Discover the Top KPIs in Fuel, Retail, Labor, & More
With Direct Store Operating Expenses (DSOE) on the rise due to high credit card swipe fees and growing labor costs, convenience store (c-store) and fuel operators must optimize costs across their business to maintain profit margins while accounting for fluctuating expenses.
While there are many ways to reduce DSOE by adjusting utility contracts, switching payment processors, or adopting a leaner staffing model, you should also focus on minimizing unnecessary costs in other areas of your operations. For example, an effective C-store inventory management strategy is a critical part of controlling expenses – and keeping customers happy.
Managing store and food service inventory requires an in-depth understanding of your customers’ buying habits, the monetary return on their purchases, and the ever-changing costs of acquiring new inventory.
Your store should monitor all these factors on a regular basis by tracking various key performance indicators (KPIs) that relate to your sales, inventory on hand, and more.
In this blog, we’ll outline some of the top KPIs for C-store inventory management and explain how an end-to-end business intelligence (BI) solution can help you track these and other KPIs in comprehensive, easy-to-use dashboards.
#1 Gross Margin Return on Inventory Investment
Retail Net Profit / Average Inventory Value (Investment)
The Gross Margin Return on Inventory Investment (GMROII) measures the return on your store’s inventory investment — all the grocery, retail, tobacco, packaged goods, and other items you sell. It’s calculated by dividing your net profit over a given time by your average inventory value (investment) for the same time period.
A high GMROII indicates a good balance of sales, margin, and inventory cost. If you notice your GMROII declining, you may be investing in inventory that isn’t profitable or in-demand in your market, or you might simply be investing too much in your store’s inventory, leading to potential spoilage and waste, for the potential profit you stand to generate based on your size, location, and customers.
#2 Average Market Basket Size
Total Retail Revenue / Total Number of Retail Transactions
Average Market Basket Size tells you how much your C-store customers spend on average. It’s a critical metric as it gives you insight into customer buying trends. You can calculate it by dividing your total retail revenue by the total number of retail transactions in a given time period.
You can dig deeper into customer buying habits and inventory data to see which types of products drive the most revenue and the largest basket size for your stores. Once you calculate the percentage of sales from food, tobacco, alcohol, etc., use your findings to refine product mix and align your stock with customer demands.
#3 Inventory Days on Hand
Units on Hand / Units Sold Per Day
This metric reflects how long it takes your store to sell through its in-stock inventory. Days on Hand (DOH) is calculated by dividing the number of units on hand by the number of units sold per day on average over the preceding 12-month period for a given product.
DOH helps measure your inventory health and how well you manage your inventory budget based on customer demands and the speed of business. A low average DOH reflects positive business performance and indicates that your store clears its inventory quickly. Contrarily, a high DOH usually reflects a slower business with too much inventory compared to demand.
#4 Food Waste Percentage
Food Wasted Inventory Cost / Food Service Revenue
Many food service operations evaluate food waste through financial measures, dividing the cost of wasted food by their total food service revenue. The resulting figure shows what percentage of their inventory goes to waste, whether from spoilage, wrong orders, customer waste, or other factors.
Food waste can be a significant expense for your food service operation, which means it’s crucial to monitor and manage it on a regular basis. Keeping track of food waste can help you find waste-saving opportunities that will ultimately reduce your foodservice-related inventory expenses in the long run. You can also adapt this metric to your inventory of prepared foods, beverages, packaged foods, etc., to see where excess stock may be going to waste. That way, you can reduce overstock or offer special promotions to get slow-moving items off the shelves before they expire.
Measure Key Metrics Across Your Entire C-Store and Fuel Business
A BI and analytics solution can help you manage costs and streamline operations by monitoring critical KPIs, forecasting trends, and drilling down into your operational data.
Your solution of choice should connect directly to your ERP, POS, payroll system, and more – allowing you to combine data from all parts of your operations and turn it into reports and dashboards that inform day-to-day decisions.
A successful BI strategy hinges on tracking the right numbers in all business areas, including fuel, retail, labor, finance, and more. Download our guide, “How to Make Data-Driven Decisions in Your C-Store & Fuel Business,” to learn which KPIs you should be tracking in every part of your operations.
