Freakonomics is always a good one for the feeder. Today they have a post about the cost of hot dog vendor licenses near the NYC Met Museum (which I happen to work very close to). An interesting debate is going on in the comments section, between people who think that the vendors can break even, who think they can profit, and those who think the vendors must be operating at a loss.
It serves to demonstrate that, without sales receipts, speculation is meaningless. Nevertheless, my hunch is that they must be making some profit otherwise, there would be little incentive to stay in the area. If you can profit just as much in a less heavily trafficked area (because the licenses run higher in auction) then why put the extra work in to serve to larger crowds?
Either the vendors have incomplete information about sales in different areas, are irrational or they are making a larger profit.