Soft Drinks: Revenue Lost!

publication date: Sep 5, 2008

 | 

author/source: Mitch Mullins

I tend to find the inspiration for my articles by simply dining out at a wide variety of restaurants. Whether it is a national chain, regional chain, mom and pop, or QSR, the inefficiencies and downright silly decision making abounds. My wife and I encountered just this sort of thing on a recent trip to one of our favorite pizza establishments. Pizza is a very family oriented type of dining. This presents a golden opportunity to sell large amounts of soft drinks. Not only do the children drink soda, but the parents (who in other settings would normally drink alcoholic beverages), choose not to do so in this setting. Couple this scenario with all the social and legal ramifications of alcohol consumption; and the opportunity for soft drink sales continues to expand.

On this particular visit, it became readily apparent that this establishment's policy on fountain soda was hindering their sales of that item. Their policy was to serve fountain soda in an eight ounce water glass and charge for every refill. Conventional, yet flawed, thinking would assume that not "giving away" free refills on fountain soda would increase revenue. The actual effect of this policy decreases sales of fountain soda due to the prohibitive pricing structure. The mother of the family of five seated behind us clearly stated to her children, "o.k., one soda each then you have to switch to water." Great policy if your goal is to move more tap water. Last time I checked, gross profit on tap water doesn't show up on any P & L! Furthermore, each server had to explain this policy to every table ordering fountain soda, opening themselves up to questions that they have no good answers for. Management has thrown their waitstaff "under the bus." Restaurant goers, on decreasing budgets, scoff at the appearance of being nickel and dimed at every turn.

Solution:

Switch over to twenty ounce plastic cups, which your soft drink vendor will often provide at no cost, raise the price to an acceptable profit level based on unit cost, offer free refills and move on to larger issues. I can guarantee that with management's judgment regarding fountain soda, there are even larger issues in the kitchen!