Feasibility, Profitability, & Private Industry Standards

Category Data Source
Feasibility Level 1 Vending Machines (100-399 Federal Employees). Level 2 Sundry Stand (100+ FEs) Level 3 Prepackaged Snack Bar (400-799 FEs) Level 4 Limited Onsite Snack Bar (800-1199 FEs) Level 5 Onsite Grill (1200-1599 FEs) Level 6 Café (1600-1999 FEs) Level 7 Cafeteria (2000+ FEs). GSA Concessions Management Desk Guide, August 2001, Appendix A-1-, Concessions Feasibility Study Template, pp. 1-12
Feasibility Level 1 Vending Machines (Minimum Space Required). Level 2 Sundry Stand (250 sf) Level 3 Prepackaged Snack Bar (600-1050 sf / 480-840 sf dining) Level 4 Limited Onsite Snack Bar 1200-650 sf / 960-1320 sf) Level 5 Onsite Grill (1800-2250 sf / 1440-1800 sf) Level 6 Café (2400-2850 / 1920-2280 sf) Level 7 Cafeteria (3000+ sf / 3000+ sf). GSA Concessions Management Desk Guide, August 2001, Appendix A-1-, Concessions Feasibility Study Template, pp. 1-12
Feasibility National Brand franchisee space requirements: Blimpie: 100 sf for Sandwich Express or 300 sf + seating area for full service; A&W: 1,200 sf; Long John Silver's: 1,200 sf; Orion: 300 sf; Arby's: Seating for 40; Huddle House: 2,000 sf; Pizza Inn Express: 200-400 sf; Simple Simon's Pizza: 180 sf; Piccadilly Circus Pizza: 12 sf for merchandizing unit to 100 sf. Convenience Store Decisions, June, 2001, "Foodservice Decisions," pp. 76, 78, 80, 82.
Feasibility In 2000 nationwide GSA food services operate 251 days per year for breakfast and lunch with daily patronage ranging from 60%-80% of the building population and lunch patronage equally less than 40%. Daily sales equal $1.40 per building occupant. GSA Concessions Management Desk Guide, August 2001, Appendix A-1-, Concessions Feasibility Study Template, pp. 1-12
Feasibility In 2000, average lunch participation rate at onsite Business & Industry foodservice units was 45%, down 12% from 1994; breakfast participation stable at 24%. SFM's 2000 Industry Standards & Benchmark Comparison study.
Labor New York Assembly approves boost in state minimum wage to $6.75/hour 126-19; Senate approval pending. Nation's Restaurant News, June 17, 2002, "Steep N.Y. min.-wage hike looms as feds eye vote," pp. 1/6.
Labor Sen. Edward Kennedy has introduced a bill raising the federal minimum to $6.65 in three increments: 60-cents in 60 days, 50-cents by 01/01/2003, and 50-cents by 01/01/2004. Nation's Restaurant News, June 17, 2002, "Steep N.Y. min.-wage hike looms as feds eye vote," pp. 1/6.
Labor According to the New York Department of Labor, the state's average weekly wage rose 6.3% 1997-1998, 3.6% 1998-1999, and 8.4% 1999-2000. Nation's Restaurant News, June 17, 2002, "Steep N.Y. min.-wage hike looms as feds eye vote," pp. 1/6.
Labor In Atlanta, daytime workers paid $9/hour instead of $5.15/hour minimum wage. Atlanta Journal-Constitution 06/23/2002, "Fast-food industry belies stereotypes," pp. R1/4
Labor Many chains offer health and dental coverage, 401(k), and other benefits Atlanta Journal-Constitution 06/23/2002, "Fast-food industry belies stereotypes," pp. R1/4
Labor Naval Supply Systems Command is developing a new Menu Planning Guide to reduce labor by utilizing a mix of heat and serve food and speed scratch recipes. FoodService Director, June 15, 2002, "Navy Seeks Labor Savings," p. 1.
Labor Your operation must provide man-hour coverage for the following functions: management and supervision, preparation, set-up, service, and utility, housekeeping (cleaning) and sanitation, sales and marketing. Your staffing pattern must reflect the needs and requirements for the facility, layout, menu variety, patronage level, and sales volume. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, pp. 18-19.
Labor In Government models, holiday and vacation pay are treated as regular hours with benefits frequently projected as 20% of wages. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, p. 19.
Profitability Budget In preparing an annual budget, start with a marketing budget that answers these key questions: What percent of sales will you do over the next 12 months with your current clients? How much business will fall way from your present clients? What is your strategy for bringing in new business? How are you planning to profile clients so you only work on high quality new business? Are your current lines giving you the return you want? What specifically are you going to do to get better lines? Vending & OCS, July/August 2001, "Budgeting Provides a Road Map, pp. 8, 10.
Profitability Budget In preparing an annual operating budget, project expectations based on historical data to address the following key areas: Sales, product costs, and direct operating costs for the year. A breakdown of general administrative expense. A pro-forma balance sheet showing your expected assets and liabilities at the end of the year. A pro-forma cash flow statement showing what the use of your cash flow will look like at the end of the year. Vending & OCS, July/August 2001, "Budgeting Provides a Road Map, pp. 8, 10.
Profitability Costs "80% of your money goes for 20% of the items you buy. These 20% are the ones you really have to manage." FoodService Director, June 15, 2002, "Tracking food prices online," p. 84, quotation attributed to Alan Raedels, professor from Portland State University, Portland, Oregon.
Profitability Costs Food Prices on the Web: Food Institute Online--Food Price Outlook [www.foodinstitute.com/outlook.htm] Foodservice.com Market Prices [www.foodservice.com/marketprices/] NACUFS Surveys and Statistics [www.nacufs.org/resources/mayCommBskt.asp] Purdue Agricultural Economics--Food Price Report [www.agecon.purdue.edu/extensio/outlook/food/index.htm] US Bureau of Labor Statistics--Consumer Price Index [www.bls.gov/cpi/] USDA Reports by Commodity [www.usda.gov/nass/pubs/estindx.htm] FoodService Director, June 15, 2002, "Tracking food prices online," p. 84, quotation attributed to Alan Raedels, professor from Portland State University, Portland, Oregon.
Profitability Costs A driving force behind high food costs results from cooks choosing to follow their own recipes or measuring "by eye" instead of using standard recipes and prescribed spoons, cups, and scales. Nation's Restaurant News, July 30, 2001, "Let's get fiscal: Look at the other side of profitability, p. 18.
Profitability Formula Sales Per Square Foot Formula: Sales per Square Foot = Total Net Sales divided by number of Square Feet. Restaurants USA, October1995, "How's Business? Add It Up," pp. 11-13.
Profitability Formula Sales per square foot gives a reliable, quick read on profit potential, and $300 annual sales per square foot of total floor space is a good benchmark. Nabisco Foods Group Profit Workbook III, c 1993.
Profitability Formula Break-Even Point Formula: Divide total fixed costs by 1 minus variable costs as a percentage of sales. To determine the daily break-even point, divide the annual amount by the number of days open during a year (251). You should recalculate your break-even point whenever there is a change that affects operating costs. Restaurants USA, February 1994, "How to Figure Your Break-Even Point," pp. 15-17.
Profitability Formula At Lipton franchised stores, sales must average $23,000 per week to break even. BusinessWeek, June 12, 1995, "Pecking at Boston Chicken," p. 82.
Profitability Formula Working Capital Ratio Target formula: Cash + Inventory + Receivables divided by Accounts Payable + Accrued Expenses should yield a ratio from 0.5 to 1.0. This means you have 50 cents to $1 on hand for every dollar owed. A ratio too low and you're in danger of not meeting your business responsibilities; too high and you're not leveraging your credit enough. Nabisco Foods Group Profit Workbook III, c 1993.
Profitability Formula Growth Rate Formula: Growth Rate = Current Year's Income minus Last Year's Income divided by Last Year's Income. Restaurants USA, October1995, "How's Business? Add It Up," pp. 11-13.
Profitability Formula Profit Ratio Formula: Profit Ratio = Gross Profit divided by Total Expense. This simple equation helps you measure the relationship between your profit and your break-even point. A high profit ratio (125% or 130%) is very healthy--especially if it is increasing over time. Restaurants USA, October1995, "How's Business? Add It Up," pp. 11-13.
Profitability Formula Projected Gross Sales Formula: Daily Patronage times Check/Transaction Average = Projected Daily Gross Sales times 251 working days [+Catering and Vending Machine Receipts] = Projected Annual Gross Sales. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, p. 16.
Profitability Formula Simple Ingredient Mark-Up Pricing Method Formula: Multiplier = 1 divided by Desired Food Cost Percentage [Multiplier for 40% or .40 Food cost = 2.5]. Best Selling Price = Ingredients Cost x Multiplier [i.e. for .90 ingredient cost times 2.5 multiplier = $2.25 best selling price]. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, p. 37.
Profitability Mark-up Average Mark-Up on side-of-plate items: Rice (82%), French Fries (81%), Appetizers (68%), Soup (66%). FoodService Director, August 15, 2001, "Matching entrees to sides," p. 86.
Profitability Inventory Formula Inventory Turnover Formula: Turnover = Cost of Goods for Time Period divided by Average Inventory for Same Period. Stockpiling too much inventory is deadly because it ties up valuable working capital. On the other hand, not having enough inventory can cause problems in not meeting customers' needs. Lagging turnover is a sign that you're carrying too much inventory. Restaurants USA, October1995, "How's Business? Add It Up," pp. 11-13.
Profitability Inventory Vending machines should have between 35% [perishables] and 50% [canned/bottled drinks] of their inventory sold every time a machine is serviced. Vending & OCS, September/October 2001, "Operating in a Contracting Economy," pp. 6-8.
Profitiability Margins Convenience Store Foodservice Gross Profit $ Per Store Per Week: 2000: $1,266 / 2001: $1,011 [-20.1%]. Convenience Store Decisions, June 2002, ""Strength in Numbers?" pp. 16, 18, 20, 22, 24.
Profitability Margins Convenience Store Foodservice Average Gross Margin Percent: 2000: 57.0% / 2001: 50.4% [-6.6%]. Convenience Store Decisions, June 2002, ""Strength in Numbers?" pp. 16, 18, 20, 22, 24.
Profitability P&L To compare apples to apples, set up 13 four-week periods of 28 days each. Each will have four weekends and four of each weekday, insuring that normal, repeating traffic won't skew the results. This system also nicely accommodates two identical payrolls (every two weeks), or 26 payrolls per year. Nabisco Foods Group Profit Workbook III, c 1993.
Profitability P&L Government Model P&L Profile: Gross Sales: 100% Food Cost: 40% Labor Cost: 40% Miscellaneous: 10% Profit and Administrative: 10%. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, p. 44.
Profitability P&L Always keep value in mine. Lower prices win repeat customers. Raise prices only on specific items as dictated by your costs. Track number of each item sold and determine how each item contributes to your profit compare to other items. Drop unprofitable items unless loss leader strategy is in place. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, pp. 32-33.
Profitability Sales In 2000 convenience store sales grew 15.1% with onsite food service generating gross profit of $115,400 per store. Convenience Retailing brochure, 2001, p. 4.
Profitability Sales Convenience Store Foodservice Average Weekly Sales: 2000: $2,220 / 2001: $2006 [-9.6%]. Convenience Store Decisions, June 2002, ""Strength in Numbers?" pp. 16, 18, 20, 22, 24.
Profitability Sales Bob Evans restaurant sales up 8% for the year ending April 26, 2002. Nation's Restaurant News, June 17, 2002, "Bob Evans serves up 33% net gain in fiscal year '02," p. 12.
Profitability Sales In 2000, average lunch checks reaches a record high of $3.17. SFM's 2000 Industry Standards & Benchmark Comparison study.
Profitability Sales 1996 Check Averages: Breakfast: National: $2.50 Government: $1.50 Lunch: National: $5.15 Government: $2.75 Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, p. 16.
Profitability Sales Using 80/20 rule, put in two rows of your five best sellers. Vending & OCS, September/October 2001, "Operating in a Contracting Economy," pp. 6-8.
Profitability Strategy "Only marketing and innovation produce profits." Vending & OCS, July/August 2001, "Budgeting Provides a Road Map, pp. 8, 10, quotation attributed to Peter Drucker.
Quarterly Reviews Quarterly management reviews (using an effective foodservice operations checklist) are invaluable sources of reliable data that can be used to plan short-term and long-term business and operational improvements. The program areas most checklists include are: Food Products (garnish & appeal; temperature [storage and holding]; portion control; preparation quality, variety and specifications; attractive display. Operations (management: supervision; unit productivity; staff appearance; customer service). Facilities and Equipment (clean and sanitary [free of food debris or grease]; working or documented repairs underway; preventive maintenance). Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, pp. 6-7.
Cleaning Standards Daily sweep, vacuum, damp mop, spray buff, wipe down, spot clean of clean quarry tile and resilient tile floors, carpets, tray rails, tile walls and posts in dining areas, trash receptacles, trucks, carts, dollies, doors, door windows, glass refrigerator doors, inside of dishwashers, coffee urns, beverage dispensers, hot and cold counters, conveyor belts, tables, chair seats, and rest rooms. Empty trash and rubbish cans at the location designasted by your building manager. Weekly clean, steam clean, wash, spot clean, or spray buff chairs and table pedestals, hoods and filters in kitchen, mobile equipment, entire cafeteria receiving dock and trash room, carpet, and resilient floors. Monthly clean all portable fans. Quarterly strip and wax all resilient tile floors and shampoo carpet (more frequently as needed). Semiannually perform high cleaning of pipes and louvers, clean tile walls in the kitchen and dining areas, wash venetian blinds (if any), and clean all fans and ventilators. Annually dry clean all. Creating a Foodservice Operations Checklist, 1997, GSA Southeast Sunbelt Region, pp. 28-29.