Worried about getting the Convenience Store Profit And Loss Statement? This is a detailed research on convenience store profit calculator. If your preference is convenience store margins by category, then this article is perfect for you.
Although many people know a store profit and loss statement is important to understanding their business’s growth, it can be challenging to know what information to include when creating one. Often it can carry everything from the price of napkins to labor costs. Sarah Prorok, director of food and beverage at Thorntons Inc. in Louisville, Ky. explains how a P&L is a necessary tool in any c-store’s foodservice arsenal.
convenience store profit calculator
Convenience Store Profit And Loss Statement
CSD: Why is a profit and loss statement important to a company’s foodservice operation?
Sarah Prorok (SP): Profit and loss statements are important for measuring sales units, dollars, average retails, gross profit and gross margin. Being in foodservice is a big commitment and being able to measure the results of that activity is important to understanding the return you are getting from that investment.
CSD: Should P&L statements be constructed for weekly, monthly or yearly assessment? Or should a retailer use all three?
SP: Monthly statements are important to understand how the changes you are making (promotions, products, pricing, etc.) are impacting the bottom line. Being able to monitor performance month to month and year over year allows you to identify trends to forecast and budget accordingly.
CSD: What are the more common expenses c-store operators should consider in terms of a P&L?
SP: Labor is a big part of the foodservice expense summary. Having a high amount of labor dedicated to fixed costs like routine cleaning and maintenance of equipment make the value proposition difficult if sales volume and profit are low. Basically the more you sell, the lower the fixed labor costs are as a percent of sales.
Retail cost of goods (products), non-retail cost of goods (associated supplies for retail products) and waste are also common P&L expenses. Waste is critically important but can easily be mismanaged. Retailers often make the assumption that no waste is a good thing. Having some waste indicates that we did not sell out and that we were in business during designated operating hours. On the flip side, excessive waste could indicate poor product quality, over-production and the wrong product variety, among other things. Having visibility on waste performance is important.
CSD: What are some related costs of a foodservice program that many c-store operators tend to overlook?
SP: At a high level, the cost of advertising and promotion can be daunting. This expense is not only an initial investment to gain and grow units but also a significant investment on an ongoing basis to keep guests aware and engaged with the foodservice program. The often difficult-to-measure benefits of advertising and promotion are organizational confidence, operational competence and ultimately, guest confidence in a foodservice program. In spite of these challenges, the returns from this expense should only compound over time.
CSD: How do you approach listing sources of income as it relates foodservice, beverage offerings, etc.?
SP: We monitor performance by subcategory for dispensed beverages including hot, cold, frozen, ice cream and the associated supply costs for each of those. Fresh food is similarly split into bakery, other fresh food (fruit, salads, snacks, etc.), roller grill, sandwiches and associated supplies.
CSD: What are some related costs that should be included in a P&L when assessing foodservice expenses?
SP: Outside of retail cost of goods or purchase costs, it is important to account for non-retail purchases such as condiments, cutlery, napkins, etc. If these expenses would not be occurring absent of foodservice sales, then they are a cost of being in the business and should be captured accordingly.
CSD: Do you have a tip for making the P&L process easier?
SP: Doing all accounting-related procedures consistently, accurately and timely makes the process and resulting outcomes more actionable and impactful. Having confidence in and understanding the numbers is the first step to reacting and implementing changes as a result.
convenience store margins by category
How to Determine the Profit in a Convenience Store
A convenience store’s easy access can command high product prices and strong customer traffic. This can translate into healthy profits for your small business, provided you’re serving the needs of your customers, controlling your costs and pricing your goods appropriately.
Three levels of profit – gross profit, operating profit and net profit – or profit after taxes – can help monitor your convenience store’s performance against the nation’s more than 154,000 stores that generate $233 billion a year, according to a National Association of Convenience Stores report.
Calculate Gross Sales
Add the sales revenue your convenience store generated from your primary revenue sources for the accounting period in question to calculate your gross sales. For example, assume your convenience store sold $50,000 in food and beverages, $75,000 in gasoline and $5,000 in miscellaneous merchandise during the month. Add these to get $130,000 in gross sales.
Calculate Gross Profit
Subtract the amount of any refunds you gave to customers as well as your cost of goods sold from your gross sales to calculate your gross profit. Cost of goods sold represents the amount you paid for the merchandise you sold during the period. In this example, assume you refunded $1,500 to customers and had $90,000 in cost of goods sold. Subtract $91,500 from $130,000 to get $38,500 in gross profit for the month.
Calculate Operating Expenses
Total your operating expenses for the period to determine your total operating expenses. These are the expenses necessary to run your core business, such as rent, utilities, wages, repairs, maintenance and insurance. In this example, assume you paid $3,000 in rent, $1,500 in utilities, $20,000 in salaries and wages, $1,500 in maintenance and $500 in insurance during the month. Add these amounts to get $26,500 in total operating expenses.
Calculate Operating Profit
Subtract your total operating expenses from your gross profit to figure your operating profit. In this example, subtract $26,500 from $38,500 for $12,000 in operating profit.
Calculate Net Profit
Add the income you earned from sources other than from selling your primary merchandise to your operating profit. Subtract the interest paid to creditors, income tax payments and any other non-operating expenses from your result to calculate your net profit after taxes.
A negative number represents a net loss for the period.
Assume you earned $500 in fees from a third-party in-store ATM machine and paid $1,000 in interest and $2,000 in income taxes. Add $500 to your operating profit of $12,000 to get $12,500. Subtract $3,000 from $12,500 for a $9,500 net profit after taxes.
Increasing the Bottom Line
If your convenience store’s profits need a pick-me-up, consider these ideas:
Increase your offerings: Food service sales are increasingly becoming convenience stores’ most profitable category, accounting for 35 percent of gross profits according to the National Association of Convenience Stores.
Offer a lottery option or increase your current offerings. Ninety-five percent of lottery customers buy at least one other item while in the store.
Cut Costs: Replace old institutional-style lighting with new energy-saving lighting. This will save on costs and the softer effect will provide a more pleasant ambiance.
Maintain curb appeal: Eighty-four percent of customers who fuel up say cleanliness is a factor when considering whether to go inside to make an additional purchase.
Give a Cash Incentive: If you sell gas, give a several-cent discount on each gallon of gas when customers pay with cash. Not only will you avoid debit/credit card fees but you will also bring customers into the store to possibly make an additional purchase.
Mirror Advertising: Take advantage of big-box marketing. If a restaurant chain is offering a limited-time deal on a sub, consider offering something similar. Your customers may have seen that ad, have it on their minds and may be primed to purchase it from you if it’s advertised.