trucks operate with unfair advantages. And because they are mobile, food trucks supposedly do not have “skin in the game” the way brick-and-mortar restaurants do in the areas they operate. 1

Critics argue that, unlike restaurants, food trucks do not invest in their communities because they do not rent or buy real estate or pay property taxes. Paired with their lower overhead costs generally, this supposedly gives food trucks an unfair operating advantage over restaurants and risks driving those “real” businesses with “roots” in their communities out of business. 2 Even when food trucks are required to pay for operating permits, critics argue trucks still do not pay their fair share for using the land on which they operate. 3

Critics’ theory that food trucks harm restaurants relies almost entirely on anecdote.

Food truck critics also take issue with trucks’ ability to go where the customers are. For example, in defending Chicago’s stringent food truck regulations, the Illinois Restaurant Association said that restaurants were “part of the fabric of the City” and would be “unable to survive as a result of food trucks unfairly siphoning off customers.” 4 Worse, the supposed negative effects are not limited to any one locale: Food trucks can move from location to location, “swooping in and stealing” customers from restaurants over a wider geographic area. 5 Moreover, if a particular location eventually becomes undesirable—for example, because of a large number of shuttered brick-and-mortar businesses—trucks can easily move on to greener pastures. Or so the story goes.

Underlying this story is a notion that existing restaurants have a claim on their customers that the government should protect. But competition from food trucks is no different than competition from other restaurants or other food purveyors like convenience stores. Competition from other restaurants can and does drive some restaurants out of business, with research indicating competition is a consistent and significant predictor of restaurant failure. 6 Independent restaurants, in particular, struggle to remain operational in areas with greater competitive density. Nevertheless, competition is normal, and, many would argue, desirable given its tendency to promote better quality and value for consumers. 7 Few would agree that cities should protect pizza parlors or coffee shops from having similar establishments open up next door. Nor would most people agree that cities should be able to stop people from patronizing fast food restaurants in order to protect high-end restaurants. Yet this is essentially what many restaurateurs and their allies demand regarding food trucks.

In the end, critics’ theory that food trucks harm restaurants relies almost entirely on anecdote. But is their theory empirically correct? Does the food truck industry fundamentally threaten the restaurant industry?