What are the 10 strongest retail markets in the U.S.?

eddie — Sun, 03 Apr 2011 22:11:13 +0000

As an entrepreneur, one of the most important decisions you will make is where to locate your business.

For many involved in online sales, location is unimportant. But if you’re in the restaurant or retail sector, location is everything.

I came across this list of the Ten Strongest Retail Markets in the US. The list was compiled by ChainLinks Retail advisors as part of what they call “The US National Retail Report.”

The top 10 retail markets in the US:

1. Washington, D.C.
2. San Francisco
3. New York City
4. Boston
5. San Diego
6. San Jose/South Bay
7. Baltimore
8. Philadelphia
9. Seattle
10. Pittsburgh

As you can see, Washington, D.C. tops the list, followed by San Francisco and NYC.

I am a little surprised to see Pittsburgh ranked so high – it’s relatively small (about 300,000) and has a reputation as a blue-collar “working class” town. Notably missing from the list is Minneapolis/St. Paul – people in Minnesota seem to love shopping (See the Mall of America), and I would have expected to see them in the top ten. Oh well, better luck next time, Minnesota!

How much does a fountain soda pop like Coke actually cost a Restaurant?

eddie — Tue, 09 Jun 2009 18:49:34 +0000

In short – not very much.

According to this article at Newsweek, the syrup to make a single cup of Coca-Cola costs $0.000052, or .0052 cents.

The concentrate for 70 percent of Coca-Cola’s 1.5 billion drinks served each day originates in the tax haven of Ireland, where enough concentrate for 50,000 Cokes costs $2.60—including labor. The concentrate’s main ingredient? Caramel.

That means that one penny buys enough syrup to make nearly 200 glasses of Coke!

Of course, that is Coke’s cost, not the restaurant’s. And the restaurant certainly has other expenses – the initial cost of the fountain machine, maintenance, electricity, etc. But make no mistake – fountain sodas are nearly pure profit for the restaurant.

I would guess that many restaurants make a healthy percentage of their profits from soda sales. Blogger Greg provides a little insight into the world of restaurant upselling.

A lot of good lessons there, but the key one was the “up sell”. And the up sell involved those items that cost very little to the restaurant, but had tremendous margins. Interestingly, turns out, you don’t make all that much on the burger, but if you suggest grilled onions on that burger (costs 5 cents, sells for 79 cents) there’s your spread. That shot of lemon or cherry extract in your soda for 49 cents, pure profit. And don’t even get me started about the margins in the deserts! My god, 100x ROI on the basic chocolate cake or ice cream Sunday. And fountain sodas? Like printing money…syrup and carbonated water, maybe 2-8 cents per glass, but you are selling it for $1. If only I could get margins like that in my business!

This comment thread at Reddit has a lot of great first-hand anecdotal stories as well:

Cosmic_Charlie
I was a restaurant manager for a while (yeah, it sucked). The 5 gallon boxes of syrup cost 40 or so dollars each. At 5-1 mix ratio, we got 30 gallons of mixed soda from each. If my math is correct, that’s 3840 ounces of mixed drink. Each 22 ounce glass held about 13 ounces of soda (fill it with ice of course.)This results in somewhere around 300 glasses of soda per 40 dollar box. That works out to about 13 cents a glass, not including CO2 costs, which were minimal.

We charged each person 2.29 a soda.

TheBlueberryPirate
A fast food franchise guy I knew once said the same thing. That McDonalds is the most elaborate Coca Cola sales operation on the planet, and exists pretty much to sell coke.

Yes, America loves its Coca Cola. But keep in mind – with fountain soda running $2.00/glass these days, a family of four that dines out twice per week will save nearly $1,000 per year by skipping the soda pop and instead going with water. Don’t get me wrong – I like a nice, cold, refreshing (caffeine-free diet) Pepsi as much as the next guy. But personally, I’d rather spend that $1,000 on an extra weekend getaway or two. Wouldn’t you?

Eddie On Everything » business

What are the 10 strongest retail markets in the U.S.?

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How much does a fountain soda pop like Coke actually cost a Restaurant?

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