Food Service

Food Service2012-06-22T02:14:31+00:00

Client: A $75 million, multi branch distributor of products to the food service industry

Challenge:

Enable company executives to exert more strategic control over pricing during adverse economic conditions

Results:

Program increased overall margin by 200 basis points in 60 days with no negative impact on sales.

Background:

This distributor of janitorial and paper products retained Profit2 to evaluate current pricing practices, identify opportunities to improve methodologies and increase overall margin without negatively affecting sales during an economic downturn. Together, we created a comprehensive pricing system in 60 days that drove a 200 basis point increase in 2009 without any adverse impact on sales.

Client Situation:

Client is a profitable firm with growing sales in an intensely competitive market. We analyzed two years of sales and pricing data as well as all current pricing records in the clients ERP system. This analysis revealed that the client’s margin on their most price sensitive sales benchmarked well above that of similar companies in the industry.

Our analysis also revealed the company’s margin on “incidental sales”, those items purchased on occasion by the customer was 4 to 5 points lower P2 clients in the industry. Further analysis revealed that adverse economic conditions was placing pressure on sales people, resulting in indiscriminate price cuts that reduced margin on the company’s most profitable sales.

Summary:

Together the client and Profit2 …

  • Set a strategic pricing plan to increase profits during the recession
  • Determined the optimum selling price for any potential sale
  • Safeguarded competitive sale pricing
  • Identified opportunities to increase margin
  • Improved the Clients ERP pricing system
  • Created a system to adjust pricing as economic conditions change
  • Trained sales people in how to price during a recession
  • Developed metrics and a system to measure progress
  • Created tools for executives to use to coach salespeople