Shape Your Business logo
Follow Us:

McDonalds Slimming Results Has Fat Lesson for Small Business

Friday, January 24, 2014   By Mike Reddy

 

Even with today’s announcement of a drop in sales, McDonald’s showed yet again how they are so well equipped to compete.

They continually serve as a textbook for improving small-business performance.

For many businesses, a sales reduction of 0.1% probably wouldn’t have raised much alarm. Even though in McDonald’s case that means a lot of zeros, in the scheme of things 0.1% is still 0.1%.

But this is when their analysis hits another gear. And they show us how we should be analysing our own small business results.

Business coaches, accountants and consultants have many ways of analysing sales while searching for opportunities to improve a client’s results.

I am personally of the view that it’s useful to break your sales figure into:

Number of customers
X
Number of visits
X
Average sale value
=
Total sales

That, as it turns out, is along the same lines that McDonald’s use.

And although their analysis showed that sales haven’t moved a heck of a lot, monitoring these numbers highlighted that the number of visits had reduced which was all but offset by an increase in the average sale value.

So instead of just looking at the turnover and concluding that things are fairly static, they instead determined that they need a strategy to increase the number of customers.

After all, if it wasn’t for the fact that the customers who are still visiting their stores are spending more at the register, the reduction in total sales would have been significant (Read: Lots more zeros).

It also allows them to focus on why there has been a reduction in traffic.

  • It could be the result of competition which means they can study what the competitors are doing differently and replicate it in their stores; or
  • It could be a reduction in spending on fast food in which case they can consider strategies to ensure they get a larger slice of a diminishing pie; or
  • It could be something else.

Whatever their findings, they have at least identified where to start looking.

I fear that most small businesses would have just shrugged their shoulders and carried on as usual.

Consider how, by analysing what is really happening in your business, you can constantly learn new ways of doing things better and achieving better results.


Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.