Immediately following the disappointing vote against Charterwood last week, Town Council voted 
to allow food trucks in Chapel Hill. Council had to strike a balance between local restaurant owners who were unhappy with the prospect of additional competition in a tight economy, and local foodies who wanted an inexpensive meal out, and local kitchen entrepreneurs ready to fill that market niche.
Several council members had been supportive of allowing food trucks from the start. But one of the concerns raised by residents during the public comment period was whether food trucks would be held to the same hygiene standards as brick-and-mortar restaurants. They are, of course, but because they move around and are open outside of regular business hours, inspecting them to make sure they comply could be problematic.
In approving food trucks, council embraced town manager Roger Stancil’s recommendation that food trucks be inspected monthly, that a second-shift inspector be hired and that the fees for a food truck business be high enough to make a dent in the cost of the inspections. Council approved the $118 zoning compliance fee, $50 privilege license and $600 fee for code compliance inspections. All three are annual fees, totaling $768 a year, or $64 a month.
Rather than rejoice at the opening of a new customer base, some food truck vendors griped that the fees were high enough to dissuade them from doing business in Chapel Hill. Frankly, I’m relieved that the fees weed out trucks that operate on such a slim profit margin that $64 a month – and to use a comparable commonly cited by Chapel Hill residents, the equivalent of four lattes a week – would not make business worthwhile. If about $2 a day in profits is the make-or-break line, what shortcuts would they take to make up for a day when business was bad?
One of the owners of 3 Cups opined that a food truck might take in $600 a day and would have to deduct overhead – ingredients, serving vessels, gas, insurance and employees’ salaries, for instance – and those would add up, as any restaurateur could attest. But if sacrificing $2 a day in profits is the deciding factor on whether to do business in Chapel Hill, the ordinance has done us all a good service.
– Nancy Oates
Brandon Rector
/ February 8, 2012That assumes they never leave Chapel Hill and are not required to pay fees to operate in other cities (Carrboro, Hillsborough, Durham, Cary, Raleigh, etc).
CitizenWill
/ February 9, 2012Will be interesting to see the implementation of the ordinance. Will Chapel Hill allow some prorating of the fees? Will promised compliance checks be as frequent as promised or will we have another under-resourced inspection regime like Northside? What about “special event” food trucks that might only want to service a few events a year (maybe Festifall?)?
The fee structure certainly doesn’t seem inviting for folks just starting out. As Brandon points out, regional operations deal with regulations in multiple counties and have to chose which ones to “invest” money in fees with.
Anita Badrock
/ February 9, 2012I completely agree with this post. Any business that capitalizes on Chapel Hill’s customer base ought to consider 2.00 per day a bargain. I’m sure a lot of our local restaurants would jump at the chance to be charged only 2.00 per day.
If you use the industry standard of which I am aware–rent should be <5% of gross, then a food truck would have to gross about 1300.00 per month to make this work. I understand that there is the cost of the truck involved too, but even if you assume that the tcost of the
truck doubles the rent overhead, the truck needs to sell about 2600.00 per month. At 6.00 per plate ( a la the carrboro taco truck) that's about 433 meals per month. Working only 8 days per month that would be 54 sales per day. And that I think is overstating the sales needed to justify the fees.
Joe
/ February 9, 2012What really gets me about the food truck discussions is the assumption by food truck owners and supporters that food trucks are more important than other businesses, and thus deserve to have exceptions made for them.
We have thousands of small businesses in our community that operate under the existing rules and tax/fee structures, and I don’t hear about businesses (other than food trucks) saying that they are deserving of special consideration.
CitizenWill
/ February 9, 2012Joe, it’s a stretch to suggest folks with concerns that the implementation of the fee structure serves as a potential impediment to claiming “truck owners and supporters [find] food trucks are more important than other businesses”.
There are other bricks-n-mortar food service companies in Chapel Hill that have to deal with multiple tax and regulatory jurisdictions but, as far as I can tell, are not required to pay the government substantial upfront costs to operate. Substantial, in this case, measured as a percentage of gross.
Anita is correct, $2/day seems like a great deal to operate in this potentially lucrative market but is $2/day realistic when it has to be paid annually upfront? And does $2/day reflect the real cost of doing business in Chapel Hill?
Chapel Hill requires property owners to shell out $118 for hosting a truck. Durham and Raleigh charge, respectively, $0 and $76. Other than the cost, this adds an additional obstacle as truck owners will have to convince property owners, who will surely will face pressure from their other tenants, to even apply for permission. If property owners agree, they still have to get Planning Board approval.
If a truck wants to service 4 areas in Chapel Hill and picks up the tab for the property owner, that’s $472 not $118.
Then there’s the truck zoning fee of $118, $600 operations fee and the $50 (problematic) privilege license.
Essentially, Chapel Hill’s fee structure is acting like a tariff on foreign imports to, as one Downtown business owner put it, “level the playing field”.
I understand and agree with some of the competition/investment concerns expressed by our Downtown business but believe jacking up fees to send a message – “keep out” – is poor public policy.
What’s struck me about this debate, so far, is how many of those most opposed bellyache about Chapel Hill driving business away, burdensome regulations, etc.
Chris Jones
/ February 9, 2012Will — Ever heard of a business license? “not required to pay the government substantial upfront costs”. I assure you, as someone who works intimately with many of our downtown food & beverage providers both now, and in their upfit phase: A brick-and-mortar restaurant pays substantial fees to city, county, and state entities, upfront, and of a much higher amount than those proposed to the food trucks (though, I have not taken the time to compare regulartory cost to revenue; certainly, Joe’s Crab Truck would generate less revenue than Top of the Hill – – would the fee scale be appropriately tied to revenue? I don’t know.)
I’m not sure that the if fee structure is correct, as is, or not, but I do believe that there should be a cost of business to bringing the food truck into Chapel Hill; I also feel you’re being a little overly dismissive to some of our existing restaurant owners’ concerns.
“What’s struck me about this debate, so far, is how many of those most opposed bellyache about Chapel Hill driving business away, burdensome regulations, etc” . . . I see where you’re going with this. All I’ll say is that if we’re depending on sales tax from food trucks to be the engine that restores economic growth to Chapel Hill, and helps balance the distorted tax base that leans so heavily on residential taxes, then we may already be screwed.
Fred Black
/ February 9, 2012Comparing CH to other jurisdctions is difficult given the economies of scale in their various departments and the energy or lack of energy devoted to enforcement. As the Manager reported in his January 23d memo to the Council, there doesn’t seem to be a lot of enforcement other than complaint-driven enforcement:
“Enforcement Strategy: We have learned that in neighboring jurisdictions, violations of food
vending do occur with some regularity, but because the enforcement strategy is generally
complaint-based only, violations are not typically pursued.
If new food vending regulations are enacted in Chapel Hill, I propose a pro-active administrative
and enforcement strategy, so that with respect to responsibilities of all parties and consequences
of violations, the expectations of vendors and Town staff are clear from the beginning.
Our suggested framework provides for:
· Education of the vendor and property owner about food truck regulations, and
consequences for violations, during the vending application process;
· Town staff to conduct at least monthly inspections of each food truck or trailer; and
· Second shift Town staff (Inspections, Fire, Police) ability to issue citations on the spot.
I think that the above measures will help ensure compliance with food vending regulations, and
set the expectation of prompt Town follow-up in the case of violations.
Cost/Revenue Balancing: We anticipate needing a part-time zoning enforcement officer to carry
out the new tasks associated with the new food vending regulations. Our recommended
framework for balancing the cost of staff time with revenues provides for:
· A vendor to obtain from the Town a Zoning Compliance Permit ($118) for each
truck/trailer, and a $50 privilege license;
· A property owner to obtain from the Town a Zoning Compliance Permit ($118) for each
site); and
· Vendors to pay annual fee to the Town ($600) to cover the costs of regular code
compliance inspections by Town staff.
I think the above permit structure will provide revenues to help cover the cost of staff time for
administration and enforcement actions associated with food vending.”
A lower fee structure would mean?
Scott Maitland
/ February 9, 2012Will, I will explain your conundrum. The people “bellyaching” about regulations also “bellyache” about rising taxes as well.
The question is “Why should we as a community pay more taxes to police an industry that will add little to nothing to our economic tax base and tax revenue?”
Ultimately, that is the concern about the entire concept. People act like the food truck industry is the cutting edge of entrepreneurship. It’s not. It’s a business model that has the advantage of being able to avoid traditional fees, taxes and inspections. It adds nothing to permanent infrastructure. Personally, I don’t believe that our fee system will even cover expenses incurred by the community policing it. If such policing is not necessary, then why do we have health inspections to begin with?
Note that this is a very different question than “why does so much money need to be spent to navigate an ever-changing regulatory environment to create things like Meadowmount, Charterwood (fail), or Top of the Hill Distillery which increase our tax base?”
By the way, a food truck will be operating at the distillery building Thursday thru Saturday late night as soon as allowed. I am not anti-food truck. I am level playing field.
Terri Buckner
/ February 9, 2012Saying that this is going to cost food truck owners $2 is misleading. It will cost them $2 + the cost of the rent they pay the property owner + the state fees + the fees they pay to other municipalities as well as all their other operating expenses and gas. In all of these discussions, I still haven’t heard anyone give a good estimate of the daily cost to operate a full-time food truck, but I know it is a lot more than just what Chapel Hill is charging.
CitizenWill
/ February 9, 2012Chris, I’ve spoken to a few food truck vendors and from what I can tell they tend to average low margins with wide swings in demand. Their transitory nature actually works against them at times.
Scott, I understand your argument about the contribution to Downtown of transitory nature of food trucks as compared to fixed establishments but wonder how to tally up the cost and value of each option. Food trucks require more overhead to police presumably. Fixed establishments need more public infrastructure (public parking?) ?
As far as the “bellyaching”, just pointing out that I’ve heard several local critics whinge on about how anti-biz folks on Council are yet applaud a fee structure which is not competitive with other communities. Then again, the ordinance clearly sends the message Chapel Hill doesn’t want to be competitive (yes, I do understand the difference between CH and Raleigh/Durham).
I’m still of mixed mind on food trucks. I tilt towards folks who have made a substantial permanent commitment Downtown but also wonder where this policy will lead.
What other businesses should be protected or favored by regulation?
Nancy Oates
/ February 9, 2012Terri — You can’t assume that the food truck owner will always pay the location permit fee. For instance, a few food trucks may share space in one parking lot, or the lot owner may pay the fee because it complements his/her business (like TOPO Distillery).
CitizenWill
/ February 9, 2012Speaking of TOPO Distillery – congratulations to Scott for getting his Fed permits. I’m not a big drinker but will be dropping in to check it out.
Joe
/ February 9, 2012The only reason this topic is getting so much public discourse is because it’s a new, trendy business that people are aware of. What non-business owners don’t realize is that every other business in Chapel Hill pays THROUGH THE NOSE to do business here, and most of them contribute more tax revenue and add more jobs than food trucks ever will.
– Garbage collection/recycling. Every brick and mortar business needs garbage collection, and most need recycling. The city pays $0. Garbage/recycling for even a small business can run into the thousands a year.
– Fire department. Any business with a commercial location in town gets the pleasure of being harassed mercilessly by the fire department, often being forced to spend many, many thousands of dollars on whatever the fire department decides it wants you to buy today.
– Planning fees/permits. The tiniest commercial space needs to set aside *at least* a few thousand if even an electrical outlet needs to be moved.
The list goes on and on. The food trucks are getting off easy.
Chris Jones
/ February 10, 2012“Chris, I’ve spoken to a few food truck vendors and from what I can tell they tend to average low margins with wide swings in demand.”
Will, you just summed up the entire food and beverage industry in one sentence. Just because they have 4 wheels instead of a concrete pad doesn’t mean that they shouldn’t have to pay to do business in town just like other providers. Again, I’m not sold that the fee structure is correct, but I might argue that their transitory nature may demand paying a premium compared to a permanent site.
CitizenWill
/ February 10, 2012Joe, Chris and Scott I appreciate the education in the realities of food service in Chapel Hill.
One thing I was having difficulty getting a good grasp on was what constitutes “a level playing field”, you all have helped me readjust my earlier conceptions.
Anita Badrock
/ February 10, 2012I concur with everything Joe, Scott and Chris have said. I also want to make it clear that I patronize the taco truck in Carrboro occasionally, and I really like those people and the food.
Do I think they are so exceptionally essential to the social and cultural values of the town —more than Lantern, Vimalyas, 411 West, TOTH, and other “fixed site” restaurants—that they need to be subsidized or cut a special deal? No. They are making a business decision to do business here, rather than somewhere else, and we need to make a business decision about the cost of that privilege, just like we do any other business.
Joe
/ February 10, 2012This is a bit off-topic, but this just occurred to me… I haven’t heard any discussion at all about the pollution generated by food trucks. For a town so concerned with environmental impacts (for which brick and mortar businesses pay dearly via the development process and ongoing rental rates), why is a pass being given to businesses that operate via gasoline generators? I can only imagine the public outcry if Scott Maitland decided that he was going to run his businesses off of gasoline generators. Does it really make sense for a business to run a gasoline generator (noise, smell, and of course, lots of pollution) for hours at a time in order to sell a bit of pizza or tacos? Where are the expensive environmental impact studies that other businesses have to pay if they want to add so much as a single parking space?
Whether one agrees or not with the extensive environmental costs of operating a physical business in Chapel Hill, it’s pretty clear that this is another area in which food trucks are given significant privilege over other businesses.
CitizenWill
/ February 10, 2012I spoke with a few interested food truck entrepreneurs (from Guatemala I recall) who planned to bootstrap their truck business to a fixed establishment “some day”. Their business plan would allow them to test the waters both geographically and business-wise before making a larger capital commitment.
Scott, Chris, any ideas on the costs of starting a new establishment Downtown? Seems like two cases: refurbishing a property that wasn’t a restaurant before and taking over an existing restaurant property. Scott’s Top of the Hill or Tommy & Greg’s 411 West are examples of the first, the new Indian restaurants at the old Cypress and India Palace the second.
Joe
/ February 10, 2012“Scott, Chris, any ideas on the costs of starting a new establishment Downtown?”
Assuming that the owner can maintain the astronomical rents (and that’s a big assumption, obviously, based on turnover alone), just to open the doors is going to range from the low 6 figures for an existing restaurant to high six figures for a new space.
Ideally, this question would be answered quickly and accurately by our Economic Development office. Unfortunately, both Chapel Hill and Carrboro have always had very ineffective ED offices. When the whole food truck thing came up, the ED office should have said, “The average restaurant owner in Chapel Hill has to pay $xxxx in fees annually, and $xx,xxx in startup fees. It costs on average $xxx,xxx to open a restaurant in Chapel Hill, and those costs include this list of items…”
Of course, our ED office (that is largely useless to most business owners that I’ve spoken with), did NOT have this information, so the town Council had to fly by the seat of their pants when making these fees decisions, taking into account only a fraction of fees/expenses that brick-and-mortar businesses must pay. We, as a town, could make much better decisions about business development if the non-business owners had some kind of understanding what the business owners go through. It’s high time that both Chapel Hill and Carrboro get their ED offices doing something other than cutting ribbons.
Terri Buckner
/ February 10, 2012Sounds to me like someone needs to explain marketing to the local restaurant owners. Food trucks are not competition to Lantern, 411, Top of the Hill or most of our other local restaurants. They may be competition for the McDonalds but to my knowledge they are not the ones hollering “unfair competition.” Can you really imagine taking your spouse to a food truck to celebrate an anniversary or to have a quiet night away from your kids? Would you take someone to a food truck for your first date if you could afford the $50+ for a nice restaurant dinner? Would you go to a food truck if you wanted a beer or wanted to hang out and watch a ball game?
Chris Jones
/ February 10, 2012“someone needs to explain marketing to the local restaurant owners”
Tell you what . . . how about instead, I’ll just explain how groundless, off base, and ignorant about the debate your comment is. Terri, you’re right, to a degree. Food trucks aren’t competition to TopO, 411, Lantern, Elaine’s, Mint, R&R Grill, Vespa, or Carolina Brewery (or Bin 54, Squid’s, and others out of downtown).
Food trucks ARE competition for B-Ski’s, 4 Corners, Linda’s, McAlisters, Cosmic, Jack Sprat, Franklin St. Pizza and Pasta, Peppers, Artisan Pizza, Lime & Basil, Med Deli, McDonald’s, Gumby’s, IP III, Qdoba, Sakura, Sutton’s, Time Out, and Subway (and, away from downtown, Brixx, 5 Guys, The Loop, Chick-Fil-A, JJ’s Deli, Margaret’s Cantina, Cafe Carolina, and many many others). And these people, like TopO, 411, Lantern, Elaine’s, Mint, R&R Grill, Vespa, or Carolina Brewery (or Bin 54, Squid’s, and others out of downtown), have paid, and continue to pay, the cost of doing business in the Chapel Hill community.
You see, ma’am, the really cool part about the F&B industry, particularly in this town, this that a guy like Scott Maitland (among several others), who won’t be affected by food trucks, has the street cred, backbone, and character to stand up and make a statement on behalf of those that WILL be affected by food trucks. Terri, I doubt anyone wants to “keep ’em out”. Most F&B purveyors welcome competition, as it tends to bring the “A” game out of them, and certainly enables them to learn new things. They just want new entrants to have to pay a similar cost-of-doing-business that they do.
Or, you can go tell the local owners of TopO, 411, Lantern, Elaine’s, Mint, R&R Grill, Vespa, or Carolina Brewery (or Bin 54, Squid’s, and others out of downtown), and B-Ski’s, 4 Corners, Linda’s, McAlisters, Cosmic, Jack Sprat, Franklin St. Pizza and Pasta, Peppers, Artisan Pizza, Lime & Basil, Med Deli, McDonald’s, Gumby’s, IP III, Qdoba, Sakura, Sutton’s, Time Out, and Subway, and, away from downtown, Brixx, 5 Guys, The Loop, Chick-Fil-A, JJ’s Deli, Margaret’s Cantina, Cafe Carolina, and many many others (ALL locally-owned independents or locally-owned franchises) that they need a lesson in marketing. I can GUARANTEE that they’ll really appreciate and value your feedback, and welcome you to come back and share your extensive understanding of the local food and beverage industry any time.
Chris Jones
/ February 10, 2012Will, Joe gave you a broad range, and, unfortunately, that’s the best anyone can do. There are SO many variables . . . in CH, a privelege license alone (not, to say, the NC ABC privelege licenses – obviously, that’s another fee) can range from $10 to $500 annually. From the ground-up: lease down-payment, planning/inspection fees, utility hook-up (good lord, please pray you already have an OWASA hook-up, or now you’re REALLY out the money), architects, contractors, recylcing, waste collection, grease disposal, etc.. It obviously adds-up very quickly. Of course, the type of food that you offer then determines more of your up-fit cost — do you need fryers? Grill? Not only do you have to buy the equipment, run the gas lines, and buy the hood, but now you have to incorporate the vent into the architectural plan too. Long story short, I have seen very simple concepts, even with no grill or hood system, cost every bit of $250,000 to upfit and open.
For what it’s worth, and I haven’t worked on a good “build-from-scratch” restaurant in a couple of years, but I wouldn’t be surprised if refitting a building downtown today (either restaurant-to-restaurant, or retail (other use)-to-restaurant) may be a more expensive project than building a free-standing unit from scratch. The town’s interpretation of code, particularly as it relates to fire inspections, and particularly in older buildings, tends to put a heavy cost load on a project. Please note: I’m not necessarily critizing the town’s interpretation – I’ve seen it implied flat out incorrect, but also seen some good planning come out of it – merely acknowledging the reality that it adds a lot of cost.
Joe, for what it’s worth, I respectfully disagree with your assessment of CH’s ED efforts (I can’t speak for Carrboro – I don’t have enough experience to know); I think Dwight has done a lot, with VERY little (or no) budget. I would remind you that the previous town manager built an empire of disfunction, that Roger and Dwight have worked hard to, if not dismantle, at least adjust to the realities of the world. I’m a big believer that Rome wasn’t built in a day, and when you factor in the worst economic environment since the 1930’s, I’m not sure how much more we could ask for right now.
Terri Buckner
/ February 10, 2012Tell you what Chris, let me explain how shallow your analysis is. Your list of restaurants that might be hurt by food trucks seems to be based on price point. Of these B-Ski’s, 4 Corners, Linda’s, McAlisters, Cosmic, Jack Sprat, Franklin St. Pizza and Pasta, Peppers,Gumby’s, IP III, Qdoba, Sutton’s, Time Out, and Subway are restaurants located on the main drag of Franklin Street. Where exactly do you think a food truck could realistically operate within that area? A food truck has to have somewhere they can rent a space to park their truck and hook up to electricity. Even if a food truck wanted to compete with those restaurants on your list there are very few, if any, places they could realistically set up within easy walking distance (remember the students complained about having to walk to University Square to vote) of those potential competitors. But let’s say there are a few spaces that could support a truck. If the downtown restaurants put pressure on the owners of those few (if any) spaces, they could further reduce the likelihood of any of the truck owners showing up regularly. But let’s say that a few trucks did show up now and then. If these bricks and mortars restaurants are not good enough to compete with an irregular, small competitor, how likely is that business to survive long-term in the very-competitive downtown restaurant scene–even without the food trucks?
The restaurants that might be directly impacted are those in the WestEnd. That’s where the space is to support them and that’s where there are some bars that might attract customers who don’t want a sit down meal with alcohol. That same situation exists in Carrboro where I don’t hear the restaurateurs screaming over unfair competition. They may be unhappy but seriously, how much business is Southern Rail losing due to the occasional truck that shows up across the street? Maybe in the summer when there is more foot traffic, but that’s the kind of analysis I would have expected from the Chamber of Commerce and the ED office before they determined to oppose new businesses coming to town.
Another place that might attract and support food trucks is Rosemary Street down by Breadmans. I’m not as familiar with that area since Fats and the Cradle moved out (and I passed my bar hopping years). Margaret’s is also on your list. Why would a food truck want to go out to the Weaver Dairy area? Food trucks need food traffic. Weaver Dairy is one of the most unwalkable areas of town. Would trucks be attracted to Eastgate (The Loop)? I don’t think so again, because it isn’t walkable and I can’t imagine the merchants would react favorably to the mall owner leasing the space. You also had Time Out on your list. There price point is an issue. I could go to Time Out for a $2 biscuit or I could go to the Crepe truck for an $8 crepe. How serious is that competition?
When it comes down to it, I really don’t think trucks would be seen all that frequently anywhere in Chapel Hill even without these additional fees and licenses. Instead of trying to ban food trucks, I think we should be making it easier for new businesses to start up and operate. Entrepreneurs have energy and bring a dynamic to the town I think we should encourage. From everything I’ve read and the owners I’ve talked to, most of these businesses long for a bricks and mortar facility. The truck helps them get started, just as a business incubator does for tech businesses or the way a revolving loan fund helps. It seems kind of hypocritical to me for the town to be focusing so strongly on encouraging entrepreneurship and then turning around an imposing so a steep cost on those who are being entrepreneurial.
Chris Jones
/ February 10, 2012Terri – I’m sorry, but I truly don’t understand where you are coming from. Is it your position that food trucks should not be required to pay any fees? Or merely that the fee schedule is too onerous? Should they be allowed to operate anywhere they choose?
I like food trucks, Terri. I’ve been spending time lately trying to figure out the logistics and legality of setting up “food truck” rodeos at a couple of Durham parks during our little league season. I very rarely eat from a food truck, not out of protest, just out of preference. (I will get a dog from the Sabretto stand virtually every time I leave Lowe’s, however). To me, there’s nothing wrong with food trucks; but, there’s nothing special about them, either.
Terri, I work with entrepreneurs, in many fields, every day. I’ve had the joy, and occasional sorrow, of working with new restaurant owners, eager to live their dream. Those people have paid a heavy cost to do business in our community; they’re entrepreneurial spirit runs as deep and is as valid as a food truck owner. The day that we charge a new restaurant owner no privilege fees, inspection, hook-ups, MSD assessment, waste/recycling pick-up fees, etc, I will gladly concede that a food truck should be welcome to operate in CH free of charge. Until then, I stand by statement that they owe it to the community to pay their cost of doing business here (and, for the 3rd time, I’ll state that I’m not positive that the fee schedule us the right one – and in that, I’ll say that it may be too much, AND it may not be enough). Whether our policy is similar to Durham’s or Raleigh’s is, frankly, irrelevant. Should the food truck owners find the cost of doing business in Chapel Hill too high, then they won’t come here. You know what? We’ll all be OK if that’s the case…..we’ve lived many many years without them, I don’t think the town will wither up and due if they’re not here.
Terri Buckner
/ February 11, 2012I believe that trucks should pay their cost of doing business, and I believe there should be some degree of equity in the cost of doing business for all businesses of the same type. But I believe it’s important to analyze those costs from the lens of the businesses as well as the town. The cost of doing business in Chapel Hill has become onerous (not exclusively because of town policies), and in order to change that fact, the cycle of imposing restrictive fees and other costs has to be broken. Positive feedback loops are when the output of a system continually increases regardless of any input data (turning on a faucet) while a negative feedback loop is when the output of a system is constantly seeking environmental data in order to modulate the system response toward a constant level (thermostat). The cost of living and doing business in southern Orange County has become a positive feedback loop. The food trucks were an opportunity to welcome new businesses to the community without being so cost-restrictive that it would be impossible for them to actually do business here. It was an opportunity to start breaking out of the positive feedback loop. Instead, as I see it, the enacted fees and licenses will perpetuate the positive feedback loop. This was a missed opportunity at a time when there is so much attention being directed to the comprehensive/strategic planning process.
Joe
/ February 11, 2012Terri, Chapel Hill is the best place to do business in the Triangle for many different kinds of businesses. It’s a town filled with highly educated, relatively wealthy people, all living in a relatively small place. Obviously, businesses can and do work here all of the time. The fees are high, but not prohibitive. The issue in my mind, at least, is that the fees need to be fair across the board. A food truck, that adds nothing permanent to the town, that isn’t going to hire locals, that isn’t going to contribute any significant tax revenue, does not warrant better treatment than brick-and-mortar restaurants that actually contribute in significant ways to our community.
Joe
/ February 11, 2012From today’s Chapelboro article:
The surprise is the regulations that the Town Council unanimously approved. These include more than $800 in fees.
“They don’t know how these food trucks are starting because they are started by people with not a lot of money,” says Stenke. “If I had enough money to pay fees like that, then I would have enough money to open a restaurant.”
What Mr. Stenke doesn’t understand is that $800 doesn’t even pay for the building permits for a restaurant. While he’s a nice guy and makes great pizza, it’s pretty clear that even he doesn’t know what it takes to open a restaurant.
Mark Marcoplos
/ February 11, 2012Complicated issue. It seems that there are many forms of protectionism. One type protects local businesses against big corporations. Another type protects larger local businesses against local smaller upstarts. The first seems generally like good policy that helps protect local businesses against outside market “bullies”. The second protects some local businesses against other less wealthy local people trying to enter the marketplace.
I started out as a small “food truck” type construction company. I barely had enough money to buy the next $150 tool that I needed. Fortunately there were no onerous financial and regulatory barriers to trying to start a small construction business. Now I look around and I see young people starting out with small constructuion enterprises. I see them under-charging customers becasue they don’t understand the real costs of doing business yet – just like I did years ago. They get jobs because of these low prices, end up losing money on many of them, and they either figure it out or they go do something else. These little operations are sometimes a minor pain in the ass becasue of their effect on the market, but how can I advocate policies that prevent some young person just like I was from giving it a shot? That would be pretty elitist of me. And, some of these little enterprises might grow up to be established, respected building companies that employ people and provide quality construction services. I can’t justify slamming the door behind me on the next generation of builders and remodelers just because I don’t want the competition.
CitizenWill
/ February 11, 2012Mark, you nail the issue that bothers me about the suggested fee schedule. How are those immigrants from Guatemala or the other local folks I’ve spoken to who either have a new food truck or want to get one going to get their foot in the door?
Now, since they are mobile, they are free to leave the community they live in and try to make a go of it in Durham, Raleigh or even smaller burgs. Seems a shame but maybe that’s just business Chapel Hill style. Then again, maybe Chapel Hill will take these folks into account when drafting the implementation of the fee schedule. My sense is it’s the relatively big initial investment that’s driving concern. Of course, as Joe and Chris note, “big” is relative to ones restaurant ambitions.
Scott Maitland
/ February 13, 2012I think the construction analysis and comparison is a good one…….you have to get permits and inspections and that costs money which typically gets passed on to the customer via the rate that the contractor charges. The charges in the case of the food truck are for partially subsidizing the regulatory process for a new business model they won’t even come close to paying the entire burden of having the extra inspector. Why should food trucks get to pass an externality onto the rest of society?
By the way Will, the answer to your question is approximately between $100 and $200 a square foot for a restaurant (obviously depends on type of restaurant and capabilities). This up fit gets taxed as well. A tax revenue that our county won’t get from food trucks. I got a great deal on Great Room up fit and it cost $1.7M in construction for 11K of square feet.
This whole discussion reminds me of when Nancy was shocked to find out that she would have to pay a lot of money to make money with this blog. Perhaps everyone can now understand the frustration from a business perspective about taxes, regulations and the belief that somehow businesses don’t pay their share. And no, I don’t feel bad for food trucks, I feel bad for all of us trying to start and run a business and I don’t believe that any person or industry should get preferential treatment hence my consistent voice that we needed to level the playing field.
Finally, Terri, I don’t hear people saying unfair competition from the perspective of losing business, I hear people saying unfair competition because of equality issues. Food trucks seem to be the cause du jour of folks….why can’t the concerns about fees and permits be extended to all businesses in town? Why is business bad in this community except for food trucks?
Mark Marcoplos
/ February 13, 2012Scott – I think the fees & permits for all businesses should be reviewed. And I wonder if there’s a way to do less food truck inspections (or surprise inspections)? Or could they possibly sign up for an inspection for one month (or three months?, maybe a summer-time deal, etc.), some way to spread out the cost for them. There’s got to be another way.
Jon DeHart
/ February 13, 2012Scott,
I think you know the answer to this question you asked Terri . It can be, just need to have different elected officials …
Finally, Terri, I don’t hear people saying unfair competition from the perspective of losing business, I hear people saying unfair competition because of equality issues. Food trucks seem to be the cause du jour of folks….why can’t the concerns about fees and permits be extended to all businesses in town? Why is business bad in this community except for food trucks
Terri Buckner
/ February 13, 2012Scott–I think food trucks are a symbol of small businesses trying to find a way to exist and survive (not just Chapel Hill). If existing businesses feel that current fees and permits are onerous, then we should absolutely be having a public discussion about them. I am not one of the anti-business people in this town. We should also discuss the intent behind having fees and permits.The town benefits financially in many ways from new businesses so should the fees and permits be set with the expectation that they will pay for the administrative infrastructure of the planning and zoning and inspections departments?
Mark Marcoplos
/ February 13, 2012Are we to assume that a land-locked restaurant has no externalized costs? No parking?No extra grease in the sewage system? No drunks? No vehicle traffic? No police neeeded? (I know I’m redundant here), but is there a feeling of entitlement to “authentic” protection”?
Joe
/ February 14, 2012http://blogs.newsobserver.com/orangechat/chapel-hill-approves-new-towing-regulations
Here we have the town making some pretty large requirements for towing companies.
“According to the new ordinance, storage lots for towers cannot be located more than 15 miles from the site of the tow and must be secured and well-lit. Towers must provide a receipt for tows and must accept credit and debit cards at no extra cost.”
The lot requirements could cost towing companies hundreds of thousands of dollars, and the credit card acceptance will definitely cost hundreds up front, and hundreds if not thousands of dollars annually.
Where is the outcry from the general public that these businesses have just been burdened with *thousands* of extra dollars in requirements from the town? Food trucks don’t really effect Chapel Hill significantly one way or the other, while towing is an essential service that Chapel Hill cannot do without.
Will hipsters and other members of the non-business owning general public rush to the defense of tow companies? I won’t hold my breath…
Scott Maitland
/ February 14, 2012Mark,
You should know what happens when you assume 😉
I don’t think it is appropriate to equate the specific cost of regulating a new industry with the general costs you cite. I do agree that everything has an external costs but my premise is that the existing battery of fees, permits and licenses do a good job of covering those externalities or at least a far better job than the proposed fees for the food trucks will cover the costs of the new regulatory scheme.
However, since you asked:
1) Parking is a revenue generator for the town and how does a food truck generate any less parking need than a restaurant?
2) Businesses must have a grease trap which meets OWASA standards for effectiveness and is regularly cleaned out by a company that recycles the FOGs.
3)Drunks – interesting question due to the personal responsibility aspects involved and the ability to get drunk in places other than landlocked establishments….however, ABC permits, town permits, dram shop law and liability insurance cover externalities pretty well.
4) Vehicle traffic…..how does a food truck generate less?
5) Police….how does a food truck need less police protection
So, no, I don’t believe that a food truck is any less of a business than a regular business but a regular business pays more taxes and fees to help cover the externalities.
Terri Buckner
/ February 15, 2012Scott–what is the basis for bricks and mortar restaurants paying those costs (parking, drunks, grease traps, police, etc.)? I assume it isn’t through property tax since many restaurants lease.
Chris Jones
/ February 15, 20121) Off the top of my head without putting much thought into it: Business license (annually), ABC Privelege license (annually), Downtown MSD assessment, trash and recycling pickup cost (not free as it is to residences).
2) In a quick minute, I have not been able to think of one single property owner that does NOT pass on the property tax bill to his commercial tenants. Lease or not, I can assure you that the “brick and mortar” restaurant is paying the property tax bill much more often than not.
Anita Badrock
/ February 15, 2012In a nutshell it’s called a triple net lease. You pay rent for the physical space, you pay for you prorata share of maintenance costs, and you pay for your prorata share of taxes, insurance, and fees like garbage dumping. Commercial retail landlords do it all the time because they recognize that taxes, maintenance costs, and other fees are costs outside of their control, so they pass through those costs to the tenants. It doesn’t work the same as it does for residential property.
Terri Buckner
/ February 15, 2012In Carrboro, food trucks have to rent space to park. Their rent maybe pro-rated for the time they are there, but it’s still rent and should still reflect all the expenses Chris and Anita have listed. So I’m still baffled as to why so many of you think that food trucks aren’t paying their fair share. They pay rent (which covers property tax, waste and recycling fees, water, etc.), they have to have a town business license, and on top of that they are paying that additional $600 per year. Doesn’t that mean they are paying MORE for the infrastructure than bricks and mortar establishments?