Managing Slow Months for Seasonal Businesses
‘Tis the season! The season of revenue changes for a lot of small businesses, of course. For some businesses, such as pumpkin farms and apple orchards (if you’re from the northeastern U.S. like I am), autumn is the most lucrative time of year. But what about food trucks? Many food trucks see a large disparity in revenue depending on the time of year. I sat down with Matthew Rafferty from Algorithm Food Truck, a plant-based food truck local to Philadelphia, about how revenue looks for him and his small business throughout the year.
The Beginnings
Rafferty got his start in audio engineering, while also working in restaurants as a short-order cook and in cafeterias in college to help pay the bills. Shortly afterwards, he got an interview in NYC for an entry-level audio engineer position.
On the morning of September, 11, 2001, Rafferty took the train to NYC and arrived around 9 a.m, confused and unaware, just as police were shutting down all transportation in and out of the city because of the plane crashes that had just happened not even an hour before.
This day was pivotal for a lot of Americans, Rafferty included. He began to reprioritize, and rethink his life and career goals. He decided he no longer wanted to be an audio engineer, and thought there was no future in it. Simultaneously, he was also pursuing restaurant jobs to have both cash in the bank, and, subsequently, alcohol in close reach.
Fast forward to early 2020: the pandemic had just hit and the world had no answers on how to continue from there on out. Rafferty was 40 years old, living in Virginia, sitting on this idea of a fast-casual vegan restaurant that would somehow also support local producers, artists, and animal-rights activists. He figured he didn’t want to be 80 years old and “not give it a whack.” Later that year, Algorithm was born.
Pivot Point
Originally, Rafferty dreamed of opening a fast-casual restaurant, but then quickly pivoted to a food truck for financial reasons. He applied for 12 different loans, and was rejected from all because he had no historical data to support him being able to pay them back since he had never owned a food truck before. Finally, a company in Colorado said yes, and he was able to start this new venture.
Shortly thereafter, Rafferty needed two disks replaced in his neck. He calls this time in both recovery from surgery and recovery from alcohol the “small window” and “short opportunity” to get things done, refresh, recover, and get the ball rolling on finally opening his food truck. He laughs when he said one of the main reasons he opened a food truck was fear: fear of what this meant for his career, fear of the unknown timeline of the pandemic, fear of continuing of what he had been doing his whole live, fear of it being a failure since there are already a large amount of vegan restaurants in the Philly area.
But nonetheless, Algorithm Restaurants Food Truck opened in September of 2020.
Finances
Right away, Rafferty knew that opening a food truck at the end of summer was not ideal. With winter approaching, his initial revenue would be quite minimal. Regardless, he was encouraged and hopeful that it was the right time to start a local business using local producers given the uncertainty of the food supply chain.
In the two years that Algorithm has been open, Rafferty has learned some things about maximizing cost and revenue. When Algorithm first opened, there were a lot of options for customization on the menu. For example, the customer could choose their protein and toppings on sandwiches and tacos. This proved to be too labor-intensive for a 128-square-foot kitchen. Now, the menu includes pre-fixed toppings and proteins. Customers can still substitute items if needed, but not giving an option for that on the menu has greatly reduced this from happening, and has allowed operations to run a lot more smoothly.
The Algorithm team has also considered logistics over the last two years. The truck started out in one singular park five times a week, which worked out well initially. But Rafferty didn’t want to saturate the same hyper-local area. He then started testing out different areas of Philadelphia where people might want vegan food. He expanded Algorithm’s radius to other parts of the city and settled on a rotating schedule in December of 2020, meaning on Mondays they’d be in one area, Tuesday’s they’d be in another, etc. This way, customers knew where to find them on any given day.
This was really another turning point for the business. This ended up being very valuable for their schedule because it expanded their reach and attracted more guests. Insteading of saturating one area, they were able to gain traction for a larger guest base for the future.
Another way Rafferty manages costs is running on a production schedule like a restaurant would. He orders everything weekly so they don’t run out of products, meaning that they don’t miss out on a sale from not having what the customer wanted.
Changes in Seasonal Revenue
When asked how he manages and plans for the dip in revenue throughout slower months, Rafferty is only semi-joking when he says he “freaks out.” But along with that freak-out, he has some concrete ways to try and offset the slow seasons, which is generally just pushing sales through different channels:
- Catering – Algorithm offers catering “drop offs” with family-style dishes for weddings, parties, festivals, etc. This increases their mobility and reach.
- Wholesale – Local small businesses, like Batter and Crumbs, a vegan baked goods company in Philadelphia, sells Algorithm’s breakfast sandwiches out of their storefront so customers can get both a sweet breakfast treat from Batter and Crumbs, and a savory breakfast from Algorithm in a one-stop shop.
- Grubhub, UberEats, DoorDash – Opening up online ordering channels allows for a larger clientele reach as well, because folks who are on the opposite side of the city from where the truck is parked that day can still order their food and have it delivered to them.
- Pop-Up Events – Implementing pop-up events with a tent and a scaled-down menu, while the truck is in use selling food at another location or catering event, allows two sources of revenue at the same time.
These channels help increase revenue through different channels, which increases the reach and mobility of Algorithm’s food. At the end of the day, however, it’s still a numbers game. Small businesses like Algorithm expect less revenue during certain parts of the year, depending on their business. The cost of goods, the cost of fuel, the cost of menu items, deciding where to set up the truck, etc. all play a part in the larger plan of trying to at least match the costs to the revenue throughout the year.
Other ways that Rafferty manages his finances include saying “no” a lot. He says there isn’t a lot of money laying around or to pull from. This requires him to be flexible, patient, and protective of finances because a penny for him is much more valuable than a penny for a big box corporation. On a personal level, Rafferty explains that he can’t just go out to dinner whenever he wants or on a regular basis because he doesn’t have guaranteed income coming in, and he will always prioritize his staff, making sure they get paid.
The Future of Algorithm
September 1 marked the two-year anniversary of the Algorithm food truck opening for business. To celebrate, Rafferty announced the opening of their first storefront location in Queens Village in Philadelphia sometime in the near future.
When asked what the future of Algorithm holds beyond that, Rafferty immediately says “scale.” He wants to scale up the business by hitting other cities and being able to keep “the purchasing power of local purveyors alive and well.” All in all, the Algorithm team will continue to strive for animal rights, utilize hyper-local producers, and support others that support animal rights. Rafferty says, “if I can do anything to contribute to the city and to animal rights, that’s all I can ask for in life.”
