Introduction
Organizations strive to use metrics, such as key performance indicators (KPIs) to measure success and better understand their competitive landscape. Starbucks, one of the world’s leading coffee brands, is no exception. By tracking their KPIs, Starbuckshave was able to stay competitive and understand how their business was performing. Knowing the right KPIs to track is incredibly important, and using the right metrics can make all the difference. In this blog post, we explore the top seven KPIs for Starbucks franchises, how to track them, and how to calculate metrics.
Number of magazine locations
Definition
The number of store locations is a key performance indicator (KPI) used to measure the success of a Starbucks franchise. This metric is used to track business growth and expansion and is used to assess the effectiveness of strategies used to increase brand reach and presence.
Benefits of Tracking
Tracking the number of store locations has many benefits. It provides valuable insight into the growth and expansion of the Starbucks franchise. Additionally, tracking the number of store locations allows you to track the success of marketing and promotional strategies, as well as the effectiveness of operational strategies such as customer service and store design.
Industry Benchmarks
The number of store locations is an important indicator of success for Starbucks franchises. The industry benchmark for the number of store locations is generally based on the size of the market in which the franchise operates. For example, a Starbucks franchise in a large market may have more store locations than a franchise in a smaller market.
How to calculate
The number of store locations can be calculated by taking the total number of stores open at any given time and subtracting the number of stores that have closed. The resulting number is the number of magazine locations.
Calculation example
For example, if a Starbucks franchise has 100 stores open and 10 stores closed, the number of store locations is 90.
Tips and tricks
- Track store location counts regularly to get an accurate picture of the success of your Starbucks franchise.
- Compare the number of store locations to industry benchmarks to gauge the success of your franchise.
- Use store counts to gauge the effectiveness of operational and marketing strategies.
Revenue per store
Definition
Revenue per store (RPS) is a key performance indicator (KPI) that measures the total revenue generated per store. It is commonly used to assess the profitability and performance of individual stores.
Benefits of Tracking
PR tracking helps business owners and managers quickly identify locations that are outperforming or underperforming the average. Additionally, it can be used to compare current performance to historical performance, which can reveal trends over time.
Industry Benchmarks
Industry benchmarks for RPS vary depending on the type of business. For Starbucks franchisees, the benchmark for RPS is usually around .5 million.
How to calculate
RPS can be calculated using the following formula:
Calculation example
For example, if a Starbucks franchise had total revenue of million and there were 2 stores, the RPS would be calculated as follows:
Tips and tricks
- RPS is an important metric to monitor and compare regularly.
- Be sure to track PR against industry benchmarks to ensure stores are operating at an acceptable level.
- Be sure to include all revenue sources in the calculation, such as online sales and in-store sales.
Customer acquisition and retention rate
Definition
Customer acquisition and retention rates are important key performance indicators (KPIs) of a Starbucks franchise. They measure the success of a Starbucks franchise in acquiring new customers and retaining existing customers. This metric is an important factor in the success of any business as it reflects customer loyalty and indicates the effectiveness of marketing strategies.
Benefits of Tracking
Tracking customer acquisition and retention rates helps Starbucks franchise owners understand their customer base and the effectiveness of their customer service and marketing strategies. Knowing these metrics allows franchise owners to make informed decisions on how to improve customer acquisition and retention rates. Additionally, customer acquisition and retention rates provide insight into customer lifetime value, which is an important factor in a franchise’s profitability.
Industry Benchmarks
The industry benchmark for customer acquisition and retention rates is typically around 25%. This means that a Starbucks franchise should aim to acquire 25 new customers and retain 25 existing customers in a given period. However, actual rates may vary depending on the location of the business and the type of customers they serve. It’s also important to note that customer acquisition and retention rates can vary significantly over time.
How to calculate
The formula for calculating customer acquisition and retention rates is as follows:
The formula for calculating customer retention rate is as follows:
Calculation example
For example, if a Starbucks franchise had 100 customers in a given period and 25 of them were new customers, the customer acquisition rate would be 25%. The customer retention rate would be calculated as follows:
KPI Tips and Tricks
- Track customer acquisition and retention rates over time to identify trends and make informed decisions.
- Compare customer acquisition and retention rates to industry benchmarks to see how your franchise is performing.
- Analyze customer feedback to understand which strategies are working and which need improvement.
- Make sure your customer service team provides the best customer experience to increase customer retention.
Average cost of goods
Definition
Average cost of goods (ACG) is a key performance indicator (KPI) for a Starbucks franchise that measures the average cost of raw materials, labor, and other associated costs in producing a product . This KPI can help a franchise owner understand how much it costs to produce a single item and how to adjust prices accordingly.
Benefits of Tracking
Tracking the average cost of goods is important for a Starbucks franchise owner. It helps them understand the costs associated with producing products, allowing them to make better decisions about pricing, inventory management, and other operations. Additionally, tracking the ACG KPI helps a business owner determine if their costs are reasonable and identify areas of potential savings.
Industry Benchmarks
The average cost of goods in the food and beverage industry is usually between 30% and 40%. This means that for every dollar in sales, the company should have 30 to 40 cents of costs associated with producing the product. However, this may vary depending on the type of product and the operations of the company.
How to calculate
The formula for calculating the average cost of goods is:
Calculation example
If a Starbucks franchise has ,000 in total costs associated with producing 10,000 units of a product, the average cost of goods would be:
Tips and Tricks for Tracking the KPI
- Track the costs associated with producing each item separately to get a more accurate cost estimate.
- Monitor regular costs to identify areas of potential savings.
- Compare your ACG to industry benchmarks to ensure costs are reasonable.
- Adjust prices accordingly to ensure profitability.
Total net sales
Definition
Total net sales is a key performance indicator (KPI) that measures the amount of money the Starbucks franchise earns from the sale of products and services. This KPI does not take into account discounts, returns or other deductions. This is an important metric for franchise owners to track as it gives an indication of the overall profitability of their franchise.
Benefits of Tracking
Tracking total net sales helps franchise owners better understand their financial performance and make informed decisions about how best to allocate resources. It also helps identify customer spending trends and the effectiveness of marketing strategies. Additionally, it provides insight into the franchise’s overall success and can be used to benchmark performance against other Starbucks franchises.
Industry Benchmarks
Average total net sales for Starbucks franchises across the United States are approximately .2 million per year. This benchmark can be used to compare the performance of individual franchises to the industry average.
How to calculate
The total net sales KPI is calculated by subtracting any discounts, yields or other deductions from the total sales for the period. The formula for this calculation is:
Calculation example
For example, if a Starbucks franchise had total sales of ,500,000 and rebates, returns, and other deductions totaling 0,000, their total net sales would be ,200,000.
Tips and tricks
- Track the total net sales KPI over time to identify trends and make informed decisions.
- Compare your franchise’s total net sales to industry benchmarks to gauge performance.
- Analyze discounts, returns or other deductions to identify areas for improvement.
- Review the Total Net Sales KPI regularly to monitor the financial health of your franchise.
Average Customer Transaction
Definition
Average customer transaction (ACT) is a key performance indicator (KPI) that measures the average amount spent by customers in a single transaction, often referred to as average ticket size. It is calculated by dividing the total turnover generated by the total number of transactions during a given period.
Benefits of Tracking
Tracking the Average Customer Transaction (ACT) helps businesses better understand their customer base and create more targeted marketing campaigns. It also helps identify areas of improvement for increased customer spending. By understanding the average size of customer transactions, businesses can focus on increasing customer spending and generating more revenue.
Industry Benchmarks
The average size of customer transactions varies by industry and the type of goods or services sold. For example, the average customer transaction size for retail stores is typically lower than for restaurants. Generally, the higher the customer’s average transaction size, the more successful the business.
How to calculate
The average customer transaction (ACT) is calculated by dividing the total revenue generated by the total number of transactions during a given period. The formula for ACT is:
Calculation example
For example, if a Starbucks franchise had total revenue of million and total transactions of 10,000 during a given time period, the average customer transaction (ACT) would be:
Tips and Tricks for KPIs
- Track Average Customer Transaction (ACT) to understand customer spending patterns.
- Monitor industry benchmarks to ensure the company is meeting the standard.
- Identify areas of improvement to increase customer spend.
- Analyze customer behavior to gain insights into customer preferences.
Employee retention rate
Definition
Employee retention rate is a KPI used to measure the percentage of employees in a company who remain with the company for a given period of time. This metric is a measure of a company’s effectiveness in retaining its employees and is an important indicator of a company’s overall health and performance.
Benefits of Tracking
Employee retention rate is a valuable metric for any business to track, as it can provide insight into overall business performance. Tracking this metric can help identify areas for improvement in employee engagement, job satisfaction, and morale. Additionally, tracking employee retention rate can better understand the company’s ability to attract and retain employees.
Industry Benchmarks
The average employee retention rate for the restaurant and hospitality industry is 70%. However, this number can vary depending on the type of business, the size of the business, and the industry in which the business is located. For example, the average employee retention rate for fast food restaurants is generally lower than the average for hotels and resorts.
How to calculate
The employee retention rate is calculated by dividing the number of employees remaining with the company at the end of the period by the number of employees at the beginning of the period. The result is then multiplied by 100 to get the percentage.
Calculation example
For example, say a Starbucks franchise begins the period with 100 employees, and at the end of the period there are 90 employees. The employee retention rate for this period would be calculated as follows:
Tips and tricks
- Track employee retention rate over time to better understand employee retention trends.
- Use employee retention rate as an indicator of overall employee engagement and job satisfaction.
- Compare employee retention rate to industry benchmarks to measure performance.
Conclusion
Mastering the techniques and strategies behind tracking KPIs is critical to success. By tracking and calculating the seven KPIs described in this blog post, Starbucks franchises can better understand their success and identify areas for improvement. Monitoring the seven KPIs listed below can help identify areas for growth, improve customer loyalty and increase profitability:
- Number of magazine locations
- Revenue per store
- Customer acquisition and retention rate
- Average cost of goods
- Total net sales
- Average customer transaction
- Employee retention rate
By understanding the importance of each KPI and having the right tools in place, Starbucks franchises can optimize their operations and maximize their profitability.
- Home
- Number of magazine locations
- Revenue per store
- Customer acquisition and retention rate
- Average cost of goods
- Total net sales
- Average Customer Transaction
- Employee retention rate