Foodservice programs live and breathe when you understand the numbers. It’s vital that you can start measuring and analyzing both big and small metrics, so you know how effective your program is, and the proper steps you can take to improve its success.
When evaluating your foodservice program, it will always come back to the metrics, but it’s important to set goals for yourself. Whether that’s continuously increasing the numbers or something more specific like reducing waste below a certain percentage. Goals will keep you focused, and in an industry where a spectrum of factors can determine what’s successful and what isn’t, there’s not always a magical number to shoot for. Instead, use what you know is successful for your business.
There are many different ways to measure and track metrics, some are new, and others have been around for centuries. With all of this new technology though, save yourself some of the hassles and let an automated system do a lot of the heavy lifting for you.
When you start focusing on monitoring metrics and using them to drive your action plans, you’ll find it becomes easier to address problems quickly and effectively. You’ll be able to work through changes with your staff more easily, and your foodservice program will have a greater impact on your business overall.
How to Start Using Metrics
If you’ve never used in-depth metrics before, or are wondering where you can go next, then this section is for you. Make sure that you start monitoring only the most critical numbers first. These will be the blanket metrics that give you an overview of how your program is doing. They are detailed enough so you can evaluate the success of your program, without being overwhelming. You can still begin to take actions based off only a few metrics and get more granular over time.
As you start to understand the patterns in your blanket metrics, you can then begin to monitor additional numbers. The more metrics you can analyze the more insight you’ll gain into the success of your program to inform the creation of an action plan.
Learning to read metrics does require time; eventually, you’ll start to identify the patterns and know what little fluctuations in numbers may mean, how they relate to your business and what you can do to improve them. A foodservice partner can help you learn to read the numbers like a second language; it’s something they should be very familiar with.
Relativity of Metrics
In the end, each business is slightly different. This is because a wide range of factors can have an impact on what success will look like for your store. Geography, weather, local competition and many other factors all add up into slight variations.
What this means is that what you define as success will not always be the same for another. A specific profit margin may be significant for your business but low-priority for others. This is important to consider when it comes to setting goals and monitoring your metrics.
When analyzing, think about your metrics relative to your goals and what your historical numbers have been. Use industry benchmarks as guidelines, but don’t get worried if you never meet them. You’ll be able to adjust to what’s possible for your location. The most important thing is that your profit is growing or has reached a good plateau and that your business continues becoming more successful.
Which Metrics to Monitor
When beginning to evaluate your foodservice program, there are two metrics to start monitoring before any others. Those are:
Gross Profit Margin - A percentage of how much revenue is left after cost of goods is deducted. As a general rule, foodservice programs can aim for 45-50% profit margins, but this may depend on your overall store strategy, local market and competition. Some grocery stores may use their foodservice program as a value option for customers while other areas drive profit.
Daily Sales - This only applies to your daily foodservice sales and no other department. In general, stores need to be selling $500 in foodservice items a day to make a healthy margin from a program. You can do it in less, but it becomes tough. Focus on continuing to grow this number by attracting more customers to your store, or capturing more that stop by for other products.
After you have analyzed gross profit margin and daily sales, and begun to take action and set goals around them, these are the metrics to start adding to what you monitor.
Labor - When looking at labor costs, don’t just look at the overall cost, but the percentage how much labor costs in comparison to your sales. In general, we like to see a percentage somewhere around 20% of sales as labor. This number will depend on the expertise of the staff, average traffic, and several other factors. It’s important to look at this as a trend, and not as a small sample size, as some days are going to have higher and lower sales.
Waste - Waste contributes directly to the profitability of a program and is a great metric to build an action plan around. You should target less than 5% wasted by your program. Waste is one of those metrics where you can almost always improve the number, once you get it down to your goal, keep looking for ways to improve. Eventually, you’ll be looking for any small change in the metric. Of course, there will always be some waste. When measuring waste make sure to examine it by meal; for breakfast, lunch and dinner. By doing so, you’ll be able to identify if you aren’t capturing enough sales at a particular time of day, or perhaps that too much is created in the lunch hour.
Capture Rate - Capture rate is the measure of how many customers that walk into the store and end up purchasing a meal or food item from your foodservice program. You’ll need to invest in some way of tracking the number of your customers, a digital counter at your entrance is a great solution. We’ve seen goals as high as 35% capture rate attainable by stores, but it will highly depend on location, competition, and whether you are a grocery store or a convenience store.
No matter how many metrics you measure, make sure they tie back to the success of your program and your store. It’s hard to measure something like napkin usage and turn it into actionable insights.
How to Act on Metrics
Now that you’ve started measuring and analyzing some metrics, the question becomes, how do you act upon those metrics? The best place to start is just to read what the numbers are telling you. Often, they won’t identify only one thing you can do to improve success.
Make sure you get an overall picture; choose some attainable goals to start with and some long-term goals to keep in mind. This will help give you a rolling action plan, as well as an understanding of how your actions impact the short-term goals and relate to the overall vision of the program.
You identify that it’s time to reduce waste during the dinner meal; it’s the only meal still above 5% waste. You give yourself three months to reduce this number while also setting a 12-month goal of increasing profit margins from 40% to 45%.
Reducing waste directly helps the long-term goal of increasing profitability and is one step in the long-term goal. Seeing how these two metrics tie together lets you make incremental decisions and actions to drive the long-term success of your business one step at a time.
There are two main types of actions you can take to improve your foodservice program: internal actions such as process changes and training, and promotional actions to help draw more customers to your program and raise awareness.
Internal Action Plan
Often, there are a plethora of things you can work on internally to help improve the success of any foodservice program. Many of these may be simple changes, while others are going to take time and constant vigilance. It’s important to note that you can always strive for more success, so there will always be something to work on, no matter who you are.
When looking at an internal action plan start by thinking about the following:
Training - What else does your team need to know to help improve the efficiency and capture rate?
Merchandising - Do your customers get caught up by the way your foodservice program is merchandised? Is product getting in their way or can they easily find the add-ons like chips?
Cleanliness - It’s easy to miss a little detail, is the store clean and easy to navigate? Even if it is clean, is there anything that might give the perception it’s not, like a partially empty restocking cart just sitting in an aisle?
Visibility - Can customers easily find your hot case and cold case? Is the foodservice program easily visible as you walk into the store?
Technology - Do you have a point of sales (POS) system that helps you monitor the right metrics? Does it make ordering easy?
There are many other categories of actions you can take to help improve the success of your program. Let your metrics guide you to what can make the most impact and what is worth addressing at a later time.
Some factors can be addressed quickly and effectively, like remerchandising. Others such as training and technology require more investment and time before you’ll see the impact. It’s important to focus on an internal action plan before a promotional one. You want to make sure that if you have something that’s hurting your capture rate internally that you address it before spending money to draw in more customers.
When you are just starting a foodservice program or beginning to monitor metrics closely, the big steps that result in big increases in sales or profitability should be your primary focus. It’s important to start building momentum and morale, though. That’s where finding opportunities for quick wins that can make an immediate impact is so important.
Find a few things you can do today to help improve your metrics without forgetting your short and long-term goals.
Promotional Action Plan
Sometimes the issue is simply increasing awareness and drawing in more customers (we say “simple,” yet doing so isn’t easy). When this is the case, raising your brand awareness and marketing your foodservice program is the right course of action.
Your analytics can help to illustrate this thanks to daily sales and capture rate. Maybe you just aren’t getting enough customers and need more outdoor signage, or your capture rate is too low and you need internal signage.
A promotional action plan can consist of events, signage, flyers, promotions, coupons, digital advertising, print, radio and more. Focus on what’s cost effective and within your budget. You can often raise your exposure with some simple steps online, or by focusing on digital advertising to increase awareness.
Raising Your Effectiveness
Measuring the success of a program is vital to creating an actionable plan that leads to results. By always treating every challenge like an opportunity to experiment and find new ways to grow, you’ll find yourself with a wildly successful foodservice program that your customers love. Utilizing technology and tools like an order management system makes the collection and analysis of data that much easier.
Metrics allow you to determine which actions will create the most impact, and give you the focus to manage and maintain your growing success.