Coffee Service Corner: Menu Management – More Or Less?
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
