March 17

Coffee Service Corner: Menu Management – More or Less?

Coffee Service Corner Monthly Column

In the world of Coffee Service, there are two primary methods of serving one’s accounts. The first, pre-calling or pre-selling, involves either a tele­mar­keting call or a live visit to one’s customers at a prede­ter­mined interval for the purpose of writing an order which would be deliv­ered within a day or so by a delivery person. The second method, route selling, is a service model in which the route person estab­lishes par inven­tory levels at each brew site at a loca­tion and replen­ishes the inven­tory to the par level, hope­fully selling some­thing new along the way and increasing revenue. Route selling is the predom­i­nant method of service in general. Pre-selling is more popular in large metro areas such as New York, Chicago and Atlanta.

For this review, we will focus on menu manage­ment in the route sales model.

An effec­tive route oper­a­tions manager will have two primary goals. The first is serving every customer on every route, on time, every time. The second objec­tive is to drive same-account sales, which is achieved most of the time by adding new prod­ucts or upgrading existing offer­ings. Herein is both the oppor­tu­nity and the problem.

The delivery day typi­cally begins with a load plan for each route person built around a fixed route where supply needs are calcu­lated from the past history of those customers’ purchases. Usually a modest cushion amount is added onto the load to account for north­ward move­ment spikes. Hopefully, there is a weekly or quar­terly promo­tion that might influ­ence which “other” prod­ucts are added to the load. If not, it is then left up to the discre­tion of the route person as to what “new” product offer­ings should be added onto his or her load. This deci­sion can have a measur­able impact upon the route’s rela­tive future success or lack thereof.

The clearest example that I can provide of good intent gone bad is a story from the 1990’s during my first tour of duty as an oper­ator. We had a very good route profes­sional that we will call “Billy” in the Denver market who was most effec­tive in building the ticket. His manager proudly reported one day that Billy had secured the foam cup, paper towel and tissue busi­ness at a large office complex with about a dozen brew sites. This new busi­ness would yield 40% GP and approx­i­mately 200 cases of addi­tional product on a monthly basis, beamed our manager. Knowing that Billy served his customers from a Ford Econoline van, I knew the mess we had just written ourselves into. These higher cube, lower cost and revenue yield prod­ucts would never provide profits that would come close to covering the incre­mental service costs to Billy’s route.

Not wanting to take the wind out of the sails of either our route pro or manager, I thanked them for their proac­tive selling efforts and planned a market trip to Denver for later that quarter for a menu manage­ment coun­seling session. However, before I could get to Denver, Billy reported another “success”. At the same account he reported that he would now be selling approx­i­mately a dozen new SKUs of sodas and juices and several vari­eties of snacks…. none of which were carried at his branch. You see, some select, tenured route profes­sionals were given company credit cards along with permis­sion to use generic code numbers to purchase prod­ucts ad hoc to help them build the ticket. The orig­inal purpose was for key account emer­gency one-offs. Billy added approx­i­mately two hours of shop­ping time for the first service. Four missed delivery calls that same day. And to make matters worse, volume never warranted bringing those prod­ucts into the branch ware­house.

While this example is an isolated inci­dent of good ideas gone bad, there were many more exam­ples that our company expe­ri­enced before we tight­ened up our poli­cies and behav­iors regarding menu manage­ment and became more corporate-centric in our selling deci­sions.

From my short list of helpful hints regarding menu manage­ment, I offer these consid­er­a­tions:

• Stay abreast, even in front of, market trends. Building the ticket is a good thing. Increasing same account revenue is more doable now than at any time in my expe­ri­ence.

• Encourage your route profes­sionals to sell, but guide them with a well thought-out menu of offer­ings and a game plan for success.

• Listen to your route profes­sional and include them in the decision-making process. They are the primary touch points to your customers. They will respond well to being recog­nized for their value.

• Consider the impact of selling by the square foot. Adding high cube, low revenue yield SKUs can be a killer for your ware­house and your delivery vehicle. Yes, avoiding some prod­ucts can open the door for others to get into your accounts, so you must be careful in your deci­sion making.

• SKU ratio­nal­iza­tion is a must and this is not a project. It is an on-going process. Do you really need 7 frac­tional pack Colombian Coffees? Do your seasonal offer­ings need remain in your book year long?

There is much more to effec­tive menu manage­ment than effi­cient SKU selec­tion and elim­i­na­tion. Proper receiving and ship­ping proto­cols are crit­ical. Product storage, rota­tion, and handling is a must. Periodic cycle counting and full inven­to­ries are vital at your facil­i­ties and vehi­cles.

I appre­ciate your past emails and comments. Please contact me at sheaathome@msn.com for your feed­back and sugges­tions for future arti­cles.

Thank you!

Ken

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