Revenue Per Available Seat Hour (RevPASH)
Increased client's revenue by 9.8%
A small, first-ring suburban diner did $1.3M in annual revenue, but had a new annual revenue goal of $2.5M based on an upcoming move to a larger restaurant. Seating capacity indoors was increasing from 84 to 124 which included an expanded bar.
In reviewing the new seating chart, we suggested they confirm the validity of the plan prior to opening. Over the next three weeks during their busiest meal periods the client tracked arriving party sizes while on a wait. This allowed us to accurately determine the number of tables at each size that best matched the client’s guest needs in order to maximize revenue.
With the revised table mix implemented, annual sales actually finished at $2.8M, up from the proposed budget of $2.5M. At peak times for their busiest day-parts the client is doing more covers due to a better table/seat occupancy for arriving parties - 50 more guests per peak shift.
Analytics determined that $245,000 out of the $300,000 in increased revenue over their original $2.5M budget can be directly attributed to the successful implementation of this seating strategy.
Distributor Sales Strategy
Improved top line sales by 8%.
We launched a professional consulting practice for a large division of a full-line foodservice distributor serving the restaurant sector. This helped to reposition their operation for greater customer value-creation and sustainable growth. Their reliance on transaction-oriented representatives who were ill-prepared to endure the sales cycles required to convert high-quality accounts from competitors was not producing their desired revenue and profit objectives.
The first step of this consultative strategy was segmenting customer revenues and tracing their origins, gaining insights into how, why, and when the business grows or shrinks. Thus, we tracked:
– Acquisition: Revenue from new accounts. We created and trained a new team of four Business Development Managers in a Complex Sale approach. Each was responsible for a pipeline of 50 to 75 prospective clients along with a specific sales budget.
– Penetration: Revenue from existing accounts. We created and led a team of specialists to work with existing customers who were under-penetrated. This team diagnosed pain points and co-created strategies with operators to assist them in improving their business. This resulted in selling them more product lines, creating additional revenue.
– Retention: Revenue lost from former accounts (expressed as a negative value, or, “customer churn”). The annual customer churn rate at that time for a full-line distributor was 17%. At this particular division that number hovered around 13%. We developed and delegated a formal Business Review strategy to help improve customer retention. The outcome was a 4% reduction in customer churn.
The resulting top-line sales growth from this strategic initiative was 8% with improved profitability. This was accomplished through customer stratification and better utilization of personnel with a disciplined focus of new and existing customer channels.
Negotiated 2% food cost reduction.
A restaurant company’s food & labor costs were trending 5% high. We wanted to make sure that the operator’s buying power was optimized.
Having been on both sides of the table we had a keen awareness of how to negotiate an aggressive pricing structure while ensuring that the distributor is achieving the efficiencies necessary to attain the proper operating income.
The first step that we took in this initiative was to negotiate a new agreement with a produce company on approximately $1.0M in annual purchases. Once that was successfully achieved we created a request for proposal to the broadline distributors in the marketplace.
Four broadline companies, in addition to the incumbent, participated in presenting proposals and bidding on the business. After meetings with each company to review their service capabilities and product offerings one company was awarded prime vendor status.
The result of these two negotiated contracts, for both the produce and the full-line distributor, resulted in a food cost reduction of over 2%, improving the operator’s bottom line by approximately $450K annually.