Keep Your Eye On The Prize

by Paul Schlossberg
Posted On: 6/18/2018

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The prize is clear and obvious. It is to increase sales and profits consistently.

At a foodservice industry conference in the late 1980s one of the shrewdest industry leaders said (paraphrasing here), "In the 70s we could simply show up at work and we were going to have at least a 10% sales increase – without even trying hard." We all know that it has not been like that for a long, long time.  

How do we stay on the growth track? It's more challenging now.

The best way to generate growth is to steal transactions and market share from competitors. My recommendation is to do it legally. In my blogs and articles, you've read about strategies and tactics to "sell more stuff." Since everyone we compete with wants that same thing, achieving it is not is not guaranteed.

At nrn.com, on June 7, 2018, a headline read "Restaurant sales lose momentum in May." Data from TDn2K's Black Box Intelligence and its The Restaurant Industry Snapshot, "same-store sales growth dropped by 1.5 percentage points compared with April's rate."

Are you watching "same-store sales?" That is a comparison of current period data versus year ago (or last month, etc.) for the same group of stores (or locations). You must exclude any new stores which were not open in the prior time frame.  

TDn2K also reported that another data trend was unfavorable. "One metric that has highlighted industry challenges since the recession is continued traffic erosion. Same-store traffic dipped 2.9% in May, which also represented a 1.5% fall from April."

We all track dollar sales. Hopefully you're measuring unit volume too. It's not easy for us to assess traffic measures at vending sites, since purchases are made at different machines. Focus on (1) total transactions and (2) average dollars per unit sold. If those trends are up, or down, you'll get a sense of your traffic patterns. It's a little easier to see traffic patterns at micromarkets. Shoppers are more likely to check out with all of their items in one transaction.

The analysts at TDn2K pointed out that there was some good news. …average spending has accelerated in recent quarters. For 2018, average check is up 2.8%. By comparison, average check grew 2.1% in 2017."

Victor Fernandez, vice-president of insights and knowledge for TDn2K said, "To put all this into perspective, guests are spending more per visit, but dining out less frequently. If it wasn't for the growth in check average, we wouldn't have seen any positive sales growth since the recession."

That quote above is very important for us. If we are not watching the data carefully, we could be missing the underlying positive or negative trend lines. In my Vending Times article, Your Best And Worst Locations: Do You Know The Difference?, we explored metrics and measures you should be using to manage your business.

At a minimum, on a weekly basis track these and other measures. (1) Traffic: Measure it as best you can. (2) Dollar sales. (3) Unit sales. (4) Total transactions. (5) Average dollars per unit. You must be sensitive to changing trends before they grow into serious problems.

We need every transaction and every sales dollar. While the economy has shown positive trends recently, labor force participation is not growing. And population growth is less than 1%. We no longer can depend on population growth to drive our sales trends up and up.

Across the country, there are states and regions experiencing population growth. Some businesses and industries are growing and hiring. It's not true everywhere. Wherever you live and work, find opportunities for new business where the growth is occurring. We live in the Austin, Texas area. Growth here is amazing. Homes and apartments are going up at a dizzying pace; there are new office buildings all over town. It seems that the state bird in Texas is the crane – the building crane.

Let's get back to the prize: consistent sales and profit growth. The restaurant trends noted above should be a warning for you. Expect to see more new products and more promotions from fast-food restaurants in the next few months. They will need to react to the traffic downtrends.

Keep your eye on the prize. Focus and work on how you will (1) increase traffic, (2) add more transactions, (3) increase the number of units sold, and (4) drive higher check averages (more dollars per unit sold). Get moving on the path to selling more stuff.


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Paul Schlossberg is the president of D/FW Consulting, working with clients to merchandise and market products in impulse-intense selling environments, such as vending, onsite foodservice and convenience stores. Based in the Austin, TX area, he can be reached at Paul@DFWConsulting.net or 972-877-2972 or www.DFWConsulting.net.