Setting your vending prices

[HBMTN]

Just curious when setting your road side vending prices do you go by cost x3 or x4, also when figuring this up to get your pricing what all do you include in cost? In other words to you figure say bun, sauce, pork, rub times 3 or 4. Or do you add things like foil, charcoal, styro containers, utensil packs for meals, etc.

[Bbq Bubba]

3X food cost is a good place to start. 4X and you won't have many customers.
The more you can include in your costing, the more accurate your food cost will be.
Once you get established, you can change your pricing to fall in line with what your customers will pay, thus dropping your food cost %. :thumb:

[HBMTN]

Thanks Bubba, that is what I am trying to figure out. I sold 5oz sandwiches for $5 and add 2 handmade sides to make a dinner for $7 this year. I think I am good on the sandwich price but feel like I should move the dinner price to about $8.50. Especially after taking my 7 and 9 year old kids to get a meal at Wendy's and paid $29 for me and 2 little kids for a crappy burger.

[PCDoctor_1979]

That's what we charged for a 4oz sandwich and two sides last year. Halfway through the season we changed the menu so you could select either two sides or a side and a 12oz can of soda for the $7.00. Although 3x is an excellent starting place, it pays to do some recon on your fellow vendors to see what they are offering and charging. I like to be right in the middle - not the cheapest and not the most expensive. :cool:

[HandsomeSwede]

Question for the author of the thread and those who have commented/lurkers:

- Your question about vending prices and the manner in which it is phrased leads me to believe that you are basically all ready to vend roadside and have done so in the past. I am in the process of getting licensed to vend and cater in the coming year which, for me anyway, involves putting together a business plan. Partly for my own use to get organized but also to present to the bank when I apply for my business loan. My question is did you also apply for a business loan to start your vending business? If so, how did you receive a loan without accurately forecasting food costs and profits in a detailed manner within a business plan? If you did not apply for a loan how do you fund your operation? Now, I live in New York so I'm sure rules are less stringent in states like VA; however, I see a lot of guys on here lately asking about pricing for the catering/vending/whatever business that they are launching and making it sound like the only thing left to figure out are those prices.

From the context of the process I am going through either I am doing way too much work, laws and regs are far less stringent and loans much easier to get outside of NY, or there are a lot of guys on here doing it under the table or in for a rude awakening with the HD, banks, their own savings, etc. What am I missing?

[Dr_KY]

From the context of the process I am going through either I am doing way too much work, laws and regs are far less stringent and loans much easier to get outside of NY, or there are a lot of guys on here doing it under the table or in for a rude awakening with the HD, banks, their own savings, etc. What am I missing?


I started my business off my own back. For us the key was not to drop in at a veny with the biggest baddest mulit dollar gear but to get the ball rollig with what we could build. The pots and pans were loaned from a pub landlords kitchen, cheap gazebo, and fold up tables. My smoker was built from a water bowser found on ebay and still is our main cooker today. The most important thing was to get insurance, register as a business and get the health department on board. I took a class for my food service license that cost about 60.00 all in.

None of this helps with putting together a business plan but it's how we started and are doing well.

[HBMTN]

Swede, I did not put a business plan together for a bank. I was able to fund my start up without having to go to a bank and borrow money. This is the end one my 1st season in business and I put most of what I made back into the business. It is hard to forecast anything and I am only just getting a hand on things so I am not sure what to tell you about a bank. I am sure some will say you can start up for $1000 while others will say $100,000 I can only tell you what I spent and if you count every detail I probably spent around $30-40K oner 2 years. Hope this helps.

[PCDoctor_1979]

Same here. I've totally funded this internally, no help from the bank. Started small and have acquired more equipment as we go along. If I happen to land a big gig, it help funds the equipment needed. This is still a part time thing for me and it's still more fun than not. I get along fine with the HD.

[Dr_KY]

Our initial investment to get on the road and cooking was under 500.00 including the purchase and build of the cooker. The first gig I ever did was with a ProQ XL, Weber 22" , ice chest and two fold up tables. No gazebo or anything. Took home 300.00 fro that gig and turned it back into the business.

[Bbq Bubba]

Question for the author of the thread and those who have commented/lurkers:

- Your question about vending prices and the manner in which it is phrased leads me to believe that you are basically all ready to vend roadside and have done so in the past. I am in the process of getting licensed to vend and cater in the coming year which, for me anyway, involves putting together a business plan. Partly for my own use to get organized but also to present to the bank when I apply for my business loan. My question is did you also apply for a business loan to start your vending business? If so, how did you receive a loan without accurately forecasting food costs and profits in a detailed manner within a business plan? If you did not apply for a loan how do you fund your operation? Now, I live in New York so I'm sure rules are less stringent in states like VA; however, I see a lot of guys on here lately asking about pricing for the catering/vending/whatever business that they are launching and making it sound like the only thing left to figure out are those prices.

From the context of the process I am going through either I am doing way too much work, laws and regs are far less stringent and loans much easier to get outside of NY, or there are a lot of guys on here doing it under the table or in for a rude awakening with the HD, banks, their own savings, etc. What am I missing?

Sorry to say but you are wasting your time brother. Theres not a bank in the world that will give you money for what you want to do.
If you can't afford to do it out of your pocket, you probably should'nt be trying to go this route.
How can you forecast changing meat prices, inclement weather that will kill sales, the plain fact that people may not like your food?

Not shooting you down but this is NOT a business you want to start with a chit load of overhead.

[HandsomeSwede]

Theres not a bank in the world that will give you money for what you want to do.
If you can't afford to do it out of your pocket, you probably should'nt be trying to go this route.

Thank you for the feedback. That is why I inquired, I was thinking maybe my train of thought was off. But indulge me for sake of process. We are not really putting together a "roadside stand" that we can then take to events. What we are developing is more foodtruck ala Kogi in Los Angeles. I have already talked to two banks about the prospect and each stated with a proper business plan that such endeavours (i.e. mobile food trucks) are commonly seeing 100% financing. The bank's reasoning is that unlike brick and mortar restaurants with a profit ratio of 1:1, food trucks have market proven returns of 5:1.

Now, your point about the forecast of prices is the most relevant. My thought was to look at the current price of pork shoulders, for example, per pound. Then look at the price of shoulders historically over the past 5-10 years (such info is available online). Take the % change and extrapolate it out as an estimate in rise in pork costs over the next five years. Am I offbase here?

Additionally, unlike restaurants, food trucks can be 100% reposessed and resold at or near market value.

[PCDoctor_1979]

I'm a finance and ops guy in real life and I'm not familiar with how one would compute this profit ratio you speak of. Can you provide some additional details?

[HandsomeSwede]

I'm a finance and ops guy in real life and I'm not familiar with how one would compute this profit ratio you speak of. Can you provide some additional details?

http://www.anythingresearch.com/2010-Industry-Statistics/Mobile-Food-Services-Street-Vendors.htm#geography (http://www.anythingresearch.com/2010-Industry-Statistics/Mobile-Food-Services-Street-Vendors.htm#geography)

The entire site is great and has industry and government data for any sector of food service. It has been very helpful throughout our entire planning process.

Depending on what version of the report you want it costs either $99 or $199.

[Learnin Querve]

Just curious when setting your road side vending prices do you go by cost x3 or x4, also when figuring this up to get your pricing what all do you include in cost? In other words to you figure say bun, sauce, pork, rub times 3 or 4. Or do you add things like foil, charcoal, styro containers, utensil packs for meals, etc.

Every nickel you spend to start up and conduct your business is a cost. Whether it's a case of ribs, the gas and mileage spent to pick up supplies, or the file folders you stash copies of invoices and receipts in, they are all costs associated with doing business.

Knowing these costs and keeping them in check is everything; both to establish your pricing as well as to be able to accurately measure your profits. Even though your greatest recurring costs will be commodities (meats) that fluctuate in price almost daily, you do your best to take that into account so you don't have to constantly adjust your prices.

Like most things in life, the devil is in the details. Learn to keep very accurate records from the outset and soon you'll be able to quickly assess how well you're doing and where you can improve. Detailed and organized records are also invaluable at tax time.

Good luck,

Chris

[HandsomeSwede]

Great thing about the business plan, even if you are not applying for a loan, is that all the costing and details are considered. Rather than getting a week out from a bid or event and saying "oh shoot, I wonder if I need to quote or pay for that."

[HandsomeSwede]

One of the advantages we laid out in the plan is that our General Partners all have experience in either professional kitchens or business finance. Thus we have a competitive advantage against most other caterers/vendors who are essentially weekend warriors who recognize a market but do not plan and calculate in order to effectively sell to that market. After inquiring in this thread I feel secure in that assertion.

For example, how does setting a price based purely on what customers seem to want to pay reduce food cost %? Selling at 3x rather than 4x does not result in a reduction of costs.

[PCDoctor_1979]

*Alert to the Mods *At the risk of this going the direction of the infamous turkey thread, are you referring to us as "weekend warriors" who don't know what we are doing? Many of us may find that remark somewhat demeaning.

FYI, selling at 4x food costs vs. 3x reduces the food cost percentage since you are dividing food costs by a larger denominator at 4x rather than 3x.

[HandsomeSwede]

I know that. If you look at my comment that is pretty much what I said. My point is that BBQBubba seemed to be saying the opposite and I wanted to clarify.

I would say a weekend warrior is someone who does not make their primary income from BBQ, rather they do it part time when they can, like ... on weekends.

[Grabnabber]

HS-

What do you plan to sell from the truck and at what type of locations do you plan to set up?

[HandsomeSwede]

Various sandwiches/sliders (beef, pork, chicken), with a variety of toppings (slaw, sauce, etc.) at a very low price point. Tennessee Taco. And the area of NY I am from (Rochester) has one culinary claim to fame (besides being a growing hotbed of BBQ activity) - the Garbage Plate. Places exist simply to churn these things out to college students at 2:30am. We are doing a BBQ equivalent.

During the Fall/Winter our kitchen has store frontage with seating right next to the college campus so we set up there, send the truck out on campus as well and the bars late night, and pick up any stray catering that comes our way. Spring/Summer hit the road for events and festivals on weekends we are not catering, light lunch and dinner crowd during the week.

[Grabnabber]

Gotcha. Always curious what folks are doing out there. Thank you.