Calculating Your Menu Correctly: Prices, Margin, and Cost of Goods Sold in a Food Trailer

Whether you’re just planning your food trailer or have been in business for a while—the menu is the heart of your business. And yet, for many, pricing is a blind spot in their operations. Prices that are too low eat into your profit margin, while prices that are too high scare customers away. If you don’t pay close attention here, you’ll end up working for next to nothing. There’s a better way.

This article shows you how to price your dishes so you can make a living from them—without relying on gut feelings or guesswork.

Why Many Food Truck Operators Sell at Low Prices

Most people underestimate the true costs when they first start out. The cost of goods sold is only part of the equation. Rent for the booth, electricity, water, insurance, vehicle expenses, and your own labor— all of these must be factored into the price. If you don’t, sooner or later you’ll end up operating at a loss.

The most common mistakes:

Include only the cost of goods sold; ignore fixed costs
Don't view your own salary as an expense
Setting prices "by feel" or based on the competition without knowing your own cost structure

The Cost Calculation Formula for the Food Trailer

Step 1: Determine the cost of goods sold

The cost of goods sold (COGS) is the raw material component of a dish—in other words, what the ingredients for one serving cost you. Calculate this carefully, including spices, oil, side dishes, and packaging.

Rule of thumb for the restaurant industry: The cost of goods sold should account for no more than 30–35% of the selling price.

Example: A burger with toppings costs you €2.50 → selling price at least €7.15 (with a 35% markup rate).

Step 2: Calculate fixed costs on a per-serving basis

Add up all your monthly fixed expenses:

Booth Rental / Floor Space
Lease payment or loan payment for the food trailer
Insurance (Liability, Auto, Business)
Vehicle expenses (fuel, maintenance)
Electricity, Water, Gas
Tax Advisors, Fees, Software

Divide this total by your average number of servings per month. That way, you'll know how much of the fixed costs are included in each serving.

Step 3: Plan for Your Salary

You're an entrepreneur—your salary isn't profit, but an expense. Think about it: What would you earn for comparable work at a company? That's the minimum amount you need to factor in.

Step 4: Contribution Margin and Profit

The contribution margin is what remains after deducting the cost of goods sold. You must use the contribution margin from all portions to cover fixed costs, wages, and profit.

Formula:

Minimum Selling Price = Cost of Goods Sold / (1 – Target Contribution Margin Ratio)

Target contribution margin in mobile food service: 65–70%

Which dishes are really worth trying?

Not every dish on your menu is equally profitable. Some top sellers have high food costs (e.g., steaks, seafood), while others look expensive but cost you very little (e.g., homemade sauces, side dishes).

Calculate the contribution margin for each dish and divide your menu into four categories:

Category | Contribution Margin | Demand | Action

Stars | high | high | Highlight, emphasize

Plowhorses | low | high | Raise the price or lower the cost

Puzzles | High | Low | Boost Marketing

Dogs | low | low | Remove from menu

This so-called menu engineering matrix helps you strategically optimize your menu—on a regular basis, not just once when you first launch it.

Price Psychology: What Guests Perceive

Well-calculated prices must also be communicated effectively. Here are a few tried-and-true principles:

Round prices seem simpler, while odd prices (e.g., €8.90 instead of €9.00) are perceived as a bargain—in the street food sector, both approaches can work.
Use the anchoring effect: Having a more expensive, premium dish on the menu makes the average prices seem more affordable.
Less is more: A concise menu with 8–12 items is easier to price, quicker to produce, and looks more professional.

Monitor Cost of Goods Sold—Ongoing, Not Just at the Beginning

Cost calculation isn't a one-time task. Raw material prices rise, suppliers change, and portion sizes creep up. Review your cost of goods sold at least once a quarter:

Inventory at the Beginning of the Month
Add up the month's purchases
End-of-Month Inventory
Actual Inventory = Beginning Inventory + Purchases – Ending Inventory
WE Ratio = Actual WE / Revenue × 100

If your weekend sales ratio consistently exceeds the target, you'll need to either adjust prices, rethink portion sizes, or switch suppliers.

Fair prices—and promoting that to the outside world

Many restaurant owners are afraid of being “too expensive.” But if you offer fair prices and good quality, you have nothing to be ashamed of. Guests who understand that handmade food comes at a price are often the most loyal customers.

Explain your product—not your price. A brief note on the menu, on a sign, or on your social media page explaining what makes your food special (regional, fresh, homemade) justifies higher prices without having to say a word about your cost structure.

Conclusion: Calculate, Adapt, Earn

Careful menu costing isn’t just bureaucratic red tape—it’s the foundation for keeping your food trailer running in the long term. Keeping food costs under control, knowing your fixed costs, budgeting for wages, and optimizing your contribution margin: If you consistently follow these steps, you’re not just working hard—you’re working smart.

If you’re still in the process of planning or expanding your food trailer—we at AVB Manufaktur will guide you every step of the way, from the initial idea to the handover. Tailor-made, reliable, and with a clear focus on what really drives your business.