Looking Beyond The 100 Days Of Summer
This year we have all enjoyed increased sales and profits thanks to some unexpected great weather. Since the beginning of the year we have been able to reap the benefits of warmer temperatures and sunny skies, and during that time create some net worth in our stores that will hopefully help carry us through the winter months, our slower selling season of the year. Looking ahead, the weather experts are predicting we may have the worst El Niño in 85 years this winter, which is going to translate into extreme weather conditions and possibly a bigger decrease in sales for us—more than we would experience during a normal winter.
This could probably start in November and carry through until April, so we’re looking at a six-month window where our finances are going to be very restricted and we will not be able to enjoy the additional sales nor profits we’ve generated from this year so far. On top of this, there are other factors looming in our future that have the potential to adversely impact our winter season numbers.
One of the biggest is the minimum wage increases hitting cities and states across the country. Many of the increases kicked in this summer, while others will take affect beginning January of next year. Even if your area hasn’t instituted a minimum wage hike, you may find that in order to maintain your current staff of good workers you might have to give them salary increases.
Make no mistake, we’re all going to feel the pinch of these minimum wage hikes, which will inevitably impact how we staff our stores. In talking to some franchisees in areas where the minimum wage has already gone up, some said they are going to single coverage over the winter months, which is not good for the store or the guests. However, there are many other ways we can prepare our stores to get ready for the weather and wage adversities coming our way.
While raising retails appears to be the most popular knee-jerk reaction to increased labor costs, there are other solutions available to us that I believe are worth examining. One solution most commonly mentioned is getting the lowest possible cost of goods for our stores. We can raise the argument that in many cases, we are not able to obtain the lowest possible cost of goods for our stores. This is definitely something we need to look at, and urge our franchisor to pursue.
It the meantime, the franchise agreement gives us a 15 percent leeway from the 85 percent recommended vendor purchase requirement that allows us to reach out to our non-recommended suppliers. We can start to utilize this more efficiently by communicating with our regional vendor contacts to get additional products that can help increase our sales and profits. Make sure your store is fully stocked with those top-selling regional items your customers want and need so your store becomes their go-to place for those products. Also, look for and take advantage of vendor promotions to get special deals that yield great margins and can help carry your stores through the slower winter months. Finally, as most of you already do when the 100 Days of Summer are over, reevaluate your staffing situation and make adjustments accordingly so you can get through the winter season with as low a payroll as possible.
This article is not intended to create a bleak picture of the next six to eight months, but rather to raise awareness so you can be ready. There’s no better opportunity to start preparing for what’s coming than now, and trying to get yourself aligned so that when the weather shifts and salaries rise you are in a better position to increase your gross profits and maximize sales.
Your franchisee leaders have informed SEI of the dilemmas we are facing this winter, and I hope they are reevaluating some of the costs with our suppliers to deliver the lowest possible cost of goods, which is actually part of our franchise agreement. I believe together we can pull through this and then next summer, and from the work that we put into it now, we will be rewarded with additional sales and profits.