Convenience Store Food Service Consultant- Dean Dirks: News, Articles, Events

August 22, 2008

DUE DILLIGENCE – DOING YOUR HOMEWORK

Filed under: Speeches — Tags: , , , , , , — deandirks @ 4:19 pm

Outline of the “Due Dilligence – Doing Your Homework” speech I gave at the FOOD SERVICE AT RETAIL EXPO 2008.

  1. DUE DILLIGENCE
    DOING YOUR HOME WORK
  2. HOMEWORK
    Financial analysis
    Physical issues
    Day part customer count
    Choosing the correct format
    Core competency for food service
    Upper management commitment
  3. FINANCIAL ANALYSIS
    PROJECTING DAILY SALES
    Inside customer counts 478
    Capture Rate 20%
    Expected F.S customers 96
    Average transaction $7
    Projected daily sales $669
    Monthly sales $20,076
  4. PROJECTING FOOD COST
    Food costs=COGS / Sales
    Projecting food costs are complicated
    An item w/ $2 cost w/ $7 retail = 28%
    An item w/ $2 cost w/ $6 retail = 33%
    Sales mix skews food cost
    TB #1- 34% bean burrito mix =22%fc
    TB #2- 24% bean burrito mix=24%fc
  5. LABOR
    Don’t listen to general labor cost %
    Write a manning table w local labor rates.
    Washington state min wage is 8.25
    Labor in Washington vs. Mississippi, how can you discuss labor % ?
    Include incremental supervisor labor
    Include taxes, bonus, and benefits
  6. EXPENSES
    INCLUDE ALL EXPENSES
    Rent 
    Linen/Laundry 
    Telephone 
    Credit Card Service Charges 
    Other Taxes/ B&0 
    QSR Royalties- 
    Depreciation 
  7. Required rate of return (Hurdle Rate)
    INVESTMENT -$181,148
    Cash flows 
    YEAR 1-$29,106
    YEAR 2-$25,406
    YEAR 3- $22,176
    YEAR 4-$19,357
    YEAR 5- $16,897
    END OF YEAR 5 YEARS- $112,942
    $68,206 Left on the investment at the end of 5 yrs
  8. ANALYZING CUSTOMER COUNTS
    Customer counts per day part
    This information will dictate the format
    Heavy lunch-deli
    Heavy dinner- hamburger, chicken
    Heavy breakfast- donut, breakfast sand
  9. PHYSICAL REVIEW
    Drive thru-critical hamburger formats
    Parking- limited can be offset by high carry out, Subway for example
    Store layout to share labor, donut formats need to be by the registers for impulse
    Signage restrictions
  10. THE HUMAN FACTOR
    Is the owner committed to food service?
    Does the owner understand that it may take time to show a profit?
    Skill set for managing food service
    Research market rate for FS managers
    Are you willing to take on another staffing problem.
  11. THE REWARD
    Food service can be very profitable. Do your homework, select the correct concept and know how to manage food service
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