What is Your Store’s Most Important Metric?
Sales Per Square Foot:
The square footage of your store… How profitable are each of those 12” by 12” squares? Do you know? You can make the argument that sales per square foot is one of the most important metrics of any convenience store. You only have so much space in your store (unless you are contemplating a CAPEX to increase store size) and in order to increase your bottom-line you need to make those square feet as profitable as possible. Let’s go over a few numbers first.
According to a 2013 study, the average convenience store size was ~2,500 square feet. But how profitable are these square feet? For that year, c-stores that ranked in the top quartile in profitability averaged $67 per square foot while those in the bottom quartile saw $34 per square foot – they were twice as productive!
One of the ways store owners are increasing their profit per square foot is to build their stores larger. On average, a newly built urban c-store is around 4,500 square foot. They are getting bigger to offer a larger suite of services. From ATMs to seating to foodservice areas, the larger stores are leveraging convenience in order to attract customers. In fact, foodservice is killing it when it comes to improving your revenue and accounts for over 21% of all in-stores sales in 2015. Simply put, they are becoming one of the most profitable sections of a c-store.
Get this, the top quartile of all c-stores have 3.6X more sales than the bottom quartile. Think foodservice is making a big difference in sales per square foot? What can you do in your store to close the gap?
Here’s a breakdown of some of the numbers you can find this CSP Daily News article:
|2013||Top Quartile||Bottom Quartile||Top vs. Bottom|
Store Operational Productivity
|In-store gross margin %||32.7%||27.3%||5.4 points|
|Average square feet||2,477||2,494||Even|
|In-store sales per square foot||$67.09||$33.99||2x|
Closing the Gap
While sales per square foot is a slow moving metric, if you want to make drastic changes then you need to change the system. One option is to bring in a highly competitive foodservice program. By having a name brand foodservice program, you create a buzz that draws customers to the hot case.
Make no mistake about it, you have to quickly grab their attention considering that you have 3-4 minutes between the time a person walks to the stores and leaves… You have to make an impact. Nationwide programs such as Champs Chicken can do exactly that. It’s a recognizable name with an unforgettable taste. With product margins hovering at 35 points plus, it’s a great way to add money directly to your bottom-line!
So how do you get started?
Obviously, as with any critical business decision, you need to have a clear plan and make sure you have the financials to be able to bring in a business altering program. For instance, do you have enough capital? Do you have the equipment? How long will it take to make your money back (like payback period)?
One great tool that we have created at PFSbrands is our payback period calculator. This simple calculator can help you figure out how long it will take to payback your investment, at which point it becomes all profit! The beauty of it is that you can mold the variables to fit your location (or even if you own a grocery store). Check out it here.
Once you have a good idea if a branded foodservice program is right for you, then it’s time to get in touch with the experts for a completely free business consultation or even an in-store demo. From equipment recommendations to store layout or pricing, we can answer all of your questions and help you get started! You can speak to one of our exclusive business experts by emailing our Customer Success team or call: (855) 632-3373.
You plan out ever square foot of available space in your store, so why not offer what could give you the biggest bang for your buck? The biggest margins? A quick payback period? Hot foodservice programs are a great way to attract new customers to your location with can’t miss, delicious foods that returns dividends throughout the store as it attracts more customers.
So how are you going to increase your stores most important metric this upcoming year?
Want us to help you improve this important metric? Email our Customer Success team or call: (855) 632-3373.