Restaurant Revenue Per Square Foot

When comparing different store locations based on sales per sf make sure you calculate each stores square footage and gross sales the same way so you have a solid apples to apples comparison. For example if your gross sales are $350,000 and your stores square footage is 1,500 sf then your sales per sf is $233.33 ($350,000/1,500). The dollar value of sales per square foot is often used as a measure of success in the restaurant industry.

There are, of course, various types of promotional tactics including BOGO offers, free gifts, loss leaders, and more. Free Financial Modeling Guide A Complete Guide to Financial Modeling This resource is designed to be the best free guide to financial modeling! The ratio should be compared to the figure for similar competitors and evaluated along with other metrics. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

How To Increase Sales Per Square Foot

The retailer saw an increase in sales, comparable sales, and margins. When calculating a store’s sales per square ft., don’t forget to exclude the non-selling areas of the shop, such as stock rooms or receiving areas. It tells you how efficient you are with your use of space and can give insights for improving store layout, merchandising, staff performance, and more. The retail landscape is evolving – traditional retail operators such as Toys”R”Us and Sears filed for bankruptcy in 2017 and 2018, respectively. With the emergence of e-commerce, many analysts now neglect using sales per square foot as an efficiency measure for retail companies.

sales per square foot

Then there are retailers who are being more creative with their spaces. Take Staples, which started offering office space in its locations.

Main Disadvantage Of The Sales Per Square Foot Metric

The Retail Trade Economic Data features sales by industry, annual survey results, as well as shopping centers retail sales per square foot by state. Often times, this data is a few years behind, but it is a good starting point. Calculating sales per square foot can help retailers decide which stores to expand, reduce in size, or relocate altogether. It’s also used by retail shopping center owners to determine the amount of rent to charge retailers. As a best practice it’s a good idea to calculate both sales per sf per year AND sales per sf per month. For example, the Forum Shops at Caesars Palace in Las Vegas sets a precedent for Las Vegas stores. The location has the second highest sales per square foot of any mall in the nation at approximately $1,300 per square foot (Bal Harbour Shops is first with over $2,500 per square foot).

sales per square foot

It simply implies the average revenue earned for every square foot of sales space. It is used to measure the efficiency of a store’s management in creating revenues given the amount of sales space available to them. Sales per square foot may no longer be as relevant to management or analysts as a measure of efficiency as it has been in the past. “Omnichannel” is the new buzzword in retailing that describes a hybrid approach to physical stores and online venues. For example, the Apple stores may be as much about marketing, customer service, and image creation as about direct sales volume. If your store’s sales per square footage isn’t as high as you’d like, consider optimizing your shop’s layout.

Murphy USA sells both fuel and convenience merchandise to consumers across America, making it a top contender for dollars within the industry. With about 1,400 retail stores, Murphy USA does $3,721 in sales per square foot. No matter your industry, there is an association you can join that can give you data specific to your retail store type. For example, the National Shoe Retailers Association publishes reports to its members of the key performance metrics of its member stores. After all, I didn’t know if my margins and sales were good or great until I compared them to similar stores.

What Sources Would You Use To Measure The Kpi?

Do you have a learning management or sales enablement system that can reach every member of the team with education in sales, brand, and product? Needless to say, the more people who walk into your store, the more potential sales you can have. Educating them on sales tactics such as upselling, suggestive selling, etc.

The office supplies retailer has partnered up with co-working services provider Workbar to convert some areas of its stores into workspaces. That’s why it’s essential to have a solid digital marketing strategy that puts your store and products in front of the right online audiences. Now that you have a basic understanding of sales per square footage and how to measure it, let’s talk about how you can maximize sales per square foot in your stores. The term “brick-and-mortar” refers to a traditional business that offers its products and services to its customers in an office or store, as opposed to an online-only business.

Does Sales Per Square Foot Still Matter?

Spaces that appear messy or crowded can drive people away, and they make it difficult for shoppers to find what they need. Instruct your staff to straighten out untidy areas and ensure that items are always in their proper place. There is a wide dispersion of this metric in the retail industry. At the higher end of sales per square foot, Apple Inc. produces around $5,500 per square foot, and Tiffany & Co. generates approximately $3,000 per square foot. Both companies sell small, high-dollar value products in smaller store spaces. By contrast, sales per square foot for Walmart stores is approximately $400 per square foot, while Target is around $300 per square foot. The United States Census Bureau data isn’t just a count of households in your community.

Remember that while people like to browse or shop around online, many shoppers prefer to complete the purchase offline — particularly when it comes to categories such as apparel and cosmetics. I actually determined what I should be stocking more of in my new location based on sales by category and then fine-tuned the hours by looking at the sales by hour,” she said. Doing this helped her improve how she ran her stores, and she’s advising other retailers to do the same. Take a data-driven approach to how you re-merchandise or rearrange your store.

According to industry research firm RetailSails, Apple has the highest sales per square foot, with average in all their stores of $6,050 per square foot annually. In retail, sales per unit area is a standard and usually the primary measurement of store success. The unit of area is usually square metres in the metric system or square feet in U.S. customary units. Square feet are also widely used in retailing in the United Kingdom, but there are signs of a trend towards use of square meters. Sales per square foot — a popular metric used when comparing the profitability of retail real estate — have tumbled in recent years as the retail industry struggles to draw in shoppers. The size of a brick-and-mortar location, often referred to simply as “square footage,” is a key factor in the success of a business.

sales per square foot

One way to track same store sales over time or to compare sales in different retail store locations is to calculate sales per square foot . Sales per square foot is a calculation of the dollar amount of sales that you generate in one retail store per square foot. The average sales per square foot for your chosen type of retail store is also needed to write a business plan. This data not only measures retail sales performance within a business, it also allows retailers to benchmark their sales against competing retail businesses. Once you learn the sales per square footage for your retail industry, don’t be surprised if your business does more or less in sales. Factors such as location, competition, store layout, and level of inventory may greatly influence your store’s sales results.

Key Thing To Remember When Comparing Different Locations:

This is great news for an inexpensive burger franchise like Wayback Burgers, where the buy-in costs are relatively low, and the restaurant sizes are reasonable. In most cases, full-service restaurants that don’t generate at least $150 of sales per square foot have very little chance of generating a profit. For example, a 4,000-square-foot restaurant with annual sales of anything less than $600,000 would find it very difficult to avoid losing money. This works out to $50,000 in monthly and $12,000 in weekly sales. With Vend + Afterpay, you can offer a “buy now pay later” service to customers, so they can pay for their purchases in four easy installments. Best of all, YOU get paid upfront, so you’ll immediately have access to the funds. The budget of your customers directly affects the size of their transactions.

  • Charles has taught at a number of institutions including Goldman Sachs, Morgan Stanley, Societe Generale, and many more.
  • In contrast, Lowe’s sales per selling square foot averaged 431 U.S. dollars.
  • Murphy USA sells both fuel and convenience merchandise to consumers across America, making it a top contender for dollars within the industry.
  • Since you have a lease for your store and your expenses continue to rise each year, raising your sales per square foot is the only way to make it work.
  • They are in the same business but certainly not in the same sector.

Francesca Nicasio is Vend’s Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.

The top retailer, based on sales per square foot, is Apple, CoStar found. This might not come as a surprise for many, considering the hefty price tags on many of the technology company’s products, which range from MacBooks, to iPad devices to the Apple Watch. Electronics and jewelry stores always have high sales per square ft. thanks to their big-ticket items. People spend more with these retailers simply because their products cost more. Then again, sales per square foot might mean the difference between success and failure to a small locally-owned business, with or without a website.

  • Sales per square foot is a calculation of the dollar amount of sales that you generate in one retail store per square foot.
  • Needless to say, the more people who walk into your store, the more potential sales you can have.
  • In 2015, Express decided to switch up the placement of sale items in its stores.
  • The budget of your customers directly affects the size of their transactions.
  • It is tracked over time simply by totaling sales revenue over a period of time and dividing it by the total square footage of retail space available.
  • The health of a retail store can be measured by examining its sales per square foot.

For example, employees with a strong knowledge of company products are in a better position to cross-sell and up-sell the company’s products. As such, providing employees with adequate training (product knowledge, up-selling and cross-selling tactics, etc.) goes a long way in improving sales per square foot. Limited-service restaurants that generate any less than $200 of sales per square foot have little chance of averting an operating loss. Industry averages reveal that limited-service restaurants tend to have slightly different unit economics than their full-service counterparts.

Shopping Online: Convenience, Bargains, And A Few Scams

However, average sales per square foot data for your particular niche can prove difficult to locate. Their best interests are aligned with retailers in that they also want to claim the most sales per square foot. Top retailers are managing to grow sales in the brick-and-mortar business, even as more and more shoppers ring up purchases online. To calculate sales per square foot, divide annual sales by the total interior square footage of the restaurant, including kitchen, dining area, restrooms, etc. This is usually equal to the net rentable square feet in a leased space. One strategy that seems to be working well for retailers is holding community-based events. Lululemon, for example, has found success in holding free yoga classes during slow business hours to drive traffic in-store.

Next up is Tiffany & Co., which leads the jewelry sector with sales of $2,951 per square foot. The top apparel retailer is Lululemon Athletica, with sales of $1,560 per square foot.

The dollar value of sales per square foot has, for many years, been a measure of success in the brick-and-mortar retailing industry. It is simply the average revenue earned for every square foot of sales space. Consumers rely on home improvement retailers in their efforts to maintain and improve their homes. Retailers that are able to provide an environment that makes it easy for customers to get the merchandise and guidance they need are more likely to gain a larger share of their customers’ wallets. This is bound to affect the physical retail space as analysts predict that as many as 100,000 retail stores could close by 2025. As more stores increase their presence online, traditional brick-and-mortar locations are bound to feel the pinch. The impact of problems like the 2020 economic crisis also impacts retail sales per square foot.

This line item makes up a considerable percentage of your fixed costs, ultimately impacting your bottom line. In 2020, the Home Depot averaged about 543 U.S. dollars worth of sales per square foot. In contrast, Lowe’s sales per selling square foot averaged 431 U.S. dollars. While our article is chiefly about sales per square, it’s important to note that this metric is not the ultimate measure of retail success.

Generate reports for certain time periods (i.e., monthly, weekly, hourly), so you can figure out when customers are buying from you. From there, you can drill down on what they’re purchasing, and then stock up accordingly. One example of a retailer that effectively improved its layout is apparel store Express. The Structured Query Language comprises several different data types that allow it to store different types of information… Rent expense is the cost incurred by a business to utilize a property as an office, factory, storage, retail space, or general use space. Keeping track of sales per square foot over time might be extremely useful for a small business owner.

For example, a retail company that generated $100/square foot would be deemed much more efficient than a company that generated $50/square foot. Sales per square foot can be used to determine the sales efficiency of retail stores.