Metrics give you the pulse of how your foodservice program is actually doing. Is your program profitable? What food items are expiring before being sold? When is your store traffic the slowest, the busiest?
Measuring and analyzing both big and small metrics about your foodservice program is vital for two reasons:
- It shows how effective your foodservice program actually is.
- It reveals pain points so you can identify actionable steps to improve your program.
It Starts with Goals
Goals keep you focused and help ensure that you are continually improving your business. Here a few examples of goals:
- Increase high-margin side item sales (e.g. green beans, mac and cheese, corn).
- Reduce waste below 5% for dinner meal.
- Ensure adequate staffing during high-traffic time slots.
For metrics to be impactful, you must set goals for your foodservice program. In an industry where a spectrum of factors can determine what’s successful and what isn’t, there’s no magical number to shoot for. Instead, you know your business and what means success to your bottom line.
How to Start Using Metrics
There are many different ways to measure and track metrics. Save yourself the hassle of staying up-to-date on constantly changing technology by using an automated system to do the heavy lifting for you. With the data at your fingertips, you can focus on monitoring metrics, using those metrics to drive your action plans, and addressing problems quickly and effectively.
Start by monitoring 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. Begin to take actions based off only a few metrics, and then you can get more granular over time. The more metrics you can analyze the more insight you’ll gain into the health of your program so that you can create an effective action plan. Learning to read metrics does require time, but eventually you’ll start to identify the patterns and know what little fluctuations in numbers mean, how they relate to your business, and what you can do to improve them. A foodservice partner, like your PFSbrands Business Advisor, can help you learn to read the numbers like a second language. It’s something they are very familiar with.
Relativity of Metrics
No two businesses are exactly alike. A wide range of factors impact the success of your business: geography, weather, local competition, etc. What you define as success will not always be the same for another business. For example, a specific profit margin may be significant for your business, but low 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 worry 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 new customers 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 of how much labor costs in comparison to your sales. In general, the labor percentage should be somewhere around 20% of sales. 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. 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: 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 and are creating too much food for that time slot.
Capture Rate - Capture rate is the measure of how many customers walk into the store and end up purchasing a meal or food item from your foodservice program. You 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 your goals and the success of your program and your store. It’s hard to measure something like napkin usage and turn it into actionable insights.
Action Plan Based on Metrics
Now that you’ve started measuring and analyzing some metrics, how do you act upon those metrics? Metrics give insight, but it’s up to you to analyze that insight and make an action plan. The best place to start is just to learn what the numbers are telling you. Once you understand what the numbers are saying, connect those numbers to both short-term and long-term goals.
Example: You identify that it’s time to reduce waste during the dinner meal, as it’s the only meal still above 5% waste. You give yourself a measurable goal of 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.
Seeing how these two metrics tied 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
Internally, there are many action items that you can implement to help accomplish your goals. Consider some of 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 - 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 right now 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.
Promotional Action Plan
Sometimes the issue is simply increasing awareness and drawing in more customers (we say simple, yet doing so isn’t easy). You can see this need illustrated through your daily sales and capture rate metrics. When this is the case, raising your brand awareness and marketing your foodservice program is the right course of action. If you aren’t getting enough traffic in your store, you can consider a number of solutions like outdoor signage or social media campaigns. Or if you have a lot of traffic in your store but they aren’t taking advantage of your foodservice program, you might consider internal signage or a sampling program. A promotional action plan can consist of events, signage, flyers, promotions, coupons, digital advertising, social media, print, radio and more. Focus on what’s cost effective and within your budget.
With countless marketing options available to today’s business owners, it is often overwhelming for retailers to decide where they should put their marketing bucks. PFSbrands’ Marketing Team works to help retailers find the right marketing solution for their program and budget.
Finding Wins
When you are just starting to monitor your foodservice program metrics closely, your focus should be on the bigger picture numbers that will help increase your sales and profitability. However, it is also important to find the quick wins that can help boost your team morale and have an immediate impact. Find a few things you can do today to help improve your metrics without forgetting your short and long-term goals.
Maximizing Success
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. Metrics allow you to determine which actions will create the most impact, and give you the focus to manage and maintain your growing success.
