The PMQ 2011 report states that average gross sales among independent pizza shops is $448,000. My question is what kind of profits percentages are you realizing out there?
Whether your sales are $300K or $500K what is your net profit margin?
Thanks.
Profits approach zero for tax purposes and skyrocket when trying to sell the business… :mrgreen:
You can probably find some average percent quoted somewhere, but it’s meaningless to operators. Only your profit is what counts, not the average.
It’s a hard question to answer because everyone is in different markets, different competitive situations, different labor price markets, has different food costs, different operating expenses, different property markets, different starting costs or financing costs, if any, etc. People in fashionable ski resort towns ( 
) have high ticket prices and per unit gross profit, but wouldn’t last a week with the same operation in somewhere like Oklahoma.
But there are a couple of rules of thumb about costs. A direct material cost (food) target for pizza is about 20% (or less), which is why it’s an attractive business. Traditional restaurant food costs are closer to 33%.
Operators hope to budget about 8% of sales for rent.
Everything else is more variable. The start-up costs for the pizza business, for independents, is not considered very high, but the running costs of the business are high and successful independent owners are usually hands-on people and sharp about managing and controlling the operation within their unique market environment.
Others may have different ideas, but that’s my early morning take on my first cup of coffee…
Not trying to stir the pot but i totally disagree with you entire post.
I find it hard to believe anystore doing 450k has a 20% food cost. Im sure there are some, that is not an industry standard by any means. More like 30-33%. Rent should be no more than 5% and you should hope for 3% for a delco
We operate on about a 24% margin when its all said and done.
To the OP On 300k your margins are lucky to be 10% at 500k your margin goes up to about 22%. If you got up to about 700k your margin would be about 26%
In a delco generally the labor % goes down as the sales increase
exponentially
We have 3 stores and i find this to be true across the board, but this is all my opinion others may not agree. Just telling you my thoughts from 10 years of pizza experiance
“Rent should be no more than 5%”
That is a nice goal to have but a very unrealistic number for most. 8-10% is far more common.
Just stating my experience from the northwest
2 of my shops are in the 2% range but that is because my sales are so strong. My shop with a dinning room is 8% and my other shop that is underperforming (the store I just bought) is about 6%. When I get the sales to where they need to be it will be closer to 3%
My Avg PPO is $15 as a comparison
In my area, rents below rents in the 5% range will be more prevalent than those in the 8 to 10% I’m in a similar boat as Dale with rents being less than 2% at both shops. If sales were what is mentioned above as average I would be in the 5% range.
No question that high volume campus shops can drive sales to levels than are unreachable for many and therefor also push rent as a percent of sales to very attractive levels…
But in my experience as a commercial broker (what I actually do for work) I can tell you that the low percentages mentioned are the exception, not the rule.