• Transcript
  • Work Table
Deli

VP

Moving on to the deli. Andrea, it is your turn to start.

Andrea

Our deli had a profit of $252,000 this year. I doubt anyone can beat that.

Mike

No I can’t, but one parameter very important in a deli is shrinkage. It’s very important to turn over product quickly to minimize waste and ensure fresh food. Andrea, what was your shrinkage for this year?

Andrea

I reduced my deli shrinkage to $17,000.

Mike

My deli shrinkage is 5,000 less than your deli shrinkage.

Jack

By how much did your deli increase its sales?

Andrea

Actually, we lost $348,000 in sales last year.

Jack

Oh, that’s too bad. . . . . My deli actually gained $104,000 in sales.

VP

Mike?

Mike

Our deli profit margin was quite strong: 22.38%. This high profit margin is helping our grocery chain achieve higher efficiencies of scale to beat those of other grocery stores.

Jack

Well, my profit margin may not be that high, I’d like to know what your total deli sales are?

Mike

We sold $884,000 of deli products last year.

Jack

Well, I have you beat. My sales are 44.9% higher than yours.

Andrea

Before I ask my question, I need to point out that my deli margin was 0.97 percentage points higher than Mike’s. So you can’t claim victory on the margin statistic. . . . . . Let me think of a good question . . . . . Did you increase your labor efficiency last year?

Mike

Let’s see. . . . No, our deli efficiency got a little worse last year. But not much: only a 6.8% increase in the labor costs to sales ratio.

Andrea

That’s too bad. I actually reduced my labor-to-sales by 2.9%

VP

Jack! Your best statistic about your deli, please!

Jack

To go with my $104,000 increase in sales that I mentioned earlier, I would also like to mention an increase in deli profits by $44,000. Can you beat that increase, Andrea?

Andrea

No, but . . . . . . . . you had 193,000 in profits last year . . . add 44,000 . . . . that makes 237 . . . . I should mention that my profits are still $15,000 more than yours. By the way, what is your deli spoilage—as a percentage of total deli sales?

Jack

My financial sheets don’t calculate this value, so give me a second to be with my calculator. . . . Let’s see, five-two divided by one-two-eight-one . . . that comes to a 4.1% loss in spoilage. I’m not sure if this is good or bad. As I said the financial sheets give no indication about the store rankings with this financial parameter.

Andrea

It doesn’t matter. I have exactly the same spoilage-to-sales as you.

Mike

As the manager of a smaller store, I’m going to rely on the fact that area efficiencies are usually better. So my deli sold $3,530 of product per square meter. Jack, are you better than this?

Jack

You have me there. But not by much. I’m less than 10% away from you.

VP

This round is now complete. . . . . I am a little undecided as to who should be the winner. Andrea has the best profit, but she dropped a lot of sales in the last year. Another year like last year would put Andrea in last place. . . . . Jack is showing a little improvement in profit . . . . .

Therefore I’m going to award half a point to Andrea and the other half point to Jack.

The score is now two-and-a-half points for Andrea, one-and-a-half points for Jack, and one point for Mike.

I should remind you that we have only two departments left: grocery food and grocery nonfood. Each of these will be worth one point. After that we will have an additional round to discuss the figures for the store totals. This round will be worth three points. So anyone can still win at this point.

Activity 7: Deli
Jack’s Store Last Year This Year
Sales:  
Food Costs:    
Labor:    
E & S:    
Spoilage:    
Shrinkage:    
Total Expenses:    
Profit:    
Sales / m2:    
Andrea’s Store Last Year This Year
Sales:  
Food Costs:    
Labor:    
E & S:    
Spoilage:    
Shrinkage:    
Total Expenses:    
Profit:    
Sales / m2:    
Mike’s Store Last Year This Year
Sales:  
Food Costs:    
Labor:    
E & S:    
Spoilage:    
Shrinkage:    
Total Expenses:    
Profit:    
Sales / m2:    

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