There are many metrics food truck vendors need to keep an eye on to maintain profitability. In a recent survey we conducted, many replied that they were focusing on check averages. This is the average amount of money spent by each customer in one visit. Your food truck check average is definitely important, but it doesn’t give you a clear understanding of your profitability.
The problem is, you can have the biggest check averages and still lose money. You need to maximize your profits, and part of that includes managing check average, but it’s important that you do not concentrate on increasing the average customer check.
Calculating your check average is simple. Take your total amount of sales and divide it by the number of customers. Include everything sold from your food truck, including merchandise. Your check average includes everything that involves revenue, not just food.
Finding The Right Balance
Food truck owners need to find ways to increase sales. Upselling and suggestive selling are important to maximize total revenue. You need to be strategic in your sales, promoting the items that make the greatest contribution to your income. And maybe most important, you need to price and promote your menu offerings to leave the customer with the sense that they received value. Successful vendors have to plan ways to increase check averages while increasing sales of the most profitable items. It’s a juggling act, but one that you’ll have to master to win in the food truck industry.
Tell us you have an $20 check average, and we’ll be impressed. Show that you have a 35 percent gross margin on sales and you’re moving in the right direction. Now tell us that you have 60 percent of your customers visit your truck at least once per month, and you are the winner.
Check Averages Are Useful
Every food truck should have a target check average, and work at building it. If your average customer spends $15, and you serve 80 customers on a typical shift, you see the how boosting check averages even by a few dollars will help.
Once you know your check average, it only makes sense to want to increase it. Bigger check averages mean more success, right? Not necessarily.
Careful price point selection is a fundamental issue for every food truck. A customer may pay $5 for a side but refuse to purchase the same item for $7. So, do you lower the price, sell more product and keep people happy? Or, do you keep the margin up, sell less, just to keep costs in line? Every food truck vendor is faced with this question, and it’s how you answer that makes the difference.
Don’t think that I am stating that customer check average isn’t important, it is. It’s a number every food truck owner should know. Instead of the dollar amount, think about making each check as profitable as possible.
When it comes to increasing check averages, proceed with caution. The same technique that adds a few dollars to each check may have negative consequences. If your customers aren’t happy, you’re in trouble. If the people leaving your food truck are not happy, who cares what your check average is?
3 Ways To Increase Check Averages And Profitability
Increase check averages while gaining profitability while creating happy customers. Here are a few ways to try. They may not work for every food truck, but they will get you started on the balancing your revenues and profits.
Ring everything up
Profitability will suffer if your cashier makes the sale, but then doesn’t charge for it. The most common item that doesn’t get rung up is drinks. It’s very common to overlook ringing up an iced tea or cola. Make sure your service window servers know your refill policy (if you have one) and adhere to it. Some trucks offer free refills while others charge for a separate beverage.
Create combo deals
Bundling is a win-win for food truck and for your customers. Bundling may consist of an side/entrée combo or entrée/dessert combo. You add to the dollar amount of each check while your guests maximize their dollars spent. Diners will not be surprised by the dollar value, and they can knowingly order within their budget.
Do the most with your menu
The importance of a correctly engineered food truck menu can’t be overstressed. Your menu is the number one piece of marketing material that every customer sees. There are entire books and culinary courses dedicated to the study of menu construction, but if you want the biggest take away, know this. A University of Illinois study showed that descriptive menu wording increases sales 27 percent over plain menu descriptions. For example, “Juicy Italian seafood pasta” will sell more than a simple, “Seafood pasta.”
In that study, not only did customers purchase the descriptive items more often, they also graded them as being higher quality and better value than did customers who ate items without descriptive labels.
The Bottom Line
Vendors need to understand that consumers dine on a budget, and if you sell menu items that exceed their budget you may see reduced income from tips and see fewer visits from the customer. You need to make sure that your customers come back often. This is much more important than increasing their check average for a single visit.
If a customer wants to spend more money; awesome! But it’s time to start focusing on building customer loyalty, not check averages. Share your thoughts on this topic on social media. Facebook | Twitter