Up for debate which special is the “Better” special
Special A food cost is about 38% but the overall profit is about 72 cents higher than Special B
Special B food cost is about 34% but less profit than Special A
Assuming both specials would sell equally.
Your banker could care less about percentages, you can not pay bills with them. From a financial standpoint all that matters is profit dollars. You invest time and money with the intent of taking money home. Percentages can be use for gauges to measure the performance of your business but at the end of the day your goal is to make dollars.
I agree with Rick G…you can’t take percentages to the bank!
But you need to ask yourself, are both of these specials equally easy to produce? Does one take more time than the other? Does one slow the rest of the operation down?
Just a few quick thoughts…
I agree 100% also and i brought this up because i constantly see people over concerned about % food cost and i thought this was a good way to look at it.
I suppose i could have left the the overall profit out and just said special a is 38% food cost and special b is 34% and asked what is the better special. I think most people would jump the gun and say special b.
In this particular case it is a pizza wing combo and the only difference is adding 5 wings to special A so cook time and all the other fun stuff really does not come into play because they are pretty much the same thing. The numbers were thrown at me by someone who thought they had made a great discovery and was going to make us all kinds of money because hey we just cut 4% off food cost (of this particular item) by doing this special instead of that one.
Just some food for thought for people when evaluating these things
Remember this…
You can make a lot of money selling folks what they already want to buy.
Does not matter what you want to sell…it needs to be what the customer wants.
What I love about this thread:
by Rick G » : “… all that matters is profit dollars.”
by Patriot’sPizza »: “… you can’t take percentages to the bank!”
by Bubba »: “You can make a lot of money selling folks what they already want to buy.”
Its possible that you could run 40% FC and generate 8% profit, while running 32%FC and generating just 4% profit. There’s a lot of variables that can be tweaked, but the bottom line is profit. Generally, more work should equal more profit. One store equals $1K profit, so 1K stores equal $1M profit. However, if the 1K stores equal $1K profit (total), then you’re just working way harder for the same bottom line - much more work for the same profit.
Post of the year! (I know the year is only 3 days old, but I may feel the same way on 12/31/13.)
We are all in the sales/marketing business. A great salesperson is not somebody that tries to sell what he has… it’s the person that figures out what somebody wants to buy, and then sells that to them.
Percentages are nice, but dollars are what go in the bank. You can not make these decisions without sales performance in the equation.
If one special produces 100 orders and the other produces 30 I will take the one that procuces 100 orders regardless of the percentages. In my 14 years, I must have tried 100s of offers. Some have been real turkeys despite having good profit potential or being really good deals for the customer.
If you want to dig into the numbers, you could look at gross margin productivity of the offer taking into account unit sales, food cost and price combined. Leaving any one of those three out makes the result meaningless.
I agree with bodegahwy as i said in my original post “assuming both specials would sell equally”
is there any way to say if ppl add on to ur special? say the more profit one rarely gets upsell items added on… salad, drinks, appetizer … why? maybe because its bulkier order (already a lot of items included in special…at least that what it sounds like to me), now the less profitable sounds like maybe pizza and soda or smth… so it has bigger potensial to upsell smth else to customer… my pos would be able to tell, not sure about urs. Also, what as if smaller profit special is more wide spread thru week days like mon and tue… and bigger special is redeemed mostly on fridays? - i would vote for first one. or u know what? - raise the price for less profit one 75c and u ll sleep better 