2023 P&L Study Review - Part A

by Tim Quebedeaux

Congrats to all the Garden Group Centers that reported in the 2023 Profit & Loss Study, a record 86 Garden Centers with 66 of those reporting to at least Part 4 (Inventory Turns & Gross Margin Return on Inventory Investment - GRMOII). This is an EBIDTA (Earnings before Interest, Depreciation, Taxes and Amortization) P&L Study otherwise known as an Operating P&L Study. We use this type of Profit & Loss so that we can compare apples to apples, how your Garden Center operates compared to other centers. The Study compares your center to The Total Group, Centers in your Region, Centers that are either Retail or Retail-Grower, Similar Sales Level to you, and ultimately to the Best of the Best Group.

To be able to even think about comparing your business to others, you need to be able to measure what you are going to compare. Reporting to the Garden Center Group Annual P&L Study is a great start! Once you have that accountability in the numbers, the all-important Key Performant Indicators (KPI’s), you can begin to compare your profitability to other centers and begin to ask the questions – how and why did they do it?

The P&L Study measures many different KPI’s. It starts with the big one, Revenue by category or department (you are what you sell). We always talk about the percentage of your revenues that are perishables vs. non-perishables. We have a goal of 75% perishables sold. New this year, we have your perishable revenues measured in the study. The Total Group measured 67.6% of their revenues as perishable whereas the Best of the Best showed closer to our goal, 73.8% perishable. This is important because of the forced efficiency of perishables products that lead to higher inventory turns, and higher GMROII which in turn gives us higher profitability as seen in the comparison of the Total Group vs the Best of the Best!

Then it measures the next three KPI’s also as a percentage of those revenues, Cost of Goods Sold (and the reciprocal, Margin), Operating Expenses, Wage & Wage Benefits. Leaving us with the most important measurement that we all depend on – Profitability. As a Retailer, you have a set benchmark for each of those… 44%, 18%, 28%, and 10% respectively. As a Retailer-Grower your benchmarks will depend on the amount of grown product sold in Retail. As a Retail-Grower you need to generate profit for growing and retailing your grown product. So the more you grow the higher the expectation of Margin (lower COGS) to cover higher operating and wage costs. With that higher margin expectation is the opportunity to generate more profitability. As a group of Retail-Growers (29% of total Group) those benchmarks this year are 40.1%, 18.6%, 29.9%, & 11.4%.

The P&L Study awards profitability at three different levels, 5%, 10%, and Best of the Best. Starting at the High Achievers, we see 5% as the base level of profitability. Being an operating P&L Study, we know there are other expenses still to be paid, as well as the need for some capital every year to be put back into the business to stay relevant in today’s ever-changing market and demographics.

This year we had 27 (updated) Garden Center locations achieve this level of profitability. These Garden Centers and the others that didn’t reach that level all look up to the Best Practices Garden Centers – 10% Profitability. This has been a hard-to-reach goal for many years, but since the pandemic year of 2020, a large number of garden Centers have reached that level. In 2020, we had 44, in 2021, 47… then it dropped in 2022 with 27, and a repeat in 2023 also with 27. In contrast, years 2016, 2017, 2018, & 2019 had a combined total of 35.

And from the most profitable years of 2020 & 2021, we needed to create a group that would really stretch our vision upward… The Best of the Best! This group is the top 10 centers with the highest profitability from the group of garden centers that fill out all 5 parts of the P&L Study. Over the last 4 years, only 21 Centers have made this elite list of Garden Centers, with more than half being repeat award winners! Once you have achieved this level of profitability, it becomes the norm, regardless of your revenues increasing or decreasing. 

Keep in mind that if you are a Retail-Grower your goals for the levels of profitability will depend on how much of your grown product was sold in your retail center. For 2023, those marks averaged out for Retail Growers as a group were 6.4% for High Achievers and 11.4% for Best Practices.

So, without further ado… Here are the Awards for the 2023 P&L Study:

The ultimate representation of the P&L Study results shows the three levels of profitability in the Bubble Chart, compare 2019, ‘20, ‘21, & ‘22… which direction is profitability flowing?

The Bubble chart shows us how important the bottom line (Profit) is, over the top line (Revenues). It states,

“It is not how much you SELL, it is how much you KEEP."

Diving deeper into the study, we will next look at some of the Best Practices Standards in our Facility, Revenues, Payment Types, and Labor hours. Within these benchmarks we can determine how to keep more of what we are selling.

Thanks again for all that you do!

Got questions or need more information about The Group's the Annual P&L Study or the Weekly Department Review (WDR)? Give Tim a call or email.

Tim Quebedeaux
Cell: 770.355.6249
Email: CLICK HERE

Tim Quebedeaux, RetailKPI Consulting, is a service provider for The Garden Center Group and manages all Group financial sharing programs. The Weekly Department Review (WDR) and The Annual P&L Study are industry exclusives developed by The Garden Center Group and are included in your retainer!

REMEMBER: Your interaction (by phone and email) with Group Service Providers such as Tim Quebedeaux, Sid Raisch, Jean Seawright, John Kennedy, and of course Danny Summers are included in your retainer! So what are you waiting for? Take advantage of all that The Group has to offer and give them a call or send an email now!