Hardware Retailing

MAY 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: https://hardwareretailing.epubxp.com/i/971427

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Page 24 of 248

Independent Thinking S ome people make money in spite of themselves! If you've ever heard me give a presentation on the North American Retail Hardware Association's (NRHA) Cost of Doing Business Study, you've more than likely heard me utter those words. It seems a little harsh, and most of the time, the room starts with a few chuckles until people take the time to think through some of the examples I give them. At the end of the day, they realize the statement is very true. Have you ever been in a restaurant and had such horrible food or service that you decided to never go back? And yet, the restaurant is there, day after day, week after week, somehow making money in spite of itself. Before coming to NRHA almost six years ago, I was one of those restaurant owners. For 20 years, I was a Wendy's franchisee with 17 stores and 600 employees. One of our internal jokes was that Dave Thomas must have had a great product because we spent a lot of years working hard to screw it up but couldn't. The Wendy's business was a people business first, but it was also heavily driven by operations. We didn't turn the corner until we fixed our people issue and our operations. Much like NRHA training, Wendy's had a world-class training system as it related to operations, and once we embraced their training philosophy, operations really took off. Pickup window time improved, food costs went down, turnover was reduced and sales grew year after year. And from an operations perspective, Wendy's provided us with all sorts of data from their system that allowed us to compare our operations to other stores. We used that information to help guide us on how to improve our operational inefficiencies. If the average store produced food at the pickup window in 85 seconds during lunch and it took us 95 seconds, we knew we had an issue. Was the wrong person on the register, was food not prepped properly, did we have broken headsets? The one key here is we knew because Wendy's provided that data. Where Wendy's lacked data, however, was financially. It was probably due to the fact that about 90 percent of the Wendy's system is a franchised business. Wendy's International wasn't able to compile all the data from the individual entities. So, while I could tell you at any given time that our food cost was 29 percent and our theoretical food cost was 28.3 percent, I couldn't tell you how those numbers compared to other stores in the system. Imagine my surprise on the day I started at NRHA when I was presented the wonderful tool called the Cost of Doing Business Study. My immediate response was, "I would have given my firstborn to have this tool at Wendy's." Now, I have four kids, so that's not a tremendous sacrifice. Nonetheless, this financial benchmarking tool can be a game-changer for your business. Now in its 101st year, the Cost of Doing Business Study compares balance sheets and income statements from over 1,000 stores, just like the ones you operate. It is free to participate, and your individual information stays completely confidential. In addition to getting a complimentary copy of the study, participants get a Personalized Financial Analysis that includes your company's financial results compared to industry averages, a what-if scenario generator, your company's financial ratios and other financial tools. Visit TheRedT.com/2018-codb-participate to learn how you can submit your data, and don't be left wondering, "Do I make money in spite of myself?" David Gowan, Vice President of Finance and Business Services dgowan@nrha.org " This financial benchmarking tool can be a game-changer for your business. " Know Your Business HARDWARE RETAILING | May 2018 12

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