How to Price Food Truck Items: 10 Strategies

/ Foodservice Tips, Restaurant Tips / August 13

How to Price Food Truck Items

Setting menu prices is a critical part of running any food and beverage business. This is especially true for food trucks, as their smaller space and limited offerings mean that a small change in cash flow or expenses can have a big impact on profitability. If you’re not sure how to price food truck items, this guide outlines 10 strategies that will help you maximize revenue and minimize costs, making your business as successful as possible.

Food Cost Percentage

If you’re not sure how to price food truck items, take a look at the food cost percentage method. Based on dividing actual food cost by desired food cost as a percentage of the selling price, it’s the most widely used strategy because of its simplicity. Considering that most restaurants aim for the cost of ingredients to be 28-35% of the menu price, use the upper end of the range for labor-intensive items and the lower end for simpler ones. The following example is for a hamburger that’s moderately difficult to make, using a food cost percentage of 31.5%:

Cost of Ingredients to Make Item ÷ Food Cost Percentage of Final Price = Selling Price

$2 ÷ 0.315 = $6.35

Gross Profit Margin

Although the gross profit margin pricing strategy is similar, it also factors in labor, packaging and utility costs. In addition, this method replaces food cost percentage with ideal gross profit percentage, allowing food truck owners to set prices based more on desired profitability rather than only costs. An article published by Johnson and Wales University states that a good restaurant gross profit margin per item is around 70%, so we’ll use 0.70 in the hamburger example:

Total Cost to Make Item/(1 – Desired Gross Profit Margin) = Menu Price 

$4 (this includes labor, packaging, etc.)/(1-0.70) = $13.33 

Cost-Plus Pricing

Another food truck pricing strategy that considers the total cost to make the product is cost-plus pricing, a methodology in which the final cost is determined by adding a markup based on a percentage of the total cost. While the percent markup can vary, many retail cost-plus pricing markups hover around 30-50%; considering that margins in the food and beverage industry are razor thin, a 50-70% markup would probably be appropriate for a food truck. Let’s apply this approach to the hamburger example with a 60% markup:

Markup Amount = Total Cost of Item x Percent Markup

Total Cost of Item + Markup Amount = Selling Price

Markup Amount = $4 x (0.60) = $2.40

Selling Price = $4 + $2.4 = $6.40 

Combo Pricing

Some of the most profitable menu items are those that combine related items, such as a hot dog and chips or cake and coffee. If you want to improve your food truck’s money-making potential, consider implementing combo pricing by bundling items together–such as a hamburger, fries and a drink–at a slight discount. Customers will feel like they’re getting a deal, so they’ll be more likely to come back, leading to more consistent sales over time.

Portion Pricing

Ever wonder why restaurant portions are so big? Even though larger servings cost more to make, the higher price that diners pay more than makes up for it. Since this strategy can be a great way to increase profitability, consider using portion pricing in your food truck business by offering a range of sizes. Many customers will go for the $16 1/2LB burger over the $8 1/4LB option and pay the higher markup without hesitation, increasing your business’s revenue with minimal effort on your part.

Tiered Pricing

Similar to portion pricing, tiered pricing gives customers different levels of quality at various price points. Most commonly used with 2 or 3 price points, tiered pricing subtly upsells customers by encouraging those who want the best to go with the most expensive option. If your food truck sells hamburgers, try selling a basic burger at $8, a cheeseburger at $10 and then a cheeseburger with premium toppings like bacon or avocado for $12 in order to coax customers to splurge on something good that’s also a money-maker for your business.

Dynamic Pricing

If you’re learning how to price food truck items, be sure to consider dynamic pricing, a strategy in which you adjust prices based on demand. By increasing the price of hamburgers at lunchtime for hungry office workers and lowering the price when they’re heading home for the evening, you’ll maximize revenue during the rush period and increase sales when it’s slow, helping you manage inventory and make sales.

Factor Pricing

When deciding how to price food truck items, don’t forget about factor pricing, a framework that determines the selling price by multiplying the total cost to make an item by a markup factor calculated using the percent food cost (typically 28-35%) of the product. Although this straightforward method guarantees a profit, it ignores the perceived value, making it easy to overprice a simple hamburger and underprice a gourmet one. If you want to use this strategy to price a mid-range hamburger using a 31.5% food cost, the example is as follows:

1 ÷ (Food Cost Percent of Final Price) = Factor 

Total Cost x Factor = Selling Price 

1 ÷ (0.315) = 3.175 

$4 x 3.175 = $12.70

Competition-Based Pricing

As explained in a HubSpot.com article, competition-based pricing is a strategy that uses competitors’ prices as a benchmark, allowing businesses to position themselves above, at or below the general market. When it comes to food trucks, competitor-based pricing can be good for attracting price-sensitive customers, especially if your competitors’ burgers are similar to yours. However, this method ignores production costs and can lead to price wars, so it’s likely best used in conjunction with another strategy.

Value-Based Pricing

On the other hand, value-based pricing uses perceived value as a guide to raise or lower prices. For instance, even though your bison burger served on a toasted wheat bun only costs $12 to make, you might be able to charge $25 because it’s seen as gourmet. If your food truck’s most profitable items have a high perceived value, this pricing strategy can turn them into real money-makers for your business.


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