To earn a 20% EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in our ice cream business requires focus on several key areas. Here's a step-by-step guide to help achieve that objective:
Develop a solid business plan:
Write out your vision, develop achievable (and stretch) goals, and relentlessly pursue you target market. Write it out and review it regularly. Adjust it as needed.
Outline – in writing – your marketing strategies and revenue & cost projections.
Use the P&L Projection Model provided in last month’s Newsletter.
Develop a thriving mobile catering subsidiary.
Make the most of your locations:
Utilize ‘attraction devices’ for the outside.
Be the ‘go-to’ place for ice cream celebrations.
Partner with popular delivery services.
Establish one or two pro bono or volunteer activities per month, or per quarter, to do with ice cream. Be known for it.
Create an appealing ambiance:
Invest in attractive decor and comfortable seating.
Use vibrant colors and appealing displays.
Amp up the lighting.
De-clutter the store and be obsessive with organization and cleanliness.
Refine our unique menu and quality products:
Develop a variety of unique products and flavorful ice cream combinations. Dress up the final product beyond what your competitors do and then watch how Instagram explodes.
Try new products that might work for your region.
Use high-quality ingredients for a premium product.
Consider publishing a monthly ‘take-home’ calendar with daily specials, back stories, a unique flavor-of-the-day, and other products and activities.
Figure out a way to sell Branded Products. Let me know your suggestions.
Provide superior customer service:
Be obsessive with training staff to be friendly, knowledgeable, and attentive. Hire well. Don’t settle.
Develop written staff scrips and job expectations for each position.
Focus on enhancing the overall customer experience, including sight, touch, smell, and hearing experiences.
Turn your existing customers into promoters by making the experience and product irresistible to share.
Implement effective marketing strategies:
Leverage social media and online platforms for promotion. Use Lauren’s outlines. Utilize Nitro Base!
Collaborate with local influencers and engage in email marketing.
Empower your employees to be brand ambassadors and influencers for your store.
Surprise employees with rewards for good work.
Get engaged and involved with your Chamber of Commerce, City Hall, and Rotary.
Utilize our reward and communication system by distributing clever content.
Optimize pricing and cost management:
Determine what your break-even is for sales. Review the B/E Model from March, 2022.
Analyze in excruciating detail all costs, including ingredients, rent, utilities, and each O/H line.
Determine optimal pricing to maintain a healthy profit margin.
Try to avoid ‘discounting.’ Rather, try ‘value-plus’ pricing methods such as free mixin Mondays or free Waffle Bowl Wednesdays. Quality pricing attracts.
Implement efficient operations:
Be fanatical about written standardization of policies, procedures, and product formulas.
Streamline inventory management and reduce waste. Reduce skews. Look for cost renegotiation opportunities.
Use our existing technology tools such as, other free features on our POS system, rewards software, staffing scheduling, and ProfitKeeper for better efficiency and financial insights.
Increase our speed of service by taking seconds out of our bottlenecks and increasing the speed of taking orders. We are working on a new freezing patent that may significantly decrease the freezing time.
Promote upselling and cross-selling:
Train staff to suggest additional items or upgrades.
Consider improved Impulse Displays along the front counter and at the POS.
Offer combo deals or specialty toppings to increase sales.
Consider pass-through credit card processing charges to customers.
Monitor and analyze financial performance:
Be disciplined in keeping up to date with your bookkeeping.
Perform a ‘monthly close’ and immediately review your financial statements from your accounting system.
Be passionate about keeping a tight ship financially. Be aware of shrinkage and theft.
Make the “Five 20’s” your objective: 20% COGS. 20% Labor. 20% Rent. 20% Overhead. 20% Profit (EBITDA)!
Be hawkish with an eye keenly focused on this EBITDA margin. Adjust regularly.
Remember, achieving a 20% EBITDA margin requires obsessive attention to factors such as efficient operations, effective cost management, excellent customer service, and strategic marketing. Continuously evaluate your progress, adapt your strategies, listen to customers, empower employees to help you, and stay focused on saving pennies, improving products, increasing promotions, and refining the customer experience.
Good Luck to All of Us
Rob West, CFO, MBA