Mainstreet Junction Business Plan — Key Performance Indicators

The litres, basket, shrinkage and margin indicators monitored weekly, with the thresholds that trigger management action.

Key Performance Indicators

Jump to section

The following are the operating measures on which this project should be managed. Three of them — throughput, wet stock variance and shop conversion — carry more information about whether the investment case is holding than any revenue figure, because revenue rises with the pump price whether or not the business is working.

Indicator	Definition	Target	Why it matters
Throughput	Litres dispensed per month	480 000 by Year 5	Cash break-even is 324472 litres at Year 3 cost levels
Wet stock variance	Dip readings reconciled to pump meters and sales	Below 0.3% of throughput	A persistent 0.5% loss costs R649440 a year at cost
Non-fuel share of gross profit	Non-fuel gross profit ÷ total gross profit	Above 37%	The profit engine; fuel is the traffic generator
Shop conversion	Fuel customers entering the shop ÷ fuel transactions	Above 34%	The single most controllable driver of non-fuel revenue
Average shop basket	Shop revenue ÷ shop transactions	Above R118	Tested against regional convenience benchmarks
Shop gross margin	Shop gross profit ÷ shop revenue	27%	A 20% shortfall costs 3.6 points of project IRR
Debt service cover	EBITDA ÷ interest and capital	Above 1.30x from Year 2	1.19x in Year 1 even with the moratorium
Card and merchant fees	Merchant fees ÷ revenue	Below 1.05%	Charged on turnover, so they rise with the pump price and not with margin
Fuel days on hand	Fuel stock ÷ daily fuel cost of sales	Below 6 days	Every day of stock is roughly R1.9m of working capital at Year 5 prices
Diesel share of volume	Diesel litres ÷ total litres	Monitored at 48%	Diesel is unregulated at retail and carries R0.70 less margin

Throughput daily, wet stock daily, shop conversion monthly

Three cadences and three numbers, and none of them requires an accountant. Throughput comes off the pump meters and tells the operator whether the traffic study was right — the only question that determines whether the project works. Wet stock variance comes off the dips reconciled to the meters and tells them whether the product they paid for is being sold, because at R3.10 of margin a litre, product that disappears is the most expensive loss on the forecourt. Shop conversion comes off the point of sale against the fuel transaction count and tells them whether the profit engine is running, because Section 2 establishes that 37 per cent of gross profit arrives on 17 per cent of revenue. Revenue, by contrast, will rise handsomely in a month when the pump price goes up and the site sells fewer litres than the month before — which is precisely the trap this plan warns against on its first page.

Previous section17. Exit Options for Investors

Next section19. Key Assumptions