📈 Increasing Margins: 📋 The Game Plan
How do we widen our margins? Our simple idea to target is, increase the average ticket price without increasing direct costs on a percentage basis.
By: Mitch Wooderson
💬 In This Post:
- How we thought about widening our margins.
- What we plan on doing to widen our margins
- Charts to illustrate current margins
🤷🏻♂️ Soooo, What Do We Do?
With costs going up we have seen our margins tighten. We want to stop this tightening and hopefully expand our margins. We are new to this owning a business thing so just wanted to approach this in the simplest way we could think of so that we could easily quantify the effects.
Our simple idea to target is, Increase the average ticket price without increasing direct costs on a percentage basis.
How we plan on doing this 👇🏻👇🏻👇🏻
Sides
- Not only for margins but we want more variety. We started simple with what we know will be our bread and butter, the taquitos. Since neither of us had any experience in the food industry prior to this we didn't want to get in over our heads by offering too much variety. We thought that if we tried to stretch ourselves too far we could sacrifice quality. We decided to start with our focus as doing one thing (taquitos) really well.
- Goal: Increase the average ticket price
Charging for Sauce
- We hate to do it! We started out having our sauces on a table off to the side of our tent, free for anyone to take. Now we are planning on taking control of the sauces. We are going to allow one free sauce per order and then after that we will charge $.50. We think that this will just keep us at cost on the sauces. Breaking even on them is ok for us, it's not something we think major profits need to come from.
- Goal: Don't lose money by giving out sauces for free. The way we looked at it, by giving out free sauces we were effectively lowering the price we were selling taquitos for.
Where We Currently Stand
Average ticket price (as of 3/27/22): $14.89
Our Tightening Margins Per Taquito Margin on each taquito flavor 10/21 vs 3/22
*** This is strictly the food cost. This does not including packaging, labor, fixed costs, etc.
High Level Gross Profit Margin
🕐 Next Up:
So, this was part 1 "The Game Plan" as I so creatively 😅 named it. The next part will detail results we see a month after making these changes. The changes will be made in phases in hopes that it makes the impact clear to see.