open a year and struggling what next?

Sorry in advance I am new here and I know this will be a long post. My wife and I opened 13 months ago and we are still not breaking even. We have done this strictly on savings and credit cards as we could not qualify for loans and are not completely tapped dry. I have worked in restaurants for about 13 years most of which was at an incredibly successful pizzeria that never advertised or did coupons so I have a poor sense of marketing.

We are now in an odd position of we should have a decent amount of money to make things start working the way they should. We have no POS or customer contact database. We are dine-in/carry out seating 90 and specialize in gluten-free. We have probably only spent $6,000 on advertising since opening mostly Valpak and similar. We do pretty consistently around $3,500 per week even without advertising closer to 4 with good advertising out. I figure our break even is $5,000. What are the things we should be looking at to get the biggest bang for our buck and get to the black. We have not really done any solid marketing at all even to neighboring businesses. Some of the things that we are considering are:

Delivery (I know of all the problems this creates but I think it is the fastest easiest way to add sales just not sure if it is worth stretching myself to add it)
Groupon (I know it will get people in the door but I want return cusomers too.)
door hangers (how many should I do per week how strong of offers do I do?
Beer and Wine license (not having this has killed us and we will be doing this asap)
road advertising (recently got yard signs but need to do something more)
Loyalty card/program (any suggestions on what to use)
Pricing We are at $15.25 plus $1.5 per topping. I feel like it is a little high but it is a good product we are using the best we can use without going the organic route.
Surveys (for feedback and contact info or just do loyalty?)
Nightly specials (how much of a price break do I offer what kind of specials do I do)
School fundraiser nights (dropped off coupons and info last year but got no results)

I would appreciate your feed back as I am just so overwhelmed but really don’t want to let my dream go when I know it can be great and I love what I am doing.

A few thoughts:

  1. Can you fill us in a little on your market…residential, business, industrial, major highways, population within a given radius, income levels, other demographic variables?

  2. Groupon prejudice. Others may disagree, but I see Groupon as a discounted offering that will be taken by your existing customers as well as potential new customers.

  3. Pricing; your prices sound high…how do they compare with the highly successful pizzeria where you worked before? And was that pizzeria in a similar demographic market? And how do your prices compare to your immediate competition?

  4. You mention that you specialize in gluten free…what percentage of your sales are gluten free offerings? I guess what I’m thinking is that sometimes we commit too much of our marketing dollar (or time) to elements that don’t pay off.

  5. You are going to see a huge return on investment from getting the liquor license. Get it, market it and don’t underprice it.

  6. Delivery will certainly improve sales volume…the best news is that your “general and admistrative” costs do not increase proportionate with these increased sales…example= your rent doesn’t increase.

With more info we can possibly offer more input.

Delivery adds lots of headaches and expenses. If your area really wants it then go for it but if your going to do it then you have to be prepared to do it right. Service is king reagardless of what pizza sector your in and if you can not execute hot and fast then stay away from it.

Groupon is never a good solution. Sure some guests may try you on a deal but if you had to attract them by lowering your price so much it is not worth it and the only folks getting rich off that are the Groupon people.

Door Hangers - not a fan but my areas are also very restrictive to this type of media. Again dont go cheap to attract. If you want to create a deal use FREE “if” to entice trial.

Good call on beverage especially with 90 seat dinning room.

All the rest are good ideas I guess to try but first you should drop Valpak and the likes and go try a direct mail approach. Mail Shark or Taradel both have all in one services and you can fit your budget and start doing a 10 week program sending out menus via eddm. On the menus you use those FREE item coupons etc. Then make sure your customer service and food can back it up.

I recently unerwent a transformation in my shops that I own. I am in direct competition with Big 3 (we were founded as a Domi-clone) as a regional franchise. I shifted my focus away from marketing and such. Made efforts to ensure consistency in my products and then focused on superior service. 6 months later I had an All-Time Record month in May. A record that had stood since 2004 (when I had a school contract included) and at my level of sales was also 22% increase vs last year May (114k). Just last week in the same store we popped 25k when last year (and traditionally in the summer) we did 18k. Beginning the 1st week of June I added direct marketing back into the mix. 11x17 Menus (folded to be 8-1/2x11) and began hitting my area 2500 pc per week.

I have another shop I took over 18 months ago. When I bought it was doing 5k a week in a 26k address area (my above store only has 30k addresses). Doing the exact same thing as listed above we are now doing 11k per week. I am only mailing 1500 menus per week there as the crew has to be able to grow in experience and # with the business.

Look into those 2 services (I know Chris from Taradel is on the tt). I also have a fellow franchisee using mail shark.

I hope you get some insights!

Pizzadoodle;
Nightly/daily specials? Do you really need them? I have never been a big fan of discounting my pizza prices because eventually it leads to a loss of value preception by the customer. Instead, I like to bundle the pizza with something else, such as a free pitcher of soft drink (dine in only). or a free order of breadsticks. Their value, about $3.00, my cost about $0.50, about equal to giving one free topping, but with a much greated perception of value. I also like to suggest making a special pizza offering one night a week to bring in more customers on the slowest night of the week (Monday?). This special offering is only available for the one night, and it will vary every week, you can promote it a couple days ahead of time (be sure to mark your calendar to join us this coming Monday night for a special seafood pizza, etc. No special pricing, infact it might even cost a little more, but the offering is special. We do this VERY successfully at a local restaurant where the “special” may cost as much as $20.00 a plate more than the regular entre options. Some of the specials are Copper River Salmon, Locally grown, organic raised pork, etc. You’ve just got to be a little creative to make it work.
Tom Lehmann/The Dough Doctor

Without knowing any of the details of your place: If I see a place that “pushes” gluten-free, then I interpret their overall pitch as, “Try our gluten-free food, it is nearly as good as normal food”. Which isn’t much of a recommendation, unless you are looking for gluten-free. Which eliminates the majority of possible customers. Now, I’m sure your reply will be, “Our gluten-free is every bit as good as normal!”, which will bring up the question of: If that is true, why don’t you make your quality your selling point, rather than your gluten-freeness?

Gluten Free is a fringe market. (Yes I realize it is a growing thing that more people are interested in, but it is still a tiny portion of the market) It is hard to imagine getting a business off the ground with such a narrow focus.

To the large majority of consumers out there, gluten free is a food fad, not interesting and perhaps a little off-putting. As mentioned above, in today’s market the expectation is that “gluten free is almost as good” which makes it a tough concept to center your business around.

A good add-on, but not a foundation.

Sorry in my first post I meant to say that we are currently tapped dry but have now been blessed by a fair amount of money that we need to either invest in the business or cut our losses and run. We are pretty set on sticking it out and making it work.

1)Demographics:
1 mile radius:
10,300 population
4,200 homes
82,900 avg income
442 businesses with 3600 employees
22 eateries or drinking places

3 mile radius:
93,800 population
36,800 homes
98,900 avg income
3400 businesses with 34,000 employees
155 eateries or drinking places

Douglass county (1 of the top 10 richest counties in America) is 2 miles south and 2 miles north is cherry hills where many of the sports stars in the city live

2)Pricing we are .25 higher than the place I worked that does 50k a week without delivery and they only charge $1 per topping they are in similar demographics.

  1. Gluten-Free our business is probably 20% gluten-free (don’t have a pos to keep good track). I think if we delivered this would increase even more though as no-one else delivers gluten free sandwiches and pasta that I know of. I do think we have good gluten-free pizza but I would never say it comes close to the real thing (I have had several customers try to pass it off to family and friends as such successfully).

  2. I think we have decided to pass on the Groupon as I just don’t want to deal with the customers that it draws in and I don’t think we have the staff to handle the crowd properly.

  3. We have decided to start delivery I think (last week I was convinced we should do groupon). I think it makes more sense to open another door for business but I am not looking forward to the headaches nor the winter deliveries that I know I will be doing myself.

What is a reasonable budget for advertising monthly if I start doing eddm? Should I do a big drop at once then cut back a little?

How much should I plan on delivery increasing business to start?

If you want bang for your buck, the first thing you need to do is invest in a POS system. The lowest hanging fruit in this business is your existing customer base. You need to be sending them direct mail (or e-mail) long before you start an EDDM campaign.

A mass direct mail drop will yield me an ROI of about 100%. A direct mail drop to my existing customers will yield me an ROI of about 1,000%.

Plus, I think it’s a waste to spend any money on advertising if you don’t have the systems in place to accurately track performance. That’s how marketing works - you test, track, tweak and repeat… over and over again until you find the winning combination. You can’t do any of that without a good tracking system.

I also can’t fathom how you can run a 90 seat dining room, along with pick up (and considering adding delivery) with no POS system!

Beyond just the marketing aspect, I can’t imagine running a restaurant without analytic tools.

ETA: Also, because it can’t be stressed enough… forget Groupon. Not only will it do you no good, but it could very well cause you active harm.

Have a menu to look at?

What forms of advertising are you trying or using?

Not that it matters too much to your situation but the Dominos in the area is doing 30k per week.

Sorry I tried to attach the menu but it would not allow pdf or pptx attachments, so you can look at the website Pizza-Doodle.com We have had this menu for about a year now. We are about to make some changes so I would love some feedback. Calzones, small pizzas, and pastas will probably go down. Slices will go up to 2.75 each off 20" slice pie. Let me know if you have any feedback good or bad that you think could help.

Late to the party. PERSONAL FACE TIME at the local, nearby businesses. Get there and get top of mind. find a way to get your food on their hands … free pies on first visit for reception/front gate staff? Develop something to give them for group events. Businesses often spend on pizza for various reasons. 3400 FREAKIN BUSINESSES is a target rich environment. Prioritize and start visiting them during lunch hours and try to meet some variety of management … set appointments if you can.

Any university/college campuses? Also golden fishing holes for customers.

  • Youth athletic teams
  • high school kids have pizza parties
  • cooperative marketing with other businesses … dinner and a movie - buy discounted tix from nearby theatre and package for a date kinda thing
  • big churches
  • get involved in community activities like possibly feeding firemen or habitat for humanity builders

some of my goto ideas that worked for me

looking at your menu,too many choices for me, there is a lot to be said for keeping it simple, pizza offerings didn’t make me salivate,look up pizza offerings at the super successful pizzerias (pizza today top 100, or PMQ featured pizzerias). We don’t have a POS (thinking about it though) 28 yrs without ! we beat our competition with FOOD QUALITY and CUST service,house made everything! kid friendly is great but will a couple go out on a date there ? just went to a place with dark brown table clothes with light brown disposable paper covering table,good for drawing,classy,easy cleanup,thinking about switching! We offer GF 8" mini ,GF pasta as a side note,sell a lot of GF minis but doesn’t dominate the menu. Don’t be afraid to make an even better pizza and raise prices,look at Bodegahwy’s menu,be careful who is answering your phone- let the TLC come through !

Delivery adds lots of headaches and expenses. If your area really wants it then go for it but if your going to do it then you have to be prepared to do it right. Service is king reagardless of what pizza sector your in and if you can not execute hot and fast then stay away from it.

Groupon is never a good solution. Sure some guests may try you on a deal but if you had to attract them by lowering your price so much it is not worth it and the only folks getting rich off that are the Groupon people.

Door Hangers - not a fan but my areas are also very restrictive to this type of media. Again dont go cheap to attract. If you want to create a deal use FREE “if” to entice trial.

Good call on beverage especially with 90 seat dinning room.

All the rest are good ideas I guess to try but first you should drop Valpak and the likes and go try a direct mail approach. Mail Shark or Taradel both have all in one services and you can fit your budget and start doing a 10 week program sending out menus via eddm. On the menus you use those FREE item coupons etc. Then make sure your customer service and food can back it up.

I recently unerwent a transformation in my shops that I own. I am in direct competition with Big 3 (we were founded as a Domi-clone) as a regional franchise. I shifted my focus away from marketing and such. Made efforts to ensure consistency in my products and then focused on superior service. 6 months later I had an All-Time Record month in May. A record that had stood since 2004 (when I had a school contract included) and at my level of sales was also 22% increase vs last year May (114k). Just last week in the same store we popped 25k when last year (and traditionally in the summer) we did 18k. Beginning the 1st week of June I added direct marketing back into the mix. 11x17 Menus (folded to be 8-1/2x11) and began hitting my area 2500 pc per week.

I have another shop I took over 18 months ago. When I bought it was doing 5k a week in a 26k address area (my above store only has 30k addresses). Doing the exact same thing as listed above we are now doing 11k per week. I am only mailing 1500 menus per week there as the crew has to be able to grow in experience and # with the business.

Look into those 2 services (I know Chris from Taradel is on the tt). I also have a fellow franchisee using mail shark.

I hope you get some insights!

Dale:

Glad to see your sales are going in the right direction. My stores are going in the same direction too. My high volume store us clearing 50k a week now and its completely insane. We have to get food deliveries 7 days a week just because of restricted space. Anyway, my next big project is to bring our level of service up. If its not too much to ask, can you send me your paperwork on your service guidelines and systems. I’m trying to gather as much info as possible.

Thanks
David
pizzapirates@adelphia.net

you have a high average income in that area, you should think about capitalizing on that! I like the playroom but it is geared towards youngsters I would get some arcade games, maybe a air hockey table…something you can generate some income on and attract more tweens and older families. alcohol is a great idea but also brings more insurance and licencing but your place is big enough to make it work.

Maybe I’m missing something here, but the guy who started this thread (Pizzadoodle) hasn’t posted since July of 2013. He was having problems back then and several of us posted comments or suggestions … without reply from pizzadoodle. Did his business improve? Did any of our suggestions prove to be helpful? Dis he throw up his hands and close his shop? I’m curious, and hope that he provides an update.

huh i didnt notice that, glad i wasted my time replying. oh well, hopefully someone else will read this and get an idea from it.

Some new folks spend hours reading the archives…So all contributions help out…

true true