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Snack success stories

Question:

What are the most profitable snack bar items?

– Roger Beattie, President and CEO, RLB Holdings, Inc., Salt Lake City, Utah

Answer:

To begin with the obvious in determining profitable items, let’s look thoughtfully at revenue and controllable expenses. Those foods for which people are not price sensitive, those with low cost of goods sold (in our case food or beverage cost), low labor cost, or, best, low prime cost (food and labor combined) are your best bet.

Let’s look at examples in each category:

Revenue. In general, people’s price sensitivity varies by product. There are some foods where people bristle at paying more than they would at a supermarket (for example, a $2 banana at an airport; cost about 35 cents).  For other items, people are willing to pay a great deal more than their cost. For example, a $4 frozen coffee drink consisting only of sugar, coffee, ice and a splash of milk does not seem like an obscene offering to a devoted coffee drinker, but the ingredients combined cost about the same as that banana.

Food and beverage cost. Think white carbs. In general starchy foods like potatoes, pasta, breads and rice have lower costs per portion than produce, dairy, or proteins and are filling and craveable.

Labor cost. Heat and serve, frozen breaded, self-serve, grab-and-go, and prepackaged items are lighter on labor costs.

Prime cost. Here is the sweet spot of low food/beverage and labor costs. For example, a low-cost starchy item that is quickly cooked from frozen—French fries—fits the bill.

The big winners that satisfy both price insensitivity and low prime cost are many fountain beverages including coffee (though prices have gone up) and especially alcohol. There is very little labor involved in filling a soft drink, bottle of beer, or glass of wine order and people will pay much more than the cost of the product. In foods, white starches like fries, popcorn, nachos, soft pretzels, and cookies are all winners. For healthier options, smoothies, baked potato, yogurt and granola parfaits, and miniature baked goods can still yield margins that will make you smile.

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