Analyzing sales: 3 indicators to watch closely
Jul 23, 2020, 6:28 AM
Point-of-sale (POS) systems typically do a great job collecting and presenting data (if yours does not, consider changing systems). However, it’s still up to you to decide what data is useful & relevant to your decision-making process. After all, POS systems don’t make decisions - you do!
The problem is, there can be so much data and so many nice charts that it can be overwhelming. While decision making is about filtering through data and other information to make informed decisions, food business operators often lack the time to thoroughly review and analyse all available data. So, what sales indicators should we really focus on?
1. Top 5 selling items - list these products (excluding coffee sales) and track them week-to-week. Cross reference your product costings against this list to ensure that your most profitable (high margin) products are among your top selling items.
If a top selling items is not in your most profitable product list, then review that product and see what changes can be made (e.g. to ingredient costs, packaging costs, labour costs) to produce the item more cost effectively and hence achieve a greater margin.
2. Lowest 5 selling items - list these products and track them week-to-week. Consider replacing or making changes to an item common to this list over a 4-week period.
Food businesses are always looking to introduce something new to keep customers interested. Having a low selling items list makes it easier to decide which product to swap out when introducing something new.
3. Average spend - We always want to attract more and more customers and achieve higher sales, but it is impossible to control how many customers ‘walk through the door’ each day. In fact, the number of customers/transactions per day can be reasonably consistent (notwithstanding holiday periods).
What is important is extracting as much from each transaction as possible by influencing purchasing decisions. How? It’s about having the right product mix in place, the right product placement, the right ‘up sell’ items and the right ‘bundling’ options. The goal is to push average spend per transaction higher and higher.
The takeaway: Focusing on these 3 indicators will provide clarity and help make product changes which will have the greatest impact on your bottom line. These indicators provide actionable insights, enabling you to quickly turn data into profitable business decisions.
