Summer 2024 Campus Dining Today - 59

101:
Retail
Pricing and Merchandising
Part 4 in an ongoing educational series on retail in campus dining
Dennis Meersdom
retail category manager and
vending coordinator,
Michigan State University
Pricing: Where to start? If you were opening
a location off campus, you would first need a
business plan with a revenue stream to cover
your expenses, e.g. building cost, utilities,
equipment, labor, and of course, goods.
Competitors
Visiting local competition will allow you to see their
pricing. (Visiting competitors is a recurring trend in
this series: there is a lot you can learn from these
visits.) Once you understand local pricing, you need
to know your product costs, which, chances are, will
be greater than or equal to your competition, since
larger chains can negotiate lower prices. The next
step is deciding on a profit margin, or gross profit,
you can live with. The industry-wide equation for
calculating gross profit is: retail minus cost, divided
by retail. This will give you a number less than one,
like .35 for example. Multiply that by 100 and that
is a 35 percent gross profit margin (GPM). Set up
an Excel equation and use it as a cheat sheet. 35
percent is a common GPM used by convenience
store (c-store) operators-common, but not
universal.
RETAIL 101
| CAMPUS DINING TODAY
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