For truckstop and travel plaza operators, net operating costs provide insight into their locations’ profitability, efficiency and success, which explains why operators are constantly looking to improve their net operating costs.
Darren Schulte, vice president of membership at NATSO, said there are a number of ways locations can improve net operating costs and what works well for one location may not be the solution for another. “You can reduce or improve the cost of your food or your retail items, your labor or your supplies while your sales remain the same, you can work to increase sales, or you can increase your sales and also reduce your costs,” Schulte said.
Regardless of which area operators focus on first, Roger Cole, editor of the NATSO Foundation’s Biz Brief and a former chairman of NATSO, suggested operators remove fixed or semi-fixed costs they can’t control, such as property tax and depreciation, when examining their net operating costs so they can focus on things the managers have control over.
For more tips and insight, NATSO sat down with operators to learn how they have improved their net operating costs.
Holding expenses constant while increasing sales, gross profits, and cents per gallon margins is the preferred method of improving net operating cost percentages, said Tom Heinz, president of Heinz Inc. and Coffee Cup Fuel Stops & Convenience Stores Inc. “Focusing on increasing average transaction amounts by simply selling more to each customer is going to be crucial,” he said. “With lower gasoline prices, a renewed focus on the gas customer and training all employees on how to upsell should pay future dividends as well.”
Schulte said, “If there is a magical bullet everyone would agree it is to increase your sales. Most people believe if you can drive your topline sales it has a double benefit. It increases the revenue, which leads to increased profits. It also improves your economy of scale. If you’re growing sales, you’re buying more, which comes with its own cost reductions.”
Heinz said simply maintaining a product mix with high double-digit margins while mitigating out of stocks can be helpful in increasing average customer transaction amounts...