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Increase Profitability During Your Fall Season
Track Costs and Revenue to Make Your Farm Grow
By Jane Eckert
We all know by now that the fall season is growing and continues to attract larger crowds to our farms each and every year. According to my fall survey, many farms last year experienced huge increases in sales both in the U.S. and Canada due to the near perfect weather conditions. An increasing number of these agritourism farms are in fact open only five or six weeks a year for pumpkins, corn mazes and a huge variety of entertainment activities.
Yet, when I talk with these farms and consult with them one-on-one, and I look at their profit and loss statements with them, they all ask me the same two questions. What do I need to add to my offerings to get more revenue? How do we get our guests to spend more money with us per visit?
The third question—perhaps more fun—is what new activities should I add, such as, do I really need a jumping pillow and will that insure my success? But that's really a question for another day. Let's address getting the maximum revenue out of your existing offerings first.
How do I get my guests to spend more money per visit?
Because our agritourism industry has not done a good job of developing benchmark numbers that we can share with each other regarding our businesses, no one is really sure what to do or how they compare with others. Often times, we don't want to share these numbers with our nearby competitors. Even worse, some farms just plain don't keep track of them. "I'm a grower, not an accountant. I don't have time to do everything!" But the problem is, without this information, you don't really know how you are doing from one year to the next, and you don't have this annual comparison to identify areas that need improvement.
For those of you that don't keep track, I hope this article will spur you to do a better job this fall, and I'll try to provide a few tips and ideas that you can have in place now, before the work gets too hectic.
I recently contacted about a dozen of my farm friends in the industry and asked them to share with me their 2010 revenue and key numbers. I intentionally selected farms that charge an overall entry admission, versus a charge per activity, since these farms could tell us the exact number of people that entered their farm.
The farms chosen were from both in the U.S. and Canada, and had overall fall season farm admission attendance from 16,000 to 188,000 in about a six week period. Their average per person admission prices ranged from $6.84 - $11.00 (taking into account ticket couponing and discounting).
Most of these farms also had significant night time offerings including flashlight corn maze, haunted hayrides, spooky hayrides, haunted woods, bonfires and more. In fact, several of the farms reported that their daytime versus evening attendance was about 50:50!
That's an important number: for those of you that have not yet jumped onto the night time offerings, you may in fact want to consider doing so, even if only for the weekends. If these farms are making half of their revenue at night, and you already have the maze and most of the offerings already in place, this may be a good place to increase your revenue with minimal investment.
It seems that both the family "scary" mazes and the adult "haunted" attractions are bringing record numbers of people on to our farms. In fact, several of these farms are already experiencing over two hour waiting lines just to go through the haunted attraction.
Another popular, easy revenue attraction offered by the farms is charging for a bonfire/campfire for private parties, and this being done both in the day and in the night. In addition to paying an admission per person, groups also pay for the privilege of a place to gather and have fun that includes the bonfire, straw bale seating and roasting sticks. The bonfire sites on the farms surveyed ranged in price from $25 - $75, with a couple charging more on nights and weekends. Among the farms I talked with, the rental numbers ranged from 35 to over 1,000 sites for the season.
On most farms that I visit, food concessions is an underachieving revenue category, mainly because of the lack of food choice, use of concessionaires versus doing the food yourself, and simply not enough places to be able to purchase food on the farm. If we want to increase the amount of money people spend on the farm, then food concessions typically offer your biggest opportunity.
The average food sold per person from my small survey ranged from $1.94 to $5.77. I have seen many farms with average food sales of less than $1.00 per person. So my question to you is "would you rather buy a new attraction for fall or spend your money this season on building another one or two food stands?" It's certainly been proven by Vala's Pumpkin Patch that the more food locations you have across your farm, the higher your average food sale per person.
There are several other key spending numbers you should be tracking:
- Average price spent per person on pumpkins
- Average price spent per person on fall decorations (straw bales, corn stalks, Indian corn, mums, gourds, squash etc.)
- Average price spent per person on other non-food and non-fall merchandise sold in your markets
The sale of these products is very dependent on large and prominent displays, merchandise choice and selection, as well as ease of shopping. From my small survey group, these numbers were so inconsistently reported that I can't give you hard numbers here. However, you should be tracking these categories from year to year to see how these sales can be improved.
Improving Profitability is Not All About Sales
Finally, I asked the smaller group of farms for one more very important number. What is your percentage of fall labor to sales? This number is calculated by taking your fall season labor expense (the days you are open) and dividing it by your gross sales. Interesting enough the labor percentage ranged from 8.02 % - 25%.
While some farms may either include or exclude family wages in this number, this is still a very astounding difference. Obviously, watching and controlling your labor expense you can make a huge difference to your bottom line. It's a matter of watching both sides of the equation: on the one hand, you should think about how you can get your guests to spend more money per visit, and at the same time, consider your labor expense category, which, for most farms is our biggest expense.
The fall season has become an important time for most of us. I encourage you to make the best of these efforts by getting a handle on your benchmark numbers. This year, know where your revenue is coming from, identify your profit leaders, and target your loss leaders. You can make a big difference from one week to the next!
Jane Eckert is the founder of Eckert AgriMarketing (www.eckertagrimarketing.com), a full-service marketing and public relations firm that helps farmers to sell directly to consumers, diversify operations and become tourist destinations. She is also CEO of www.RuralBounty.com, a search directory for agritourism farms and ranches in North America. Jane can be reached at 314-862-6288 or you may email her directly.