The most profitable retail chains we did market business valuations for over the past year all had great foodservice results. The least profitable chains (and units) either didn’t have foodservice or showed huge waste (food, supplies and labor) causing dismal results. If you are in the foodservice business, here are five critical factors for success.
1 Who’s in charge? When I see units with foodservice losses, I often inquire about accountability. I’ll ask, “Who is in charge of making sure foodservice is profitable?” You can likely guess the answer. Either “no one really,” “the retail supervisor” or “the store manager.” Even though the last two hold someone accountable, both of these positions typically have lots more on their plates other than food.
On the other hand, when I find a chain with great results and ask the same question, they invariably name a specific person with accountability for their foodservice success. Then, in the next breath, they tell me about that person’s performance compensation. The lesson is to have one person accountable for results and reward him or her.
2 Proprietary versus franchise concept. In my experience, there are specific instances where franchises work well, but I don’t see fail-safe consistency with franchise brands. In some units, a particular franchise does great. In another area, even with the exact same demographic profile, that same franchise may underperform. I used to think the cause of the variance was staffing/training differences. But that is not always true.
On the other hand, I see consistently amazing results with proprietary concepts. When I drill down into the success, it’s more about diligence, commitment and attention. What I’ve come to know is that operators who bother with their own brand concept are deadly serious about results. Any negatives (shrink, labor overages, etc.) are quickly remedied.
3 Match the foodservice offering to your market. It seems so obvious, but sometimes we miss the simplest steps in foodservice. Do not just build a proprietary concept that you like. It doesn’t matter what you like. It matters what your market likes.
This means you may have to tweak even your proprietary offerings from site to site.
When I see losing locations and ask if they’ve ever had a demographic study, the answer is usually “no, we didn’t want to spend the money.” When I ask highly profitable operators the same question, they usually tell me it’s standard procedure.
4 Hours of operation and staffing. Once you get past food costs, it’s the labor that will make or break a food operation. A trend I’ve observed in the most profitable marketers is again about flexibility: setting hours at each location separately based on market demand. Depending on traffic patterns, access during high traffic times and a host of other variables, the best foodservice operators are masters at correct staffing by individual location, not being married to set hours at all locations.
Contrast this to operators who run every location with the same hours. These operators seem to have set ways of setting cashier numbers as well. Their savvier, more profitable counterparts use part-time help during peak hours and appear to be more thoughtful about demand patterns.
5 Unit Level Incentives. The most profitable marketers I see share a mini profit and loss statement (P&L) with their foodservice managers, who share that with their foodservice personnel. Then they take that one step further with a bump in hourly wage rate (I’ve seen as high as $2 per hour) for teams that completely meet their goals. The best incentive programs are measured and rewarded weekly.
The least profitable chains rarely share anything with anyone.
So, figure out what you want your foodservice team to do. If you pay attention to just these five profit drivers in your foodservice offering, you will increase profits quickly and then your foodservice will be fun.