CCO Helps Retail Franchisee Advance Operations for More Profit and Portfolio Growth
Kensington Hill Capital (KHC) is the third Largest Jimmy John’s franchisee with a total of 58 locations in Alabama, Florida, Georgia and Ohio. As the company looks to become the largest Jimmy John’s operator in the world, KHC turned to Cornerstone Consulting Organization (CCO) to conduct a thorough on-site evaluation of its existing locations to ensure they are optimizing performance in each and applying best practices across the network of stores.
CCO worked with KHC leaders to quickly apply its FIT Operations, an enterprise-wide methodology that addresses complex interdependencies in any business, to design the best approach for managing the challenges in their operations and to achieve optimized performance and profit.
CCO’s team first evaluated revenue and costs – reviewing profit and loss data in 30-minute increments by day, week and a 28-day timeframe – to examine profitability by hour at a store level. The CCO team also performed a comparative analysis of each store’s Cost of Goods Sold (COGS) to determine anomalies and pinpoint profitability improvement opportunities.
Through this data analysis, CCO identified four key findings:
- Two-thirds of sales at Jimmy John’s locations in Georgia occurred between the hours of 11 a.m. and 3 p.m. However, these sales segments did not cover the cost of the average shop’s labor.
- Data could be better utilized to establish benchmark reports.
- The need to develop and implement 5S method training and solutions.
- An opportunity to better analyze cost and benefits in geographic clusters.
The CCO team determined that in order for KHC to deliver sustainable, profitable performance and growth – and ultimately achieve maximum EBITDA – the organization needed to focus on both enterprise and store management.
Though some original plans were delayed when the pandemic hit, other operational recommendations were revised and deployed to effectively manage the business during a time of major disruption.
From adjusting store hours to consolidating product preparation at anchor stores, these actions were implemented to ensure sustainable, profitable growth. KHC also introduced temporary labor adjustments such as layoffs of part-time employees, along with shift changes and reduction of variable wages for full time employees, to reduce costs and stabilize gross margins.
In addition to identifying improvement opportunities, CCO opened a door that allowed KHC to view the business and its operations in new ways. Applying tools and techniques from other industries provided a new point of view to assess the business.
Once the pandemic is over and operations can return to normal, KHC will revisit initial corrective actions such as closing one store and rescheduling store shifts to align with sales. By decreasing overhead costs and increasing labor efficiency, KHC will continue on the road to optimized performance and profit at both the enterprise and store levels.
CCO’s FIT Operations approach will ensure a business can adapt to its corresponding environment, handle unexpected variability in the process, and maximize the value from the potential energy in the system. CCO has applied this methodology countless times to help its clients find and fix problems and set them on the path to their highest potential and performance.