What is the average markup for food in a food truck

Posted by Damian Roberti on

What is the average markup for food in a food truck

How do you calculate food costs for a food truck? What is the average markup for food in a food truck? Welcome to marketing food online. It's Damien Roberti. And we are going to dive into these two subscriber questions about food and truck businesses, and it's one of the most critical points. And when you want to be successful and profitable and obviously keep your doors open, you are trying to figure out what your food costs are for a food truck. And exactly. Is there a specific type of average markup? We're going to dive into that right now.

What is the average markup for food in a food truck

 

All right. So, welcome back to marketing food online. So in this video, as I mentioned in the introduction, I'm going to give our food truck subscribers. If you're looking to start a food truck business, or you're already in it, maybe you're just trying to figure out a better way to calculate your food costs and figure out an average markup for your food truck. We're going to give you a couple of different samples and examples, actually, to help you understand pricing methods. So there are actually two in particular that we're going to cover in this particular video: food cost, percentage pricing, and factor pricing. So these are two ways that food truck owners typically use one of the two to make meth. That's to figure out how to price their food properly. Now, before we dive into it and explain how this works, and I'm even going to throw some graphics up here on the screen to help you understand this, you need to understand that this is food cost.

 

 

How do you calculate food costs for a food truck

This is actually not going to take any consideration. Your labor and other expenses that are either daily, weekly, or monthly for your food truck are specifically food costs. Okay? So as I go through these examples, keep that in mind. There are a huge number of variables and some of these may be better for you. One or two of these may be better for you, or you might just create some flat fee that you want to charge based upon what's being charged within your neighborhood, your community, or the city or county that you live in. If you have a menu that's similar to others, But one of the biggest expenses you need to understand is obviously the ingredients and at what price point are you actually buying them? Obviously, you get something for a lot less than some other competitor or some other food truck, so you're going to be making bigger margins.

That's just common sense, but when it comes to the pricing, what specific calculations should you really be using and what should you take into consideration? So I'm literally going to give you a handful of different price points too, as I trickle down and show you a little bit of how this works. Okay, So let's dive right into it. All right. So let's dive into the first one, which is food cost, percentage pricing for food, and truck businesses. This is a method that a lot of food truck owners go by when they're trying to calculate it. So, the food cost percentage pricing method is the most widely used method from a menu pricing standpoint. Okay, So determine the prices with this method. You would need to know the quote-unquote target food cost percentage. And then we're going to talk about the second one in a minute, and the actual food cost for each item, and then you create your formula from there.

 

 

What is the average markup for food in a food truck

 

 All right. So food costs are divided by the target food cost percentage. The percentage that you want to reach equals your menu price. Okay, Now, for an example, let's just give it and break it down. As far as one particular item on your menu, let's say it was a hamburger. You have a hamburger on your menu with a cost of about $1.50. And that again, meaning that the ingredients are the only factors in making the product. There are no other factors, by the way, just the ingredients are 50 cents and your target food cost percentage. Let's just throw one out there. The percentage is 35%. So the calculation of the item would be as follows. So you take a dollar and divide it by 0.35, which is your percentage, and that equals $4 and 30 cents. So, in essence, your hamburger would retail for $4.30 based upon the actual ingredients.

 

What is the average markup for food in a food truck

 

Again, like I said, in the opening, you need to factor in a few other things, like your expenses, if you've got employees, and other things like that, but this is based solely upon the food itself. So you can at least get a good foundation to understand $4 and 30 cents. We need to move on from there. So that way, you're going to get a percentage price. Okay, That's one of the two types of percentage pricing. Now, let me give you a couple examples of different percentages. So, if you're looking for a 40% discount, you'd set your food cost at $50.Again, let's go back to the hamburger as an example, and your menu price would be around $3.75 on the minimum 35% with a dollar 50 cost. You'd be around $4.30. And I'll give you two more, and then we'll move on to the second price.

And if you wanted to do a specific margin of 25%, with your food costing around $50, your menu price would be around $6.And then lastly, 20%. And you want to do that as well, at a dollar fifty. Again, for the hamburger, it'd be around $7 and 50 cents. Okay? So the equation is very, very simple, but if you wanted to do a pricing of your food truck menu as a percentage, then this would be the formula you'd want to work with. Okay, now we're going to move on to the second type.

All right. So we're going to get into the factor pricing for a food truck item or food truck menu. Okay, Now, this method, let me explain how it works.The factor pricing method uses a factor. Assume, for example, that 30% represents the percentage of food costs.Okay, So determine the price with this particular method. What you want to do is multiply the food costs by your pricing factor. Okay, And I'll explain to you, and I'll throw up an example here on the screen in a second. To calculate the factor in the menu price, you would need to know the target food cost percentage and the actual food cost for the item. Okay, So basically, how the formula would look would look like this: 100. You take a hundred, obviously, as a factor, divided by the target food cost percentage would equal your pricing factor.

 

What is the average markup for food in a food truck

 

So food cost X, let's say, pricing factor, equals the menu price. All right. And as an example, let's do the hamburger again. So, with a hamburger costing $1.58, your target food cost percentage is 30%, correct? as we did in our first example, So you divide 30 into a hundred and you get 3.33 as your pricing factor. So if the food costs you a hamburger, as an example, a dollar 50, then your factor is 3.33. So you end up basically taking a dollar and multiplying it by 3.33, and that actually comes out to $5. So that would be the price point, but you'd want to sell it to your customer's app. Of course, like I said before, you've got to factor in a couple of other things, like your hourly wages for your employees and any other expenses that are involved. This is solely based on the pricing of the food.

So the two types of factors that are most commonly used are the food cost percentage and the And then you'll want to check out the factor pricing method. Okay, And then from there, that'll give you a foundation. If you want to move forward with all of the prices, remember to keep in mind that your menu is going to be made up of a lot of different ingredients. Obviously, common sense tells you that you've got to get them at the cheapest price, but you don't want to get cheap materials or cheap ingredients. You just want to get the best price. Keep that in mind too, because when it comes to the food, I can attest to this from my own personal experience. Don't cut corners on the quality of the product. Just try to find the best price where you can keep your standards as high as you can, because the better quality food.

What is the average markup for food in a food truck

 

 

Next time you go to that exact same event, people are going to come back again and again. So you'll want to keep that in mind too. Now, other factors, like I mentioned, are operating any insurance that you have, obviously the cost of your propane, your gas, and all of the other materials to operate the vehicle and any employees that you're paying. So there are other factories. Yes, but when it comes solely to the food itself, these two types of factoring processes will help you understand and create a great foundation for your food truck. Okay, If you have any other tips on pricing, food, or truck menu ads, let us know down below. If you guys are, you know, been around for a long time with your food truck, and you're watching this video, some, a lot of people that we have that are subscribed are new, and they're going to love to hear any examples that you have, or if you've got any advice, let us know about pricing. And I'll see you guys in our next video.

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