hello I opened up a pizzeria in the northeast about nine months ago. I am in my early to mid 20’s, have worked in the business for about six plus before opening my own place. I have been doing great, sales for year one (which will be in may) 750k-800k +.
Now, i realize there are a ton of bills your first year or so, (i spent 20k plus on bills alone in july, not including food/labor!). Although i am doing well, it seems that i should have more saved up.
My question is how much should a business in my sales range should make, net profit. I believe I should profit 30-33% I’ll break down my monthly cost…
Those are the average monthly exp. I have paid off a ton of bills for the business, though i do own for the business still (loan from my father). however, seems like theres weeks where i’m spinning my wheels. Any help from a experienced business owner would greatly be appreciated.
Some of this breaks down into regional differences. Here in DFW, I can lease a good location for $2,500/month. What’s that going to clip you on the coasts? Probably a lot more. So I have a built in advantage to begin with. Also, labor is cheaper here (at least it is cheaper vs Chicago, the other market I know very well). So again, I have an advantage vs some of you guys.
Also keep in mind the sales levels. This poster said he has $62k a month. The higher your sales, the higher your % will be as your fixed costs stay the same.
He actually has high labor costs. I would cry if my labor costs approached 26%.
I think 20% should be your target…it is not easy, but it is definitely attainable with proper food cost and sales in your range. Also in the beginning all the little stuff tends to add up that you never think of.
This should help you in determining how much profit you should be generating in your store. Just remember, there’s a [size=5]HUGE[/size] difference between profit and cash flow. -J_r0kk
Perhaps I should clarify, I am cashflowing 10,500 on sales of $34k. And not only is is possible, there is margin for error. There are a couple things that I think I can do better on.
So yes, things like depr and debr service are not in there.
I then take out sales tax (1070), payroll taxes (880), unemployment tax (85)business loan (660), other misc vendors expenses (400). Other misc debt service means 600 more out . . . for net profit of near about $1909, which is about 12.5%. I chose this month as it was a high sales month for that quarter. Expenses run pretty even percentage except fixed costs.
I think the difference in my perception is that you equated your cash flow number with net profit, which in my accounting is different. I think j_rokk does it differently as well. I register net profit as unencumbered money that I can spend any way I want to or put into a bank account that no one has any demands on.
The methodologies are going to bring similar results. Sales tax is taken out of mine already. The numbers I showed were net sales. Same as payroll taxes and unemployment. The only thing you subtract that I did not is debt service.
The only thing that is stopping you from having a number closer to 30% is your sales. If you had $34k in sales like I do, you’d be at 30% as well.
yup. given your taxes and all are out of your numbers . . . I will just have to sell one pizza every month to every man, woman and child in our city. It could be done . . . and that is acutally my goal for the year
Adding beer/wine and expanding the dining room (to get balance similar to yours) will help out a good bit in drawing from further out.
I so badly want to add beer/wine. That is my next project. I’ve talked to a few people around here and they all estimate that it added about $1,200 to their bottom line each month. I can use an extra $1,200.
Your goal of selling a pizza to everyone may or may not happen, but I am assuming you live in a small town. So your cost of living is probably a lot lower. So you don’t need to pull the revenue that some of us have to in order to get by. I know some people in NY that would have trouble making it on the sales I do, and I think I am living quite nice here in Dallas. Good luck, if there is anything I can do don’t hesitate to ask.
