Two trucks should earn twice what one does. They don't, and the gap between "twice" and what really happens is where most expansion plans go broke.
Learning objectives. After this week you can (1) explain why a second truck earns less than the first; (2) compute incremental profit and payback; and (3) place and time an expansion without competing with yourself.
Remember this: judge a new truck by what it adds to the whole team, not by what it earns on its own.
1) Growth is not addition
In this arena a second truck is not a copy of the first:
- Its crew serves a little less, and its admin cost is higher: $39 a day instead of $25.
- It pays its own district fee, and more trucks means more that can go wrong.
- More trucks thin the crowd each one draws, Truck 1 included.
Economists call this diseconomies of scale: the point where size itself adds cost. Real growth brings economies and diseconomies at once; the question is which wins at your size.
2) The incremental test
Incremental Profit = Team Profit With the Truck − Team Profit Without It
Payback (days) = $10,000 ÷ Incremental Profit per Day
A strong truck. Truck 1 nets $450 a day alone. After Truck 2 arrives, Truck 1 slips to $410 and Truck 2 nets $260. Incremental profit = (410 + 260) − 450 = $220 a day, and payback is 10,000 ÷ 220 ≈ 45 days.
A weak truck. Truck 1 nets $190. With a second truck it slips to $170 and the new one nets $60: (170 + 60) − 190 = $40 a day, a 250-day payback. Expansion multiplies a healthy business and dilutes a weak one. Fix the unit economics first; then copy them.
3) Placement and timing
Two of your own trucks in the same district on the same day share one crowd: you are competing with yourself, which is cannibalization. Count payback against the calendar too: a 45-day payback with 20 market days left does not pay back this season. Write an exit rule when you buy, because the dealer buys a working truck back at 60% of book. Adding your own trucks is organic growth; handing your playbook to independent operators is franchising.
Quick self-check
(a) Team profit rises from $450 to $684 a day: incremental profit and payback? (b) Truck 1 netted $300 alone; with Truck 2 it nets $280 and Truck 2 nets $160. Incremental profit? (c) A 45-day payback with 20 days left: does it pay back this season? (Answers: $234 and about 43 days; $140 a day; no.)
Common mistakes
- Using the new truck's own profit. What counts is what the whole team gains.
- Parking the fleet in your best district. Splitting your best crowd with yourself rarely wins.
- Expanding to chase the leaderboard. More trucks on weak economics means bigger losses.
This week in the arena
Average your team's Net today this week. Write down an honest estimate of what one more truck would add per day, remembering the shared crowd and the higher costs, and compute its payback. Report whether it fits in the days left.