I opened my first store less than 5 years ago so I never seen any bad economy or experienced it until now except Tech bubble since I moved to my new country USA. Those of you who owned pizza shops in early 1990 must seen the bad times.
What was your experience back than and how the current recession will effect us ?
It is not really easy for me to sink in my head that “pizza business will thrive in bad economy” I am hoping so
Thanks
I believe it rests heavily on the location of the pizzeria. I manage 1 store that is one of the “top 3” lets say, and have experienced steady 2-5% growth over last year still with no real hiccups.
I would say in smaller town areas, more home owners, I can see some slowdown, anywhere from -2 to -10%, my area is pretty heavy in rental living, so we have not come across any slowdown at all.
The current recession (could shape up into a depression) has affected the whole restaurant industry, even the big chains, and it ain’t all about pizza either. From what I’ve been able to piece together it looks like pizza might be weathering the storm a bit better than the other types of food establishments. I think people are still seeing pizza as a value meal, but with the increased number of times that people now eat at home (home prepared meals) there is an emphasis to do something to draw people into our stores. Things like a vegetarian special (regular priced pizza with a free order of bread sticks and pitcher of soft drink) once a week might be appropriate. This is also a good time to fine tune your customer service skills too. I have personally experienced this lately, and it does make a difference as to where we decide to go when we eat out and it doesn’t cost you anything! We still have stores which offer rude service, and it is my personal experience that they really don’t want or need my business, at least that’s my preception, so I take my business else where.
I know all of our ingredients are up (thank God the flour prices are coming down) and we are having a hard time holding the line on our prices, but you have simply got to make a fair profit on your pizza or you won’t be in business very long, so go ahead and adjust your prices accordingly but soften the blow by bundling. I think of it like this, increase the price of the pizza by $1.00 and bundle it with a free order of breadsticks (a $1.75 customer value) but out cost is only $0.25. The customer sees a savings of $0.75 but our loss is only $0.25. That’s just me though, you’ve got to do what is right for your store, your survival depends upon it. Be creative, try different things to see what will have the greatest preceived impact upon your customers.
Tom Lehmann/The Dough Doctor
People will eventually understand cooking at home for family will cost same if not more than the pizza. They can order 2 Large 14†pizza 2 topping for less than $25 can feed whole family of 5 or 6. It really costs more to cook at home than order from us. Think about it, spend gas driving to Food Anchor, spend time to cook and burn gas to cook your food.
Sit-down restaurants will get hurt much more than us Delco operation. Of course inflation will take affect since Federal Reserve keep printing new money, so our profit margin will be lower.
People will skip going to sit down upscale or casual restaurant , perhaps we will have more business.
You are correct. As fewer people go to the sit-down restaurants, and up-scale dining establishments they will end up going to the smaller restaurants or DELCO pizza stores. The ones that are smaller, with less overhead wil have an easier time holding out, while the larger stores, with greater overhead expenses my find it tougher going. Even newbies, just getting into the business should do pretty well if they keep a close rein on their purse strings and don’t let expenses get out of hand. We are really fortunate that pizza is seen as a near prefect food (great tasting, massive appeal, lots of variation, and a great dollar value), and it doesn’t fare too bad nutritionally either.
Tom Lehmann/The Dough Doctor
I’ve been in the DELCO business since 1989 and have never seen much effect from ups and downs in the economy. Although there has been a downturn in our corporate orders in the last 6 to 12 months because the big companies are cutting back on employee free food days. Our biggest problem has been food cost over the last 18 months. I dont recall there ever being a downturn in business while at the same time an upturn food cost. Looks like food cost are starting to fall, so things are looking brighter.
David
David;
At least for the short term (whatever that migh be) as long as you don’t need to go to the bank for a loan you should be OK.
If you don’t have a “rainy day” fund yet, I’d suggest starting one. One thing is for sure, there ain’t going to be no banker or loan officer riding in on a white horse to to pull your bacon out of the fire if you need some immediate cash. That is scary.
Tom Lehmann/The Dough Doctor
What I really hate is that in the “olden days” (before the gas crisis and the economy crisis) we would have a slow day and just say, “Oh. Slow day. Time to wash the windows or some other cleaning project.” Now we have a slow day and we start to freak out and get all stressed and worried about the bills and that people will never eat out again… Then the next day sales are normal and we breathe a sigh of relief until the next slow day.
I don’t know about you, but I can’t handle all this worry!!! I’ve almost banned listening to CNN or other news programs. Worry never gets you anywhere. (In fact, it says that in the Bible.) I’m just going one day at a time and do my best to feed the people who come in with the best meal I can create and keep them happy. They have enough stress at their jobs and home and the bank, and probably they are coming out for pizza to forget the world and have a pleasant meal. I just need to concentrate on what to do in any business situation with marketing and service, good product, etc… I’m a survivor and made it this far, so there’s no reason I can’t carry on! So there!!!
We’re looking for a second location. Business is good and rents are finally dropping a little around here (SF Bay Area). Lot’s of bigger restaurants and places with just mediocre food are hurting though…
I’m with you. Don’t worry over what you can’t control. As for the news, well, my own personal feeling is that they’re all a bunch of sensationalists, you know the type, “Arab gas truck has flat tire, gas supply inturupted, prices expected to rise significantly over the next several days” Instead, concentrate on what you can control, the experience your customer has when they come into your store. You will feel a lot better, as will your customer(s).
Heek your chin up!
Tom Lehmann/The Dough Doctor
Up here in the Great White North the melt down of the world stock exchanges, countries going bancrupt (Iceland), our dollar going from almost par to 82cents against US$ has had nothing but a positive effect on our little store. As Tom mentioned, I think a lot of it might be to do with our location? We are in a small town that is close enough (15 miles) for people to drive into the city for a movie and supper etc. I firmly believe that the price of gas combined with the current economic meltdown has, and will continue to, excelerate the cocooning trend . It thus follows that people will start to choose renting a movie, ordering delivery and not driving! We have seen a 20% increase in our sales in the last 3 weeks! ALL OF IT IN THE DELIVERY SIDE.