I’m a newbie here, I live in San Jose, CA and i’m looking to fulfill my dream of owning/operating a pizza shop.
I am doing all of the prep work right now, buying used equipment, looking at properties, etc.
I am finalizing my business plan and I want to know what a reasonable sales volume would be?
I am estimating 50 large pizzas per day @14.99. Most of the pizzas in my area go for $18.00 to $30.00 for a large pizza. I want to be quality, but affordable. Also, I want to offer hot sandwiches, salads, bread sticks,etc.
I have restaurant cooking/management experience, but not in making pizzas. I will attempt to work for domino’s or pizza hut for the next few months to gain experience.
In a city of 1 million, how much can I expect to sell? According to my real estate agent, the traffic count is about 100,000 cars per day by my proposed location.
It sounds like you’ve thought about your planning which is excellent. Without sounding dismissive, predicting sales is very difficult if not impossible. Sure we can give you a ball park anywhere from $2,000 to $20,000+ a week is possible but not really that helpful to you.
There are so many factors, location, competition, market saturation, market pricing, pre launch marketing etc etc etc. You best bet is to find someone nearby, of a similar business and see if you can find out how much they do that will give you some idea of potential but then again every business and business owner is different.
Hope this helps and good luck with the planning! Keep asking questions and we’ll all try and answer them.
That is a “skill testing question” that usually involves a guess that may be 80% lower or higher than reality…It depends on how much competition, how much marketing they do, price point of their product, price expectations of your client base, quality expectations of your client base, employment and/or unemployment rate in area, etc. etc. etc…
You would do well to take the 100s of hours required to ready every post on this forum…There is lots of good, bad and ugly information that will give you food for thought…Good luck…
A simple, thought still unreliable, estimate is that each household will average 1 pizza meal a month
(from conversations a cpuple years back here on the 'tank about some NRA study into dining habits of Americans). Further, those less than iron-clad projections talk about $18.75 per month per household spent on pizza.
So, make adetermination what your ‘service area’ will be in diameter, find out how many households you have in that area. That will be total market estimate (read: WAG). Figure the number of competitors competing in that area, and make a guess that only you can make as to how many of those households you can capture as ongoing customers. That will give a you a basic, though not solid, starting point for estimating sales. Size of market, number of aprtment complexes, business parks, commercial developments, other restaurants in the area, current local unemployment rate, and so forth will impact these projection/estimates.
Additionally, you need to determine your COGS as part of all this. $10,000 monthly sales with 45% COGS compared to $8,000 with 28% COGS makes a diference. I suspect you have the information already in hand :o)
When I was building our business plan I came across statements, (just where is now long muddied in my brain) stating one should get the actual postal HOUSEHOLDS number (not city population), figure your plan on 85% of everything within 5 miles of your shop, 50% of all households within 10 miles, and that would serve as your expected sales potential. Multiply that by the (at that time) average ticket expected to be spent monthly from each potential household, and that should give you a close estimate of potential sales.
Does it work?
Well, for MY location, yes it has been remarkably close in the actual performance. I can not, nor do I insinuate that it would be correct for every location simply because I don’t have that experience, I can only relate MY Pub’s experience. I know that we spent close to a year gathering “intel” from what would be our local competition, watching their sales by invoice, doing parking lot counts, sitting and watching deliveries on various nights to get an “average”. All that backed up what the reports I had read had given for our expected sales. Based on all those evenings and visits to local pizza shops, we decided that “yes” we could take a decent enough percentage of those potential sales and make a go of it.
To date, we’ve far exceeded those projections, however it is important to note we’re in a smallish town, I’ve been somewhat well known in our community, active for many years etc. We knew we were going to get a huge amount of folks trying us regardless of what we were turning out. I’m please to note that we have a more than respectable repeat customer base in our (all of) 22 days of business experience. Will it continue, will we reap at or above the “national norm”? Well…stay tuned.
What you need to do is figure out what you “need” to sell based on what your costs will be. Develop P&L’s at different sales intervals. Once you do that you can determine what is plausible. You may find you will need to sell 500 pizzas a day to make it, or only 20, but you won’t know until you work out the P&L’s.
Yes. The next paragraph after this quote menitions that this is the way to get total potential market estimate, then look at total competitors to get a better guess at how many you might wrangle to your store.
In my case, when I divide by total pizzerias in the market, I get the same number. I am only one in about 12 miles, not counting Hunt Brothers in a convenience store.
And you also have to factor in that there is always more competition than you think and just as you open your doors, they will market like it is the end of the world…
50 pies a day, is very reasonable. just have a good product. good prices. We average 100 a day. Some days we sell like 200. Lot of work though man getting started is tough especailly if you dont know anything about it and you want to get a job at dominos to learn… just buy a shop off someone else and have them train you then do it better.
I want to ask something that I might have missed but I do not think anyone else has asked. Why $14.99 large pizzas when you say the competition is selling anywhere from $18-30 for the same. Hearing the $30 figure tells me you are probably on the east or west coast and the market supports it. Now if that is the case, that means all of your other operating expenses will also be higher than a lot of the members on this board that run out of smaller markets. No offense small towners… just a fact of life. 50 pizzas a day when you are selling cheap but trying to offer good… probably will not make it. You are thyen going against the big boys and you will not make their profit margins no matter how hard you try. If your market has that large of a range…the $18-30… start in the lower middle area. Make a good pizza that you can make money off of and not have to sell 200 a night to break even. This also will determine how your customers react when your pizza goes up from $14.99 to $20.99. Why did you raise your prices? If you were selling them at $14.99 (read: making tons of profit off me the customer) then you are really screwing me at $20.99. Right? If they only knew. It’s going to be a lot easier if you start off at a more “reasonable” price point for your own good. Good luck. :mrgreen: