It’s the question that all Business owners ask. How can I increase Profit? if your business doesn’t generate profit, you won’t survive. When it comes to profitability there are many factors that will determine whether your business is profitable or not.
Here are 5 Factors that Affect Profitability for Food and Beverage Businesses in 2022.
1. Product Costs
Product costs are and will always be one of the largest expenses for Food and Beverage businesses. The price your businesses sources products for will determine if you are profitable or not. As a Food and Beverage business owner, it is important that you understand the prices that you are sourcing your products for, against the price you are charging customers.
Yes, it does sound straight forward but it is often harder than it sounds. Many F&B Distribution businesses remain contempt with their current product provider no matter what prices or increases they pass on. In an industry as price conscious as food and beverage it’s not something to put up with. The problem with remaining contempt with your current provider is it can affect your profitability and more importantly your customer. If your business isn’t offering a competitive product price, customers will go to other providers who do.
To minimise product costs and maximise profitability, businesses need to shop around. Speak to your current supplier, see what prices they can offer, if the numbers don’t stack up, look for other providers who can offer you something better. The good thing about the current market is there are an abundance of B2B2 Food and Beverage suppliers. The cheaper you can source your products for, the more profitable your business will be.
Related Article: Expenses Food & Beverage Businesses Can Reduce Easily in 2022.
2. Ordering Process
The Order methods that your business offers customers plays a huge role in determining whether your business will be profitable or not. The Food and Beverage business has changed dramatically over the last two years. The way customers purchased products before the Covid-19 pandemic is much different to the way they purchase today. Over the last two years customers have transitioned from the regular face-to face buying preference to online. If your business doesn’t offer online ordering, you are losing customers and affecting profitability.
To be successful in 2022 and beyond, all Food and Beverage businesses must offer online ordering for customers. The benefit of having an online ordering website is it simplifies the customer buying journey. Customers can click, place, and pay for orders in a time that suits them best. The easier your businesses ordering process is for customers, the more likely customers will be to return to your business.
3. Payment Options
The biggest challenge facing all Food and Beverage businesses in 2022 is debtors. Studies released by Xero found Australian Food and Beverage businesses wait an average of 24 days for payment of their services. How can you be profitable waiting almost a month for payment? The answer is you couldn’t…
One of the main reasons why Food and Beverage businesses struggle to receive payment on time is because of the payment methods they offer. To get customers to pay their invoices faster it is important that your business offers as many payment methods as possible. The easier the payment method is for customers, the more likely they will be to pay on time.
Related Article: How Australian Food & Beverage Businesses Can Reduce Debt.
4. Customer Service
The Customer Service that your business offers will ultimately decide whether your business profitable or not.
The ultimate goal for any every business is to get customers to return after their initial purchase. You already done the hard work by gaining a new customer but that’s only 50% of the battle. The other 50% is keeping them for the long haul. The only way to keep customers for a long time is to offer a customer service experience that is second to none. Look out for your customers, ensure you are providing everything that you promised and make sure you are fulfilling order requests on time and accurately. If you take care of the customer, the customer will take care of you.
The suppliers your business use can and will determine if you generate a profit or not. We already touched on supplier prices above, but another thing that your business needs to consider is your suppliers’ reliability.
As you know in the Food and Beverage industry, time is money. Your business needs to ensure your suppliers are as reliable as possible. You want your suppliers to get you your products as quick as possible. The more time you have to sell a product the less likely your business is to have products expire before they are sold.
Additionally, the reason why you want your suppliers to be as reliable as possible is because it impacts your customer. You need to ensure you give your customer the products they want at the time they want it. If you supplier cannot deliver in that timeframe look for better providers who will. At the end of the day your customers are the most important part of your business, you need to do everything in your power to help them if you want to be profitable.
There’s more to having a profitable business than realised. F&B Businesses need to look past the products they sell and the price they sell them for. There are many other factors that determine whether you are profitable or not. The 5 factors mentioned above can and will determine profitability in the Food and beverage industry in 2022.
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