What’s Your “Profit Per Chicken”?

February 5, 2009 0 Comments

Every company should have one key metric. One number to focus on and measure and to drill into everyone’s head. No it’s not profit or sales. It’s the number behind the numbers. The number that drives sales and profit. It’s the number that if you were a public company the industry analysts would all focus in on.

For restaurants and retail chains the magic number is “same store sales.” Think of a big chain like McDonald’s or Starbucks. There are two ways for them to make more money: open new stores or sell more stuff in the stores they already have. Now, of course, they try to do both. But the key indicator to how well the business is doing is whether existing stores are doing better or worse than they have in the past. Pricing, menu variety, cleanliness, service, marketing are all reflective in whether they are selling more in existing stores or selling less.

Other examples of key metrics:

Airline industry: Revenue per seat

Hotels: Revenue per room

I once heard an interview with Jim Perdue Jr. in which he said his Dad taught him that in the future he should focus not on selling more chickens, but on doing more to the chickens they were already selling. I think of this as I shop and see pre-packaged Perdue Short Cuts ready to open and put on salads, pre-cooked chicken nuggets, pre-marinated individually wrapped chicken breasts, and on and on. I don’t know for sure, but I bet the key metric Perdue Jr. looks at each quarter is profit per chicken.

So what’s your key metric?