New Startup venture - feedback?

Hi Guys/Girls,

I’ve been doing a bit of reading on this site over the past several months, and would like to get some honest and realistic feedback… I’m considering moving forward with a new pizza business which would be located in a new commercial building (already built). The location is prime, and is within walking distance of a large employer with over 1000 employees. There are currently a few franchise restaurants already in place within the commercial complex, and the space i’m eying would be located a few spaces from a sub shop. Being a frequent customer of this sub shop, and speaking with the GM, I’ve been able to gather that they serve somewhere between 350-490 people per day. The majority of the business is done during business hours Monday through Friday. The space i’m interested in is 1200sq ft, with a current asking price of $1800/month. I’ve never worked in the pizza industry before, but do have considerable business experience within a demanding field. Taking into account the build out which would be required, and the startup expenses, does this sound like a viable opportunity? The average lunch price among the 3 restaurants in this commercial center avg $8-$10/person. I wanted to target selling pizza by the slice for the large lunch crowd, and would serve as a dine in/take out restaurant.

I’ve put together a spreadsheet of estimated expenses, however am not sure how to upload it here…

Thanks in advance!

Prof. Stone

Hi Prof. Stone:

My comment is that 1200 Sq .Ft. is what we normally advise for a pizza shop without seating.

How many seats do you believe you will need to do the lunch volume you aspire to?

We Have done the layout and design for thousands of pizza shops and would be happy to do one for you at no charge.

George Mills

Agree with George, don’t plan on much inside dining.

The customer count sounds good as well as the rent.

However, most pizza business is done at night and on the weekends. A big percentage of pizza sales are done with big dine-in groups. Pizza places sell sandwiches to subsidize their pizza sales during the day for lunch.

So, no nights, no weekends, no seating and existing competition for sandwiches. In fact, if they are in the same center you may be prohibited from selling sandwiches.

None of this means it can’t be done but if I were to try building a business from scratch I would want as many things going for me as possible. You would be starting off with more negatives than positives imo.

I did a business only location before and its much harder to market to than your traditional residential friends.

Edit: One more thing. Right now many businesses have cut back on big lunch spending due to the economy.

Thanks for the reponses guys

There are several other commercial spots (double the size/price) available within the building which is also an option. Although i do agree that many pizza business’s thrive during nights and weekends, the target market for this venture would primarily be the lunch crowd of the sizable industrial business nearby, as well as the high volume of traffic the area see’s on a daily basis from the surrounding freeway. There are no other pizza restaurants within a few mile radius, and the price point i would be offering for lunch specials would be nearly half of the competitions current price point. Given that times are tough, and everyones looking for a low cost alternative, i see this as a selling point rather than a negative.

Hi,

I am a weekend pizza maker thinking of my own business. No business opeation experience. How can I find out such basics as how much you can make, business planning, gosh – everything? I’m not sure where to start. Prof Stone sounds like he/she’s got their feet on the ground a wholelot more. Any suggestons appreciated.

Aldo

Aldo, refer to Professor_stone’s first line.

professor_stone: agree with the seating issue, although for slices, if you could get a grab-n-go concept going, it could work in your favor. I’m thinking like Mr. Beef italian beef in Chicago. a couple picnic tables, and a counter you stand at the circles the dining room…everyone knows they’re going to eat with strangers…thats part of the ambiance.

I also think delivery could be huge, and not to difficult since your customers are in close proximity.

I might consider one other option… lately some folks have been having success operating only out of a truck instead of a storefront. I’ve seen them on twitter, but I bet you could google it. Imagine no rent, but the factory knows you’re pulling up at 11am mon-fri to sell slices for 2 hours, and then you’re moving to to the next place.

Lets recap back on this.

PizzaPirate is correct in that MOST pizza business is done at night.

You state - i would be offering for lunch specials would be nearly half of the competitions current price point

So you’re overlooking the fact hat MOST people eat pizza at night and then state that you believe you can produce food for 1/2 the price of the other establishments. 50% less - wow thats good!

Now take a step back re-read these posts, reconsider this info and tell us if it really sounds like a good business proposition.

I have also considered this option. We have a college campus,a hospital,court buildings,lots of schools,an industrial park and lots of construction crews around. My question is wouldn’t you still need a small store front as to make your dough,cut cheese and make sauce?

The savings here are that you would not need a “storefront”. Rather you would just need a “facility”. Much lower overhead.

I’ve done similar operations, and while they can be highly profitable, they are also a lot of hard manual work. The great profit margins come in by lower fixed overhead and the fact that you can virtually do all the labor yourself since all the prep is done during non-business hours in a facility where no one can bother you. That’s why you really just see the owners themselves running around in the trucks. Hiring the extra labor to run the operation will quickly eat into any savings your might think you have doing such a venture.

The other issue is what the effect of such an operation would have on your existing business. Lets say you can make the numbers work to turn a reasonable profit with hired labor. Its still going to draw a lot of “your” energy just to manage and maintain the separate operation and procedures. Imo, it is much easier to work your existing operations by either expanding sales or locations than to try and manage a different operation.

So what you’re saying is… MOST pizza businesses do not succeed based off business generated during the daytime?

Yes, most pizza businesses use lunch primarily to prep for dinner. Mine is usually 25% of daily sales. Obviously there are exceptions, like those in highly industrial areas. If you could google and call the manager at IMO’s Pizza in Earth City, Missouri, he has an operation exactly like you are envisioning. I bet he could give you some insite.

And here is the truck I was thinking of: http://streetza.com/

There is a place here in Canada that makes that type of conversion www.pizzatrucksofcanada.com for around $75k but you can find them out there for 40 to 50. I have looked into them as an events vehicle. They have a couple models one is self contained and one has a walkin cooler if you are making you pizza in your store.

Yep