My daughter has a skin irritation/rash around her face when she eats certain food not sure what it is ava age 3, healthy no known allergies so far immunizations up to date? Thinking it might be red dye #40?

Rash. This could simply be a basic irritant dermatitis due to little ones getting as much food on their face as they get in their mouth. And the food can irritate the skin. Also, kids will lick around the mouth, causing irritation. See the pediatrician for evaluation or a dermatologist.
There. There are 2 "bad reactions" that can happen from food - one is a food allergy, the other is food sensitivity or intolerance. A food allergy involves immune cells that specifically react to a food causing itching, hives, swelling, trouble breathing and possibly wheezing within minutes to hours of eating the food. It can be severe or life-threatening and the food must be avoided. Luckily only 5% of kids have a true food allergy. If you suspect that your child may have a true food allergy, it is important to discuss this with their doctor right away and consider testing if available. Food sensitivity or intolerance is a bad reaction to a food. It can range from cramps and diarrhea to acid reflux or even rash. The good news is that it is rarely a severe reaction. The bad news is that it can be very difficult to pinpoint exactly what causes the reaction since testing is not always available. By keeping track of your child's diet and when the reaction happens can help narrow down the possibilities. Good luck!