Introduction
As a franchisee, comprehending the financial structure of our brand is paramount. We’re here to guide you step-by-step, ensuring that profitability is both achievable and sustainable.
1. Gross Sales: Our Financial Bedrock
Every successful business starts with a sturdy foundation: your gross sales. When we say "gross sales," we mean the total revenue minus sales taxes and tips. Using $40,000 as our base figure, it’s essential to note that this is our rock bottom. This threshold represents the minimum acceptable rock bottom performance expectation for any Crave Cookies outlet.
2. DoorDash: Our Digital Partner
With DoorDash, we ensure our cookies reach every craving customer:
DoorDash Sales: These sales represent 30% of your gross, translating to $12,000.
DoorDash’s Fee: We've negotiated a reduced marketplace fee of 15% for Crave Cookies Franchisees most brands pay 30%. The remaining 15% is an investment in marketing on the DoorDash platform, enhancing our brand’s visibility. Together, these fees sum up to $3,600.
After considering DoorDash's role, our net balance is $36,400. This is our main dough, ready for the baking.
3. Cookie Ingredients: Where Magic Begins
The heart of our brand lies in quality:
Average Selling Price: Our average brand-wide sales price ranges from $3.57 in our lower priced territories and $3.95 in our higher priced territories.
Ingredient Costs: The calculated average cost of each of our cookies on the menu, including paper, ranges from $0.90 in our lower priced territories to $0.98 in our higher priced territories (this figure included packaging costs).
We will use the $0.90 average for the rest of our calculations. For our base sales figure, this amounts to $10,083.60 or 25%. The acceptable max average of cookies on any given menu is $1.15 per cookie.
Waste: Unfortunately, a 4% wastage is par for the course, leading to $403.34.
Inventory calculations should always be performed with inventory used. Inventory on hand should not be included in our monthly profit and loss statements as that inventory will inevitably be used in the future. With our rotating menu, today’s surplus becomes tomorrow’s ingredient. Regularly tuning your orders with the average cookie sales ensures minimal wastage.
4. Team Crave: Crafting Cookies with Care
Labor Costs: Labor stands at 28% of our sales, amounting to $11,200 monthly. Based on an average wage of $15/hour, this figure includes not only the frontline cookie creators but also our managers.
It's essential to note: our managers aren't just supervising from a corner. They're in the mix, hands-on, working side by side with the team. Managers should be filling one of the regular shift roles at all times (baking, working PoS, etc).This dual role ensures we're lean, efficient, and operating with team spirit.
5. The Essentials: Overheads and the Little Extras
Every store has its non-negotiables:
Rent: Unchanging, ringing in at $6,000 (this is the median for our brand. Typically rent ranges between $5,000 - $8,000 depending on location).
Utilities: 1-1.5% of our gross sales.
Software: Point of Sale, Loyalty, Mobile App, Delivery Integrations make up a flat $400 monthly.
Insurance - Approximately $400 monthly
Brand Contribution (Royalties): 6% of gross sales
Marketing: 2% of gross sales.
6. Scaling Heights: Amplifying Profitability
At a sales figure of $40,000, we aim for a profit margin of 8% when the business is fully optimized following our model above. With an increase in sales and fixed costs like rent, profitability naturally scales:
Gross Sales | Profit Margin | Profit |
$40,000 | 8% | $3,200 |
$60,000 | 15% | $9,000 |
$80,000 | 18% | $14,400 |
$100,000 | 20% | $20,000 |
7. Navigating Towards Profit
Every Crave cookie is a promise of quality, and every figure in this guide ensures profit. If you find discrepancies in your balance sheet, it signals a need to recalibrate. Maybe labor costs are straying, or your orders don’t sync with demand.
If your store is drawing in at least $40,000 in gross sales and still isn't turning a profit, it's a clarion call: scrutinize your operations, not the model. We have implemented this model successfully for over 4 years now. Our guide is the beacon; aligning with it is your ticket to success.
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