I’ll play devil’s advocate here.
After months in my store and using the same prices and topping coverage of the previous owner I weighed all ingredients for each of the 21 signature pizzas we have on our menu to work out the true cost to sales. Took a couple of hours.
The main cook I inherited, and got rid of real quick after I was confident enough to go without him, used to pile toppings on. I did the calculations on his toppings spread.
We then gradually scaled back the toppings which brought the costs of goods % down. Funny thing is people suddenly started telling us how good the pizzas were now. What we did actually helped the cooking process as all ingredients now cooked more evenly and the bases lost that wet line effect.
Over the next twelve months as prices rose we very marginally cut back the amount of toppings to where we are now. Another funny thing - our sales went up even more and compliments came more and more, as did our customer count.
A prices went up we were able to absorb them to a degree until now where we have now put our menu to press with prices increased across the board. Last finacial year our food costs were 30-32%.
We are streamlining our priceing and putting some lines up only 6% and others up to 15% with others in between. Averaged out our increase is about 8.5%. On our new menu our cost to sales is around 27%.
We have been in the shop for 20 months and used the same pricing as the previous owner and his menu prices were about 8 - 12 months old, so in fact we are 2.5 - 3 years without a price increase. Don’t jump on me I know this is really bad business but there wers some issues we had to overcome before we could do a price increase without affecting trade.
Luckily we have increased our sales by around 25% over the last 12 months so the extra dollars have helped the bottom line. Add to this a more streamlined staff levels and having all staff crossed trained has helped immensely.
With our current sales levels without any advertising (we stopped as we are overloaded on busy times) we are confident customers will accept our increases. We expect to lose some as well as get comments on the new prices but the media has been trumpeting massive food price increases for some time now so most customers will be accepting.
I will be delighted when our costs get down to the 27% as it will go a long way to paying for our much needed additional oven, prep bench and the installation of our POS, plus put a couple of bucks in my pocket. We will also re-start our advertising as we will have oven capacity to take on more orders.
I have no hestitation in recommending reducing toppings to improve margins as long as there is room to move. You only do it very gradually until you get to your desired goal.
Maccas, Burger King, KFC etc all continuall downsize their products to improve profitability, as well as putting prices up, as do the grocery manufacturers, and guess what? People still buy their goods, so why is the pizza industry so hyped up about giving more toppings than competitors? I will stand by my decisions that we made to cutback the amount of toppings as a profitabilty earner and will recommend them.
If you have a good product that people are willing to wait 45 minutes on busy nights then you know you are doing something right and they will accept your product, even with a little less toppings.
In the end of the day I’m in business to make money and not go out the door backwards giving customers the most toppings in town.
There is the opportunity while the media is talking about the rising costs of food to raise prices and marginally reduce toppings. Hopefully then we can all get the full rewards for our efforts.