What can I charge for homemade items on my food truck

[Minxies1967]

@@Hi everyone

     I run a food truck and wanted to get some feedback from anyone in the industry. I will be adding to new Sides to my menu....homemade Coleslaw and Mac n Cheese.

     What should I charge for an 8 oz container of ea? 

Thanks for any feedback anyone can provide! 😊

[Breffni · Accepted solution]

Hi @Minxies1967 Thanks for your post, and how exciting! 🙂 

Determining the pricing for your new sides depends on various factors such as ingredient costs, preparation time, and your target market. I found a nice article online here that might help. 

You could look at conducting some market research or test different price points to see what resonates best with your customers and also consider the price that your main menu items are currently set to. 

Tagging some of our Super Sellers who may have similar settings that can share some insights 💭 @GourmetOnWheels @cupzcoffeeaz @MAXSDELI 

[Minxies1967]

Hi, thank you for that information. I was thinking the same thing about testing the prices at each event to see what resonates best. 

Thank you for addressing the article 😊 

[GourmetOnWheels]

In the food business it is on average to take a margin of 75%  Take you food cost plus the container, the lid and and divide that by 0.25 That will give you the selling price

Food cost should always stay around 25 % not much higher lower is always better

René

[Minxies1967]

Thank you 😊  I appreciate the information. 

[ryanwanner]

Hi @Minxies1967 !

Pricing scratch made items can always be a challenge. I ran a scratch kitchen for 15 years, and pricing was always at the top of my mind.

First thing I'd recommend is getting your recipes down pat. If you're tweaking ingredients your pricing will never add up. Once you have your recipe down, you can start breaking out price points. If you source your products from multiple vendors, always go with the vendor who charges you the most. If you're like I was, that usually meant I priced my items off of the emergency trips to the local grocery store instead of a distributor.

Have a spreadsheet open and a scale handy.

For each ingredient in your recipe, figure out the pricing. Example, if 5 heads of cabbage costs you $10 and you need two for your recipe, you're spending $4 on cabbage. You can use the scale to determine smaller sizes: teaspoons of spices, for example. Once you've figured all that out, you then have to determine how many portions you'll get from the batch. Take that portion number and divide it into the total cost of ingredients. That will determine your cost per portion.

As @GourmetOnWheels said, you want your cost to be about 25-30% of your selling point. However, with the way wages are going nowadays, I'd also recommend taking a look at how long it'll take an employee to make the product--not how long it'll take you to make it since you know the recipe and will do it faster. Because of taxes and whatnot that get added to their paycheck, I'd look at the total cost per hour after everything is added. In Colorado, an $18/hr employee ends up costing me about $26/hr, so I'd use $26 for my math. Say it takes 15 minutes to make your product. $26 divided by 15 minutes means I spent $6.50 in payroll to make that product. Divide the portion count into that payroll count to get your total cost of labor. Then, take that cost of labor plus the cost of ingredients. In an ideal world, those two costs together should be 60% of the total cost of the portion.

That final number may scare you. It has for me in the past. At that point, your best bet is to do some footwork around your area and see what other places are charging for similar products. If your price is waaaaay out there, you'll have to make the decision if you can support taking less profit on the item, if you want to keep it where it is and market the fact that this is a scratch made product, or if you want to stick with storebought. I chose option 2 on many of my items, and me personally would never choose option 3.

Hope this helps!

[Minxies1967]

It does help thank you 😊 

[cupzcoffeeaz]

Plus one on all the comments above. 
The biggest Aha moment in the most recent year for me is that a good business idea doesn't necessarily mean a good business model. 
This is especially important in today's environment, where wages and inflation are skyrocketing. 

What I mean with a nice business model is to find the right mix based on your business model. For example:
1. Higher end food -> Higher Margins -> slower throughput. The margin will make up for the quantity
2. Mid end food -> Mid Margin -> mid throughput
3. Low cost food -> Lower Margin -> high throughput
That is the basic model that everyone follows. Ideally you want to be at least one step ahead of the models above, optimizing one of the variables like
 Mid-end food -> High Margin -> mid throughput or Mid end food -> Mid Margin -> High throughput

So when doing pricing, you can play with the cost of good sold (COGS) to be in the 25-30% or 15-20%, or find items that are extremely fast and easy to prep allowing you to sell higher volumes

[dimo10]

My general rule of thumb is make any food item that we have to prepare 3x the cost of the item.

if this is too high, you either need to lower your cogs or find something else to sell.

we are a bricks and motor takeaway store so overheads may be lower in a food van but that has served us well

[Minxies1967]

Thank you all for the information.  It is very helpful and much appreciated.  

😊

[Lovewell]

@cupzcoffeeaz @dimo10 @ryanwanner @GourmetOnWheels 

Literally the best advice there is, take their knowledge and make it happen! 
you guys are incredible!

[dimo10]

All we can do is try to help one another.

Have a great day.

[mksavage]

@Minxies1967 We generally use a goal "Prime Cost" of 60%. Prime Cost should include your Cost of Goods Sold (so, all ingredients, but also any napkins, to go containers, etc.) + the labor that it takes to make the item. So, for some restaurants, your food cost will be high because you buy more pre-prepared foods, but your labor is low because it doesn't take much time to "bring them to life." For other restaurants, your food cost will be low because you're buying all ingredients, but your labor will be high because you're making everything from scratch. So, it's hard to prescribe a food cost percentage -- it depends on the kind of food you're making. But, simply -- try to make sure your food cost + labor is less than 60% of the money you're charging.

From there, test out -- what will people pay for it? You might not want to be the most expensive item on the market, but you generally don't want to be the cheapest either. So, some market testing is a good suggestion -- generally people will pay more than you expect, especially at food trucks, because it's often an impulse buy at a fun event where they're spending money. Just my two cents!

[doc_choc]

Hi @Minxies1967 exciting times, always fun adding new products. I'm totally in agreement with everything @mksavage said. Keep an eye on those margins, don't forget labour and overheads, the latter we add 5% of the final cost to cover your energy costs etc plus you may have pitch fees, fuel costs if you are mobile and so on, factor these in. You need to make money and all these hideen cost nibble into your profit (AKA holidays and retirment fund 😀)

Here in the UK and I'm sure the same around the world, prices have just gone crazy. I think the higher prices are starting to normalise and what was once a jaw dropping price for a cheese toastie is now understood by the general public as the new norm. Don't be afraid to charge what it's worth, defintiely play on the fresh/homedae aspect of your product. Its a great selling point and it you are going to the time, effort and cost to do, make sure your customer realise this either through signage or the way you present the options verbally at the point of ordering.

What I would say is if you feel you have gone in too agressive with your pricing you can always dial it back at little.

Good luck!