Foodservice continues to be a high-margin category with a growing percentage of inside sales and a great deal of opportunity. Last year, it commanded an average of more than 50% margin and saw a 10.7% increase in monthly gross profit over the previous year, according to NACS 2023 State of the Industry. As a top-margin category, a foodservice offering is worth considering, but how can retailers minimize the risk, be nimble and pivot to meet customer preference? They have to have controls in place to ensure profitability. Back office software combined with business intelligence can provide control by protecting margins, making sense of waste, improving vendor management and offering proactive insight to help make informed decisions.
Protect profitability with recipe management
To protect margins and understand the true cost of foodservice items, accurate recipes are key.
“We can build specific recipes for our sandwiches that will deplete the inventory of turkey by a quarter of a pound,” shared Taylor Sutton, COO at Tiger Fuels, operating The Market convenience stores in Virginia. “It's really intricate and nuanced, and we can have a much better sense of what things are actually costing us and can make sure that we're staying profitable on every item.”
As foodservice items are sold, inventory in the back office software is decreased for the precise ingredients per the recipe with accurate cost and margin. There is no guesswork. Proper recipe management is the only way to have a truly accurate cost of foodservice offerings, and managing costs is the key to profitability.
Control shrink and understand waste
A strong margin is very important, but retailers don’t have a full picture of foodservice success unless they monitor shrink. With the use of inventory scanners, stores can easily keep count of unsold food and stop shrink from being a guessing game. If waste is always accounted for and shrink continues, either theft or improper portions during production are the potential culprits. Back office software can automatically alert management to prompt a quick and easy check-in with staff to fix the issue. The wasted food is also known, allowing management to adjust stock quantities up or down to better meet demand and reduce future waste.
Inventory management for better vendor and cost control
Scanners can also be used to manage purchases from vendors. Having a vendor onboard to help ensure stores have the right ingredients is important to the success. Scanners allow the stores to scan in vendor invoices to be sure what was ordered is what was received and that the cost is what was expected.
Sutton shared, “We've got scanners to quickly make sure we're getting what we're expecting from our vendors and syncing those things up on the back end. It makes it easy for the managers.”
Be nimble and able to pivot
Back office software empowers stores to take chances on new offerings for continued success. With ever-changing customer preferences, having true visibility into a store’s foodservice activity is paramount.
“Technology tools are helping us have a better finger on the pulse,” shared Sutton.
With back office software enabling tight tabs on profitability and strong controls on waste, the risk associated with trying new foodservice products is limited. Launching new items and measuring their success is easy when retailers leverage live reporting on sales captured at the POS. Combining the data with business intelligence tools, retailers can easily compare sales across stores on new items allowing them to tweak marketing messages, pricing and ingredients based on real sales data.
Sutton shared, “We've got deli stores, so we are making sandwiches, salads, fried chicken, mac-n-cheese, you name it. The number of items that are going through those stores is huge and always changing. It’s really important that we keep a good track of it.”
Opportunity awaits
Foodservice opportunities are at a high point right now. In fact, future customers are already in the stores. According to NACS Convenience Voices 2023 results, 28.7% of the c-store customers interviewed in-store said they were planning to visit a QSR in the next 30 minutes. And this figure has risen 3% since 2022. That’s a growing opportunity for retailers to offer customers even more efficiency when they buy that meal from convenience stores instead.
Using the tools available with back office software, stores are empowered to take advantage of this opportunity while controlling the risk. With a constant eye on profitability, software can be a watchdog over a store’s foodservice operation helping to ensure its success.
This post is sponsored by ADD Systems