.
To be honest, not well. I don’t see how you can survive on those weekly sales. You’re in a small market with eight other competitors. Assuming you have the best pizza of those eight, without marketing most of those 35K households will never know. That said, your pizza could be the worst of the eight (and I’m not saying that it is – how would I know?), but with good marketing it wouldn’t matter.
In 2004 I bought a struggling pizza joint in a tiny town of like 2100 people. Inside of 6 months, sales averages for FRIDAY NIGHT went from $700 to around $1100. So, I would say that 1,100 weekly is bad news in general. Granted, I was only pizza joint, but 800 households.
If you have that much competiton and you do not have an ongoing, strategic and continuous marketing plan, then will dry up and pour money down that drain until you are broke, bankrupt, or ready to stop pouring. Without customers hearing/seeing your message and learning about you, they will never come in. The marketing plan is how you develop a relationship with the market . . . you introduce yourself and get them to know & like you. Those $20K PJ weeks were built on amazing amounts of money spent on weekly and monthly advertising . . . and being in high population densities. You have neither.
Bottom line: If you are making $1100 a week and doning nothing to increase those sales, then they ain’t gonna increase. Visiting businesses with pizzas, donating to local schools’ events, putting menus on apartment doors, mailing menues to various high desirability neightborhoods, getting in on local festivals with a booth or something, School Spirit nights to raise funds for shools and you both, connect and get to know local athletics directors - they eat pizzas with teams, colleges are gold, large employers will often order in for employees, hotels are money on the hoof.
Thank you both for the feedback. One of the basic issues that I have been struggling with from the beginning, and I would assume others have had the issue as well, is fear of running out of money. I don’t do marketing because I am afraid that if I spend too much money on marketing (because right now with the sales that I am doing I just about break even every month, so I am able to keep it going) then I will have to close up. But at the same time this fear drags me down because by not spending the money to market the shop, it will never get better.
When I was with Papa John’s, our owner had us budget 5% of our weekly sales for marketing (which ending up being around $750 - $1,000 a week). We would take our last 7 days worth of sales when we published our schedule, and add that much money into marketing hours for employees or mail drops etc.
Of course, in my position that equates to $50 a week. Being a smaller shop without a large portion of sales, what should I spend weekly on marketing?
I would door hang and box top. You can use the same printed piece for both, a few thousand are not that expensive then all you need is time.
If you have a businesses in your area, show up with menus and coupons. Give the receptionist or office manager or whatever a little something (I like cinnamon stix) and you will be thought of next time they order. Another thing that sometimes helps with businesses is to make up 4 large pizzas and after cutting them arrange them so you have 1/4 of each pizza in each of the 4 boxes so you are creating a little sampler of your product and drop these off.
If you have very little money to market, about all you can do is door hang by yourself…Great exercise and no cost…Chris at Taradel can do some flyers up for 5 cents or less…To save money you can get them unfolded…But if you ask nice, they might waive the folding charge…You better get with it or you will have nothing left to save…Good luck…
You should be spending as much as you can on the marketing. Making sales should be your focus, marketing is the way to get those sales. Since your budget is tight and cash flow is limited you may have to get creative, beg/borrow/loan money, but you have to start marketing. I can promise you if you don’t do this you will run out of money or will power eventually. Once you establish the plan and figure out how to fund it don’t stop or cut it; it may take time for you to see the return. Many people cut their marketing down when things get tough. I would argue that is the time to increase marketing efforts and find other areas to cut back on. Also, look at what others in your area doing for marketing and see what is working for them; this shouldn’t keep you from trying to think of different or clever ways to market though. spending dollars on ineffective marketing won’t help you either.
I can’t remember if I read this in the PMQ magazine or if it was on one of my newfeed sites but I read about a shop that had a event where they gave away free personal cheese pizza (charged for additional toppings) as a draw and IRC that event got their name out to a lot of people and they did nice a business on add-ons to the orders. For something like that you could probably write up a press release and send it to local media; they might report on something like that giving you free advertising for the event. I’d also send it to all the people Nick mentioned below. I don’t know if that is viable in your situation but I thought it was interesting.
How are you staffing and purchasing for the $1100 weekly average. I would take a very close look at that to see if you can cut back. Staff up on your nights you are busiest and cut it back to the bare minimum on slow nights or send people home early. Looking through your daily sales history over the past 10 months should help you plot that out. At the end of the week what kind of inventory do you have left over? Do you have a lot of expensive items left over? Are there certain ingredients you can change to a cheaper version without affecting quality? You will not want to have a product that starts sliding backwards in quality so be careful if when looking at changing.
Do you have a lot of stuff you are throwing out at night or have a lot of waste from make activities? If you do adjust your prep and train your staff to guard against waste.
Look at the non-food items like cleaners and the such. Are the cheaper versions you can get. Don’t stockpile non critical items buy what you need to get the job done with a slight cushion.
Also take a look at your prices, what do you margins look like? I’m a big fan of offering bundle deals that you build in some profit versus coupons or awesome deals that leave you with thin margins that rely on volume to make it worth your time.
Looking at those areas and adjusting might give you a way to wrangle out more dollars that can be used for marketing, which hopefully in turn will lead to increased sales and new customers.
Bryan
Thank you very much guys. It is great to see that the people here are very helpful and willing to share their experiences. I appreciate all the feedback you guys have provided and will try to implement a lot of that.
The biggest hurdle I think I face is that I am open from 10am - 10pm Sunday through Thursday and 10am - 12am Friday and Saturday leaving me little to no time to do marketing (as I am the only employee).
Based on some of the reccomendations you guys have given me, I am going to budget $150 a week for EDDM and hire on someone who is very personable to go out a morning or two a week to hand out flyers to the business, free pizzas, etc. Hopefully that will put me on the right track.
While EDDM seems to work, I think in the short term I think you will get better bang for your buck if you go for a do it yourself plan…EDDM runs 25 cents each so 150.00 gets 600 homes…A do it your self flyer runs 5 cents so you can so 3,000 homes…Open an hour later and close for 2 hours in the afternoon to give yourself time to market…And right now you need to reach more homes than the 150.00 in EDDM gets you…
Royster,
One of my fears, and perhaps it unwarranted and only because I was at a chain store before, is that by changing my operating hours now, and / or closing for a couple of hours in the afternoon after having been open during those times, is that I will lose some customers and possibly anger a few. Is this unwarranted or is this a legitimate cause for concern?
An option I do have available for me is having a family member “babysit” the store and just call me in the event we get an order to make it. While this is an extra hassle, is this a better alternative or would you just as soon close completely during the mid day lull?
You may be afraid of losing the odd client during those hours, but the bigger fear should be losing everything…My way of thinking is that you would be far better off losing a few sales and doing more marketing to try and drive your evening sales…
Very true. Thank you.
Are you bringing in more sales at lunch or dinner? If it were me I might consider going one way or another to focus on my core customer. Right now you are bringing in $15 per hour on your 78 hour service week. On average that’s about $166 per day. That’s based on your average weekly sales of $1164 that you mentioned earlier. Was the weekly sales a typo? It seems like a long time to be open for a couple pies per hour. I’d look to see where the dead time is and the rush time and look at adjusting the hours accordingly.
Bryan
I am going to agree with find your target customer. Is it lunch or dinner. You are on the road to being burned out before a year. Not good! It really does take money to make money and not always a whole lot of money…but some. Start with your hours and where the current income is coming from and then work around that. Also…take that look at waste of prep items because with sales where they are you do not need a lot sitting around. I would also comment that you are going head to head with the big 3/4 on price. That ONLY works if you have super high volume of sales… which sorry to say you do not. You need to look at your plan and forcast the numbers a little to see if what you are doing is survivable. Best of luck to you!
Okay thank you. I spent the afternoon looking over some analysis that my POS system “halfway” provided me (it severely lacks on the reporting side but I am stuck with it). And was able to come up with my average sales for an hour slot during the week. That should help me re-evaluate operating hours and where to focus my funding.
That would work for you if you had a multi-million dollar ongoing campaign running both nationally and regionally and in areas. I would speculate that the local shops spend a fraction of the total Papa Johns marketing budget for a quarter or year. those franchise fees include a bit for that funding. We independents foot the whole bill and have to send out a bigger chunk to gather startup customers, then can level out over time.
I recommend you do something to assure yoursef that it makes a difference. Take the average weekly sales for 4 weeks prior to your marketing piece . . . . then take the average of the following 3 weeks. Maximum life expectancy of the message of one piece is 3 weeks. When it is all done, Add up the 3 POST WEEKS and subtract 3 X PREVIOUS AVERAGE. This will give you an estimate of the fiscal impact of the marketing piece. All things being equal, that will be the reason for an increase in sales revenues. Now, compare it to what you spent on the marketing. I’ll wager you make your moneyback PLUS have had some visibility in the marketplace to build on. Then do something else with a different group . . . then come back to group one again. You’ll probably get better return the second time around.
You don’t have to go all crazy at one time . . . but do be consistent and keep doing it for a little bit. You should see improvement provided you have amazing product and service. Adequate wom’ get it in that market. It needs to be amazing to get your best chance. Everyone else is adequate to decent.
Nick,
You mentioned that you are active on Facebook, which is great. Also not a bad idea to create a website for your shop. You can do this for the cost of a domain name (around $20 a year if I remember correctly). It’s definitely something you can do yourself during your slower times. Even if you’re not a “computer person” you can do it easily enough using a drag-and-drop site builder such as Weebly. Using varied and targeted descriptions and meta key words for each page on your site could get you a pretty high ranking on Google in no time when anyone in your area Googles pizza. Just a thought. Good luck.
WOW! I have absolutely NO IDEA how you’ve managed to stay in business with only $5K/month in sales… You are one tough fellow - congrats on hanging in there! Besides your initial investment, you’re going to have to step on another limb, and throw some $$s towards advertising and marketing. The only way you will stay in business and increase sales (they’re one and the same) is to MARKET and ADVERTISE. Good luck and best wishes!
Thank you for all the wonderful advice. I did end up securing some extra funding to do some different marketing avenues. As of right now I will be doing:
3,100 EDDM flyers and 2,500 Door Hangers (only because that is all the hours I can spare myself to do it), for a total of 5,600 pieces a month. I will be doing the door hanging on a weekly basis (about 625 a week) and will be splitting the EDDM into two drops and spreading them one week on one week off.
My question is, since I will be also implementing returning customer rewards such as loyalty cards, box toppers, and bounce back coupons, which is a better option for me with my door hanging and EDDM. Should I hit the same routes each month (hitting more homes) or should I restart the routes at the beginning of every period (13 4 week periods) so that I am hitting less homes but more consistency to those people (they would receive a flyer once every 28 days). And for the EDDM is there an ideal day to send it (someone told me Wednesday or Thursday because Monday and Friday are bad days, and Tues is filled with advo packs and large chain drops).
Thanks for the advice everyone!
If you are going to hire someone to do the door hangers, give them a gps to track them
I am using Letterbox checker. I was just mailed to day with this letterboxchecker.com/testkit
Make the person responsible for what they do, no more putting them in the bin.