[landarc]

5x times cost of product is a standard of the food service industry but, it assumes restaurant service. As you change the dynamic, reducing labor (waitstaff, janitorial, bussers etc...) and real estate (lease, rent, land taxes etc...) you can change the multiplier. It gets tricky though, and it also figures in things like waste, excess purchasing needed for service (e.g. you don't close when you run out of food, you never run out of food, this costs a lot).

The romance of the current food truck trend has lured many folks into that business, but, one thing to be aware of, in most locales, food truck owners who own just one truck, and serve fresh cooked food, are not making a whole lot of money. In L.A., S.F., Portland and N.Y., recent studies have indicated that most food trucks are returning $25,000 to $40,000 a year in profit. That is the same as a line cook in a fine dining restaurant. Many of these trucks were selling at 2x or 3x food costs, assuming their costs were lower. It ends up being that the number has to crawl upwards, towards the 4x/5x number over the long haul.

Region also matters, out on the coasts, where incomes are higher, food costs and transit costs are often also higher, resulting in 5x being a very solid number. In other regions, where costs are generally lower, the multiplier can be adjusted. Out here, another bad trend (IMO) has been organizers of events asking for fees, in terms of 8% to 15% of gross sales be paid to them. Essentially, you are coming into a huge hole from the start.