Yeah, this seems to be getting more common (maybe because the people running the festivals make a nice profit?).
I was at a hot wings festival recently. In a two-hour line for 4 wings. Then they ran out of wings, beer, and all liquids, including water. It ended up being ~$10/wing, 1 wing/hour.
I've seen some pretty epic failures, especially if they do good early on and get too much exposure. There was a garlic festival in the Hudson Valley that got way too much exposure on Food Network and was turned into an overcrowded nightmare. (Amplified by the number of Manhattanitrs out of their native environment)
Another one was a food truck festival where they spread the thing out too wide, so you had to be on a death march to actually see everything!
I'd thought it an impossible task to put on a good food based festival for a long time but Gilroy did a pretty good job with their Garlic festival. The trick seemed to be have about 5 stalls for every vendor and stick them in opposite edges so if the line is long at the Garlic Ice Cream booth you just keep walking around the edge a bit to the next booth from the same company selling the same stuff.