Ask The Experts: Question for Steve Green

My wife and I have owned a franchise for 6 years now. The chain was started by a group of friends of ours who had very little pizza or restaurant experience. My wife does have a background in restaurant, having worked in the industry since she was 16, but none of that being pizza orientated. So, our corporate office really doesn’t know the ropes and therefore, there is no one to really show us how to run a pizza business. Our marketing is pathetic. It consists of doorhangers, ADVO mailers, local neighborhood paper inserts and that is the responsibility of each individual store owner. Now, corporate has just started doing 5 sec spots on T.V. at scarce times. To sum it up, we have a great product in our pizza and wings (along with other menu items) but you’re kind of on your own withouth any strong leadership. Thus, the corporate owners gave territories to friends to try to get a bunch of stores open quickly. All the friends knew, or thought, was that pizzerias were cash cows and could they have some 20 year old kid run it for them. Well, you already know that many of those stores are not around any more. We now have 7 stores left in the area, four of which are stable and the other three just making it. The common denominator is obviously the fact that the owners are a major presence inside and working the four stable stores. These four stores average $11K a week. The problem is that we really don’t have any place to turn to try to get the most out of the hard work we are putting in. In my opinion, we need someone who has been there before and who’s history preceeds them to come in and analyze things for us. However, when you’re dealing with egos, that’s not always an easy thing to get accomplished. So I would like to get some information before the next coporate meeting so I can at least propose the idea. Here are my questions:

  1. Who would you suggest, if not yourself, to have consult on the coporate level? And what is a ballpark fee for a corporate evaluation?

  2. Who would you suggest, if not yourself, to have consult on an idividual store level? And what is the fee for that kind of evaluation?

I know that my wife and I are too trusting and run our books too loosely. If you ask our food cost, we can tell you that it is around or about 48% :shock: (did you just spit your coffee out?!). If you ask us our labor, we could tell you that it is around this or that. If you ask you our profit margin, we couldn’t even give you an answer. We obviously need help. :oops:

Thanks so much for your help!!

Mike Hines

I’m not Steve Green but I’ll give you my 2 pesos here.

Big Dave is probably the most well known pizza consultant out there. . I don’t have a clue what he charges, but I would be pretty sure whatever it is, he will save you by reducing your 48% food cost. That’s one of the things he really pushes. He will also leave you feeling energized and excited about implementing/following through on new marketing ideas he will help you set up.

Back to the 48% food cost! Something here is way out of whack, either your pricing, your usage/portioning, or your suppliers pricing. First place to start is to make sure you do not have a theft problem. Food cost this high would lead me to believe that this needs to be looked at. Make sure that raw product isn’t being stolen and that every sale is being recorded and the cash going into the register. Next you need to look at your portioning. Really evaluate how much of each ingredient you want on each final product. Find ways to standardize your portioning and stick to them. Free throwing cheese is generally a very bad idea for a shop looking to get food costs under control. Next look at your suppliers pricing. Are you required to purchase from one supplier? Have you priced your ingredients with other suppliers? I have heard of scenarios of loosely organized franchises getting screwed by their franchiser on their purveyor contracts. Basically you need to make sure that your supplier isn’t overcharging you while kicking rebates back to your franchiser. Lastly you need to take a look at your own menu prices. Are you selling $4.00 pizzas topped with Stanislaus tomatoes and Grande cheese? Go through each and every menu item and add up your cost of the ingredients and see where your ideal percentage should be. It is acceptable to have some items on your menu at a 48% food cost, but not for the whole menu to price out that way. Adjust menu prices to get closer to 35% food cost. Assuming yours is one of the $11K per week stores, a drop in food cost from 48% to 35% would give you an extra $1400 per week. Thats worth putting some effort towards.

Yes, I agree. I don’t think that raw product is going out the door but I do think that employees are having waaay too much freedom with a chicken tender here or a chikcen tender there. The main issue with us would have to be portion control. We do free throw cheese and if it’s not me on the table, then there is definitely a lot waste there. What are the other options available that are affordable? We’ve tried to do a measuring cup or scale but when the rush hits, that goes to the way side and it’s back to free throwing. Corporate started a buy one, get one about year ago on XLGs which really got the phones ringing and has kept them ringing. We do the hand written cards and are active in the community. We have always held a good name in our delivery area which consists of about 20K homes. I just think we need someone to come in and REALLY show us how to properly run this thing.

The BIG issue here is the food cost. At 48% it doesn’t matter how busy you are your going to lose money in fact at that level the busier you are the more you’ll lose. Go back to using cups or scales its what somone like Big Dave would put in place first thing so do it yourself. If it gets busy then you HAVE to stick to it otherwise what is the point.

So many thoughts come to mind, where do I start. I try to look from the inside out to start. I don’t care how busy it is my team must use the scale: cheese and meat are the most expensive to throw away. I also think you have a more consistent product. Your high food cost might be coming from another place. Franchisors have been known to sell product above wholesale cost, which by the way is illegal. How many years do you have left? Maybe re-open your way.
As far as a consultant not a bad idea but for your franchisor. I think you have more great consultats @ this site for free!

Just my humbe opinion.

Yikes! 48%? My first reaction was to spit out my coffee, my second reaction is to wonder how you are calculating your food cost. It is hard to believe that you could still be in business if you were really running a 48% food. Especially at $11,000 a week. Something not right. Big Dave would be a great choice for helping you understand the business. He is especially good at motivation, marketing and breaking down the numbers so that you can earn some money. You may also get some good advise from PMQ’s official contributing financial advisor Mike Rasmussen who can give you some good target numbers. If you want to write me and tell me what part of the country you are in I can advise you on someone who may be local, if you can not get BD.


Two things to note here. BOGO specials are fine if your menu is priced right. But if running a BOGO special is causing you to run 48% food cost, you either need to get rid of the special, or raise the price of the first pizza.

Secondly, Portion control needs to be done no matter how busy you are. When the rush hits is the time that portion control does the most good. What good is it to weigh the cheese on the few pizzas you make when it is slow, and then not weigh it when you are sending 100 pies per hour out the door. This will be my busiest weekend of the year, and we should have quite a few $1000+ hours, but EVERY pizza will have the cheese scaled. It’s just not an option at my store. If an employee thinks it’s not necessary, they can feel free to go work for someone who has money to throw away, but they will have worked their last shift for me. BTW, despite these busy hours this weekend, my stores average order will still be delivered in well under 25 minutes. Seems that scaling doesn’t slow my process down much.

I can’t believe it’s taken 6 years for me to find this place. This is a great venue to get the help needed. I am located in St. Louis, Mo. and everyone knows that Imo’s owns this city. However, when we get an Imo’s customer to try us, they are sold. So, If we could put a proven marketing system in place and get our numbers in line, I think we’d be able to build this into the type of residual income stream that we originally invisioned to pass on to our son. Realistically, with our delivery area consisting of 20K homes consisting of middle class families, what should we be doing a week in sales? We have all the major competitors in the our area along with Imo’s having two stores with one at each end of our territory. And what should the average take home be if doing $45K a month? I think I will at least contact BD and get some figures. But Steve, if you could find someone locally, that would be great also. After having done it this way for 6 years, it would be very comforting to have someone actually witness the operation and I also think it would jumpstart the staff into being excited about the changes.

Thanks for all the response and keep 'em coming!


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