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NOW UPDATED FOR 2006!
The most recent benchmarking data for Butchers is now available, both in print and in downloadable PDF format, with your purchase of the Butchers Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Butchers for the financial years up to June 30, 2004. The survey was based on 38 businesses.
Butchers are facing increasing competition from the chain supermarkets that offer longer trading hours and one-stop convenience for a range of grocery items. So the traditional butcher needs to compete in several ways, such as:
- Consistently high quality meats
- A range of different meats (red meat, white meat and some specialist product, too)
- Friendly service.
Then there are the ways to add value to a customers shopping - menu suggestions, semi-prepared foods, a party planning service or a BBQ service. These are some of the ways of encouraging your customers to enjoy their meat, and to let you sell it to them, rather than someone else!
While all this is happening, margin control is essential , as is a rapid turnover of stock to ensure its freshness. Minimising waste is a key way to improve profit margins, without needing to increase prices at all. This guide will help you identify the areas of your business that can be improved.
Survey Results
These are the results of a survey of butchers. These results should not be considered to be representative of all butchers in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the butchers in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Tasmania or the Northern Territory in our sample.
Businesses from regional cities and towns (population over 20,000) and from rural areas (population under 20,000) represented around 71% of the entire group. The rest were city-based businesses.
Over 72% of businesses rented their premises and approximately 60% of those that rented were located in premises with street frontage.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 6 th highest and 6 th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income (thousands) | $622.4 | $2099 | $1,238.5 | | Gross Profit | 32.86% | 23.26% | 43.21% | | Wages & Salaries (staff only, not
owners) | 8.74% | 0.00% | 15.94% | | Rent of Premises# | 4.76% | 1.86% | 7.72% | | Net Profit (bos*) | 9.62% | 3.42% | 17.45% | | Stock Turnover Rate | 84 | 32 | 161 | | Sales Area as a Percentage of Total Area | 47% | 29% | 68% | | Total Area per Person (square metres) | 28 | 13 | 36 | | Trading Hours per Week | 56 | 45 | 68 | | Percentage of Sales made to Account Customers | 29% | 2% | 60% |
# calculation
excludes those firms in freehold premises *(bos) before
owners' salaries and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some businesses reported some larger results for such items as:
- Advertising and Promotion, of up to 1.87%;
- Interest, Bank Charges of up to 3.43%;
- Print, Postage, Stationery, Packaging and Wrapping up to 5.85%
- Other Occupancy Costs of up to 5.13%;
- Other Depreciation, Lease & Hire Purchase of up to 3.35%;
- Repairs, Maintenance, Hire of Plant & Equipment of up to 5.50%;
- Vehicle Operating Costs of up to 6.70%;
- All Other Expenses of up to 2.79%.
To summarise this, larger businesses had:
- Higher net profit per working owner
- Higher personnel productivity
- Lower gross and net profit margins
- Substantially higher stock turnover
- Much lower ownersapos; equity relative to total assets
- More intense usage of the shop premises.
The more profitable businesses:
- Were larger, on average
- Had higher gross and net profit margins
- Had higher staff costs, but higher personnel productivity
- Had lower non-salary overhead costs
- Had more of the firmsapos; assets funded by owners and required a higher level of assets per person to operate
- Had a much higher rate of stock turnover
- Traded for more hours per week.
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