We’ve been talking a lot about food and beverage specific marketing strategies as well as tips to boost customer satisfaction on the blog lately but a part of building business success we don’t often talk about is the analysis of your business. It’s the side of business that may seem dry or boring to some but is absolutely integral to running an outlet or precinct that builds on itself and comes out on top of the food and beverage game. Today we are going to introduce one form of analysis that we recommend here at Future Food to ensure all of our clients are converting customers into dollars at every opportunity.
Performance tracking informs how you’re tracking and where you need to adjust to ensure you continue tracking successfully. When resources and structures required to implement performance tracking are not allocated, whether you’re a single operator or entire food precinct, it becomes very difficult for there to be any analysis done and therefore, any developments to be made. With the food and beverage industry being a highly competitive marketplace, it’s in everyone’s best interest to incorporate routine performance tracking to ensure you’re meeting your customer wants and needs and therefore improving your ability to meet your business targets. Continue reading to learn how small, informed improvements across multiple operators in a precinct can bring about gains in the millions for your precinct.
Tracking performance is both qualitative and quantitative. Qualitative performance is everything that the consumer interacts with - it is the tactile and subliminal interface with the brand. Quantitative performance is all the figures - how does your food precinct perform in comparison to other food precincts on the precinct map as well as in comparison to itself.
Qualitative performance is the first impression of the brand and sets the tone for further interaction. When Future Food undertakes performance reviews, we conduct a qualitative analysis according to BIPS:
- The Brand (and brand application)
- The Interiors (and how they are maintained)
- The Product (quality and presentation)
- The Service (speed and standards)
Marginal improvements across these four categories can lead to exponential gains so an in-depth assessment allows us to make recommendations or strategise the future.
A good example of this is to compare two high street bakery brands within the same asset - one with abundant displays and a well presented store and the other with minimal products on display and lacking energy from both the interiors and staff. The more appealing store is the former and provokes a buzzing trade environment for not only that store but the surrounding operators. Similar products at both stores but one out-performing the other. This is where the necessity of qualitative tracking performance comes into place to identify the short-comings of the poorly performing operator and identify the impactful aspects of the successful operator.
It’s easy to compare your precinct to regional and industry averages but all this does is places you on the map in comparison to the benchmark. These figures do not highlight opportunities for marginal improvements which is the basis of our quantitative performance tracking as no one wants to be average!
Quantitative performance tracking of food and beverage operators within a retail centre, airport, waterfront village or stadium goes far beyond merely comparing their results with average MAT per annum or MAT per square meter industry figures. The major issue with this level of performance tracking is that it lumps the industry into one basket as if we are comparing apples with apples when we aren’t - a coffee shop performs very differently to a QSR salad bar so they should not be compared against each other. We believe the key ratios to look at are strike rate and average spend - this is the information really needed to inform how to increase expenditure per customer.
- Strike Rate - the frequency of utilisation of the F&B component within the precinct. This figure can either be extracted from the consumer research data or through obtaining detailed figures from operators on the number of customer they serve per day.
- Average Spend - the amount a customer spends per visit which is determined by the environment, product and service components as well as the outlets pricing position.
In the absence of consumer research and detailed operator point of sales data, precincts can track the average food and beverage spend per visitor which yields a ratio that combines both spend per customer on a specific dining purchase and the frequency (strike rate) or utilisation. The resulting figure also includes the draw card component. This figure would illustrate the average spend per visitor to the precinct on the food and beverage category.
Implementing a consistent follow-up plan is a prerequisite. Routine audits and analysis of trade figures will equip management with resources and information to implement improvements to their dining precinct to realign the offering to the ever-changing consumer needs and aspirations.
To put this into practical perspective, we conducted a case study on a major retail portfolio which showed that implementing improvement initiatives that lead to an increase in spend by $1 per customer across all food and beverage retailers in the precinct, the staggering increase in rental returns for the complete portfolio of retail precincts was over three million dollars a year. Marginal improvements informed by audits and analyses can encourage an increase in average spend and the overall returns are exponential.