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Guest Column - April 2005

Making the Most of Your Concession Operation

Food Service and Concessions

By Erin Meyer


A successful concession area is important to your business on many levels. Patrons will stay at your location longer if they don't have to leave when they are hungry. Having a great selection of snack bar items available will keep customers happy and satisfied. Furthermore, your snack bar is fantastic source of revenue. With the right menu selections and planning, your concession stand can greatly enhance the profitability of your overall operation.

While your concession area or food service may not necessarily be your facility's primary source of revenue, it should be approached with the goal of increasing bottom-line profit. Regardless of your motive for going into the concession business, isn't it important to do the best job you can possibly do?

How do you measure how well your snack bar is doing?

FOOD COST PERCENTAGE

What is high food cost? In a "normal" neighborhood location, the target should be to keep across the board menu food cost at 27 percent or below. In certain locations, such as theaters or stadiums, consumers expect to pay a little more, which may mean even a 17-percent food cost percentage.

LABOR COST PERCENTAGE

In a neighborhood location, generally speaking, labor costs run 22 percent to 25 percent of sales. If your labor cost is 30 percent of sales, chances are likely you have two things wrong. First, you may be overstaffed or paying too much per hour to you workers. Second, your menu (including prices and the stand layout) actually may be impairing your ability to get high sales productivity per label dollar. For example, too complicated of a menu may slow service.

A word of caution: Simply cutting food cost percentage or labor cost percentage does not equal more profit. If you cut back on your product or service quality, you may create a "lower perceived image," resulting in sales actually going down 10 percent to 25 percent. To increase bottom-line profits, you must increase top-line sales/income while holding your labor and food cost percentages steady.

Bottom Line

The bottom line for any business is the net profit. Between the top-line income, and the bottom-line profit, you have various expenses such as labor, food costs, etc. To maximize your bottom line in the concession industry, the easiest and best approach is to maximize the top line by maximizing sales. Having the right items on your menu is essential.

Menu Selection

With proper planning, it really does not cost more to put together a menu with the appropriate items in the appropriate sizes—rather, it becomes very "expensive" if you fail to do so.

If there are 100 potential snack bar menu items, virtually all of them will fit into seven categories. These would include the following:

  • Salty munching snacks
  • Frozen deserts
  • Gourmet popcorn and caramel corn
  • Sweet snacks
  • Beverages
  • Baked or fried snacks
  • Meat entrées

Depending on the size of your operation, you may wish to offer items from each of these categories. Keep in mind, however, the snacks that are difficult to prepare could destroy the level of service, the overall quality, performance and, eventually, the profitability of many types of snack bars.

Before adding new items to your menu, consider several important factors:

  • Will the new items compromise sales of some other menu items?
  • Will sales dollars on the new item come across the counter at a substantially lower profit percentage than the average menu mix?
  • What item or items must you eliminate to make room for new one? (And, how much profit do you give up to get the new one?)
  • What skill level is required to prepare the product?
  • Is it easy to gauge the production of the new item? Can you economically make a few for slow periods and rapidly expand if demand expands?
  • What are the inventory requirements? What logistical problems are involved?
  • Is there dependable service/support for the equipment nearby?
  • How well has this item worked out for a location just like your own? Is this documented?
  • Can you have a short test period or trial period to prove the item works?

It's an absolute fact: You cannot expect to succeed with essentially the same game plan you used even two or three years ago. The failure to innovate, test new items or implement new merchandising ideas can ultimately become very expensive. Conversely, the investment you make in a well planned and managed operation will pay for the future.

Try new items, but remember to keep the menu simple. Variety is good, but it is probably a bad idea to prepare six types of sandwiches, stock 20 or 30 candy bar items, or create seven to 10 ice cream novelties. If a swimming pool concession stand has a complicated menu, the "skill-factor" required to run it could equal that normally found in a full-service restaurant—not to mention the fact that the weekly inventory list could run as high as 40 to 70 line items. The key to keeping it simple involves two basic approaches: retaining the low skill-level requirement for preparing your snacks and keeping the number of lines on your menu board to a relative few but offer a variety of sizes. It's amazing how simple your inventory investment can be, while still boosting sales.

Erin Meyer is director of marketing for Gold Medal Products Company in Cincinnati. She can be reached at emeyer@gmpopcorn.com or visit gmpopcorn.com for a free 112-page full-color catalog.

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