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title: BTW 261 MP 2 part 2

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# BTW 261 MP 2 part 2

## Introduction

Surviving food industry is never easy, especially running restaurants, and that's why there is an alternative on the rise over the last decade or so: food trucks. While the earliest food trucks can be traced all the way back to the late 19th century, when automobiles were first invented [0], food trucks came to a rapidly increasing popularity very recently. This literature review will discuss the different reason this phenomenon came to be, and also briefly discuss what might be the potential obstacles in continuous growth. This review will also cover how the findings ties back to the food truck ecosystem in the Champaign-Urbana area.

## Pre-COVID Growth

Before the COVID-19 breakout in 2020, the rate of growth in revenue of the food truck industry was rapid, increasing by more than 10% annually in 5 out of the last 10 years before the COVID-10 outbreak [1]. To explain the reason for such rapid growth, an article from the Journal of Urban Economics [2] published in year 2015 suggested that how food truck owners used social media to update locations of their trucks was a major factor.

### Rise Of Food Trucks' Correlation With Technology

The researchers of the [descriptive text of the organization the researchers belong to] article used food trucks in Washington DC as a case study, and analyzed over 189,000 tweets by food truck owners in a four-year span. The results show that food trucks tweet location information more than 1 tweet per weekday on average. The researchers then tried to correlate food truck activity with prevelance of smartphones and mobile data providers using Google Trends statistics as a proxy.

While the causation of such relationships is not definite, what is certain is that the control group - activity of brick-and-mortar restaurants - do not share the correlated growth with mobile technological advancements. Using data from Consumer Expenditure Survey of the corresponding years [3], they also tried to argue that food truck industry did not affect the growth of brick-and-mortar restaurants, but instead boosted the share of meals eaten out by residents of major metropolitan areas.

Speaking of major metropolitan areas, the study also showed how food trucks thrive more in densely populated cities. While capital needed for a brick-and-mortar restaurant location is higher in such cities, friction of transportation is also higher in an urban setting. In simpler terms, the research argue that people who live in suburban areas or countryside areas are in general more willing to travel longer distance for a restaurant than people who live in cities. Both Champaign and Urbana are in the top 10% among cities in the state of Illinois in terms of population density, so the friction reduction applies in the area.

### The New Food

Not only did the means of marketing changed for food trucks, the types of food trucks in the United States have been diversifying for the past decade or so, according to this University of Michigan study [4]. The new trend is the so-called gourmet food trucks (GFTs), which offer more than typical fast food like burges or hotdogs. According to the study, GFT's multicultural nature also resulted in a high correlation between a region's food truck activity and racial diversity. The U of I campus, being ranked 82th percentile in racial diversity index among college campuses [5], benefitted from this advantage and took a leap in the food truck industry.

## Food Truck Industry's Reaction To COVID-19

According to the 2021 update from the National Restaurant Association, the entire restaurant industry suffered from a 23.8% decrease in revenue between years 2019 and 2020, and even though a 19.7% bounce back followed in 2021, the annual sales still fell short of numbers pre-COVID. The same report also point out that more people were having less dine-ins than they desired compared to having less takeouts than they desired [6]. This also explained how food truck, with its primary emphasis on takeout orders, maintained a positive growth rate even during the pandemic and increased in growth rate after lockdowns were lifted [7].

A study by [scholars where] conducted survey on food truck owners and consumers to discuss the role food trucks play in people's eating habit shift during the COVID-19 pandemic [8]. Note that the study was done outside of the United States (France in this case), but the findings still can to some level represent Western countries under the pandemic situation. According to the survey on customers, food trucks are not only striking a balance between price, convenience and variety, but also serves as an alternative to brick-and-mortar restaurants during lockdowns for its outdoor nature.

The research also indicated that according to the survey results, the food truck industry fits almost every principle of a social business. To be noted, however, is that the principles of social businesses was from a publication a decade before this research was conducted, and did not take into full account the impact of social media technologies, which was likely the reason for the food truck industry to not fit the model completely.

## Room For Improvement

While Twitter was cited in multiple of the previous studies as the main platform for food truck owners to update their location information, the visibility of such tweets are on the decline. The average number of accounts a twitter user follow has grown from around 200 in 2012 [9] to more than 700 currently [10]. Even though the two numbers are from different sources, a big difference as such still hints how the amount of information an average Twitter user got exposed to on the platform increased over the last decade. The increasing number of accounts an average user follow is not the only reason that risks users not seeing tweets from the food truck they follow, however; Twitter introduced the "home" timeline in October 2021, making the tweets shown no longer based on reverse chronological order.

Even without such issues, the follower-following dynamic between food trucks and consumers also limits the ability for potential consumers to browse and find trucks they do not follow. This shows how even existing large social media platforms can have its drawbacks when it comes to variety, the very characteristic that attracted new food trucks consumers for the last decade according to studies discussed earlier in the review.

Another potential issue is that despite the growth of the food truck industry, approximating the saturation point is inevitable. There have been more mathematical studies that utilize tools such as queueing models or coalitional game theory [11][12], and despite the difference in the mathematical tools used, the assumptions are similar in that all beings are economic people and that information to other food trucks are transparent. If these assumptions are not satisfied, it becomes harder for a region to develop into the market size that exploit the region's theoretic potential.

## References