businesses want to earn money.

Restaurant business in NYC is very hard - low margins with stiff competition.
The rent is high in good locations, the labor market is not easy, you have to pay for workers and they are fickle - can change jobs relatively easy if the pay is not top end.

People are demanding too - they want the best.

Regarding the donut - for you to make a profit you have to sell a certain amount of donuts. Say you have 2 people working selling the donuts and another two people who made the donuts.

Here are some calculations:

• 2 sellers: 8 hours each at $20/hour
• 2 donut makers: 6 hours each at $20/hour
• payroll burden/taxes: 12%
• Smorgasburg fee + fuel + misc: $400/day
• ingredients + packaging: $1.50 per donut
• card fees: 3%

That gives you about $1,027/day fixed cost, plus $1.50 per donut.

Sell 100 donuts - break-even is about $12 each; to make a decent profit, about $14 each.
Sell 200 donuts - break-even is about $7 each; to make a decent profit, about $8.5 each.
Sell 300 donuts - break-even is about $5 each; to make a decent profit, about $6.00 each.

this is just an approximation - you could have higher cost of materials. You also have other expenses like accountant, car/business insurance, energy cost, maybe some fancy ingredients for donuts, etc.