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A Fork In The Road
Boosting Sales and
Controlling Costs
 

© Bill Main & Associates

 
When it comes to profitability, there is a seemingly endless number of factors to consider. Where should you focus your efforts? Should it be on increasing sales and marketing to customers? Or should you spend your initial time and energy on getting your costs under control? It's the proverbial fork in the road.

Luckily, there's a way to choose which fork to take. It's called the "Acid Test." Grab a pencil and paper and use the following formula:

Divide your annual sales by the square footage of your operation. This is your annual sales per square foot.

For example: a foodservice facility with $1,000,000 in annual sales and a total of 2,500 square feet has annual sales of $400 per square foot (1,000,000 / 2,500 = 400).

In the commercial segment, you need sales of at least $300 per square foot to achieve your full profit potential. If you're generating less than $300/sq. ft., chances are you don't have sufficient gross sales to support your concept. Your focus should be on the top line: sales-building. This includes marketing activities, menu engineering and menu merchandising.

If you're producing more than $300/sq. ft., you probably have sufficient gross sales. The best way to boost profitability in the short run is to focus on the bottom line. You can do this by making improvements to operating systems, and implementing better prime cost-control techniques.

Browse through the Archives or use the Search page to find some Trade Secrets to start you down the right road to profitability. For Trade Secrets Members, we've picked some of our best ways to boost sales and control costs to give you a head start.