Food Truck Playbook › Unit Economics
Unit Economics 101: Food Cost, Labor, Break-Even & Menu Engineering
Most food trucks that close in year one didn't fail because of bad food — they failed because the owner never modeled the numbers before launch. This guide gives you a clear framework for understanding your costs, pricing your menu, and knowing exactly what revenue target you need to hit every week to stay in business.
The Three Cost Buckets
Food truck costs fall into three broad categories. Understanding each — and their target percentages of revenue — is the foundation of profitable operations.
| Cost Category | What It Includes | Target % of Revenue |
|---|---|---|
| Food Cost (COGS) | Ingredients, packaging, beverages | 28–35% |
| Labor Cost | Wages, payroll taxes, owner draw | 25–35% |
| Overhead | Commissary, insurance, permits, fuel, maintenance, platform fees | 15–25% |
The sum of these three buckets is your Prime Cost. A healthy food truck keeps Prime Cost below 75–80% of revenue, leaving 20–25%+ to cover debt service (if you financed the truck) and generate profit.
Food Cost: The 28–35% Rule
Food cost percentage (food cost ÷ revenue × 100) is the most-watched metric in any food service business. For food trucks, target a food cost between 28% and 35%.
Example: If you sell a burger for $12 and the cost of all ingredients (bun, patty, toppings, packaging) is $3.60, your food cost percentage is 30% — right in the target range.
Ways to control food cost:
- Keep your menu tight (5–8 items). Fewer ingredients means less spoilage and more buying leverage with suppliers.
- Weigh every ingredient during recipe development and cost each recipe precisely. Don't estimate.
- Do a weekly inventory count and calculate your actual vs. theoretical food cost. A growing gap signals waste or theft.
- Build supplier relationships early — volume discounts and better prices come with consistency.
Labor Cost
Labor cost for food trucks includes all wages paid to employees plus payroll taxes (typically 7.65% of gross wages for the employer's share of FICA). If you are the owner-operator, include a reasonable owner draw in your labor cost — otherwise you are subsidizing the business with unpaid labor.
Example labor scenario (two-person crew):
- Owner-operator: $25/hr × 50 hrs/week = $1,250/week
- Employee: $18/hr × 30 hrs/week = $540/week
- Payroll taxes (7.65% of employee wages): ~$41/week
- Total weekly labor: ~$1,831
To keep labor at 30% of revenue, this truck needs to generate at least $6,100/week in revenue ($1,831 ÷ 0.30).
Break-Even Calculation
Your break-even is the minimum daily or weekly revenue needed to cover all costs without generating a loss. Here's a simplified weekly break-even model:
Sample Weekly Cost Model
With a 30% food cost, every dollar of revenue has ~$0.70 available to cover overhead. Break-even revenue = $2,406 ÷ 0.70 = ~$3,437/week. That's roughly $687/day across 5 service days.
Menu Engineering Basics
Menu engineering is the process of analyzing your menu items by profitability and popularity, then making strategic decisions about pricing and promotion. Every menu item falls into one of four categories:
⭐ Stars
High profit, high popularity. Protect and promote these. Never cut them.
🐄 Plowhorses
High popularity, lower profit. Raise price slightly or reduce cost — customers love them too much to notice small changes.
❓ Puzzles
High profit, low popularity. Improve placement on the menu, name, or description. Add a photo.
🐕 Dogs
Low profit, low popularity. Remove from the menu or keep only if it uses shared prep and costs you nothing extra.
Revenue Targets by Truck Size
| Truck Type | Realistic Annual Revenue | Key Assumption |
|---|---|---|
| Solo operator, tight menu | $80K–$150K | 5 service days/week, strong lunch route |
| Owner + 1 employee | $150K–$250K | Lunch route + weekend events + some catering |
| Owner + 2 employees, events focus | $200K–$400K | Heavy event calendar, catering, high ASP |
| Multi-truck operation | $400K–$1M+ | Multiple trucks, scaled systems, manager in place |
Next Step
Have more questions? The FAQ page covers the most common questions we hear from aspiring and early-stage food truck operators.
Read the FAQ →