Several questions!!

Pizza Shop Talk The Think Tank
1

Hoping someone could help me with the following questions

  1. How do you guys keep food costs low?
    I know someone will say 8oz cheese on a large 16" pizza but that just isnt enough, my food cost is about 35% right now and its like spaghetti is the only thing You make money on.

  2. Is there a magic sales number you need to hit before the store makes money? Ive been told $7000 is the number but Im certain my place is making money now at $6000

  3. How do you calculate how much money it costs to run the store when you can never get a clear picture bc of things like food waiting to be sold in your fridges.

  4. Does anybody use a percentage for a delivery charge? Or free delivery over say $25 and a charge for anything under. Sort of like How when you order from online retailers there is a shipping charge but they give you free shipping as an incentive to order more.

2

  1. We use 8.5 oz on a 14" pizza, so 8oz on a 16" is definitely not enough. Raise your prices. Your pizzas should be where you are making your profit. In my experience the larger the pizza the higher the food cost (in general). When you factor how much it costs you to make a pizza also add in a waste factor (we use 3%) to arrive at your target selling price. How do your prices compare to some of your competitors?

  2. It all depends on your costs - fixed and variable. Here is a link to a break even analyzer you can try. https://dl.dropboxusercontent.com/u/20041774/Break%20Even%20Analysis.xls

  3. You will always have on hand inventory. I am not really sure what you are asking here.

  4. We have personally a $2.50 delivery charge on orders under $25, Free over $25. Has worked well for us.

Dan

3

I came up with the prices on by looking at the cost to produce the item then multiplied by 3, i think employee food and drinks might be raising it up some what is a common policy on meals? Ive always thought if youre working allday you deserve a free meal is this wrong?

Also what do you mean " waste factor "? Sorry im not used to the lingo yet I come from an independent pen and paper non POS greek pizza place

4

Throughout the normal course of the day you are going to have waste, it may be produce trimmings, extra dough, toppings that drop onto the makeline. This is why we have a waste factor in our pricing to get a more accurate food cost.

When we set our food cost this is what we do:
Item costs 1.25 to make (including the packaging)
Add 3% waste factor: 1.25*1.03= 1.2875
Divide this by 30% to get a 30% food and paper cost for the item: 1.2875/.30= $4.29 should be the selling price for the item.

This is our general guideline. Depending on the item and its popularity we might increase or decrease the suggested sale price by a bit. I remember reading an article by someone from Taradel once and they suggested if an item is in a lower price range (less than $10?) than the price should end in .29, .49, .69 (I think). And if the item is greater than $10, than end it with .49 or .99

Hope this helps

Dan

5

I think the idea to do your cost times 3 is a terrible idea. The times 3 would be my starting point and where I would never go under. Where are you located? your zip? look around and see what your market is holding at.
waste factor is what if a pizza is burned? what if wrong toppings, dropped a dough on the floor. Things happen and everything adds up to food cost so you MUST factor these things in. Not every ounce of cheese makes it to a pizza.
another thing to consider on pricing. you are now at 16 inches your chains are 14
the customer is going to see the price of your large vs the comp large.
The hardest thing for me to do was to shrink my pizza. In 2004 when cheese soared threw the roof I talked to Big Dave about what to do to stay open and his 2 part advice was to portion control and compete on an even playing field. The first 6 months was the hardest. EVERY SINGLE pizza went out explaining that our large was now 14 inch the industry standard and the rising food cost of cheese (everyone at the time felt the pinch as well as that’s when Milk exploded on pricing) we also ADDED an 18 inch XXL pizza charged a nice premium and billed it as “LARGEST PIZZA IN BROWNSBURG” 25% more pizza than my competitors" food cost dropped considerably. You are early on so depending the size of pizzas in your market you maybe able to get away with it!.

6

If you figured your price by multiplying your cost by 3, I’d say it’s about right that you have a 35% food cost.

Pricing a menu item only has a little to do with what the item cost you. Prices need to be set by the demand for an item. You need to find the “sweet spot” where profit is maximized.

I have an appetizer item that costs me a grand total of about 50 cents to make. Under your method I would be charging $1.50 for it, but I charge $4.99. Why? Because I sell a whole lot of them at $4.99, and people have demonstrated a willingness to pay at that price.

To be completely honest, your questions 1, 2 and 3 are pretty basic business/finance/accounting questions. If you don’t have a grasp on those things I think you should look for an accountant that can show you the ropes. Somebody might charge you $500 bucks to spend a few hours getting your books in line and showing you the basics, and you’d probably earn that investment back in a few weeks.

7

Great answer never thought smaller pizzas definitly will consider that along with an XXL pizza thanks

8

To be completely honest, your questions 1, 2 and 3 are pretty basic business/finance/accounting questions. If you don’t have a grasp on those things I think you should look for an accountant that can show you the ropes. Somebody might charge you $500 bucks to spend a few hours getting your books in line and showing you the basics, and you’d probably earn that investment back in a few weeks.
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I know my questions are basic to most owners I was used to making food now Im responsibile for everything and the books were always taken care of by someone else, a thing Ive noticed about this industry where I live is no one gives me a clear answer several owners told me youre not making anything until you hit $7000 I thought about it and said im sure if you do it right you can make a paycheck under that amount, but my salesman from Reinhart said the same thing so I just considered myself the rookie in this situation.

There is one area Im tottaly in the dark about and thats insurance bldg insureance buisiness insurance do these really cost alot of money sorry if this is a unaswerable question I just want some kind of idea

9

Depending on coverages, insurances for building, liability, business interruption, boiler & machinery, etc. could cost a few thousand to 8,000.00 or more…

10

Let’s add some clarity. At some point, we all had this question and either figured it out or asked someone.

The cost times 3 is a benchmark so you have an idea what the cost is. You need to know the cost of the food, paper to serve it in and any other pertinent costs like royalties. The main determination for price is what your competitors charge. This does not mean you have to charge their price. It means you need to be aware of their pricing so you can market your product. If you charge more for your pizza, then tell your customer why. Kamron will tell you to focus on descriptors for your ingredients. He will also tell you to give food instead of money, think bundling.

The other train of thought is that add-ons are generally accepted to have a 50% food cost. The reason is you are already selling the high profit item, pizza, and apps or side items can be higher priced. Of course when you are selling anything with dough, it will be a better food cost. Items like wings are more costly and therefore accepted to generate 50% cost.

If you do a lot of discounting you will need to focus on the pricing for that instead of menu pricing. I have found success in having higher menu pricing and offering free things when you pay menu price.

11

Thanks for the help ive been busy working weve been getting busier every month.

These are my lastest questions hope someone can help if you need me to elaborate on any question let me know thanks

Has anyone used a salad spinner?

How to make a buisness plan

Pos system that actually helps both the owner with bookeeping and the order taker.
ie more then one adress per phone number?

Whats a good labor percentage?

Are conveyor belts really as bad as people think?

Does anyone weigh their flour and water? What type of scale is best for this purpose?

Is romano cheese wasted in sauce?
Or best spingkled on top of the cheese before putting in the oven?

12

These are my lastest questions hope someone can help if you need me to elaborate on any question let me know thanks

Has anyone used a salad spinner?
If you’re doing only individual salads to order, they will help drain lettuce quickly. If you’re doing bulk salad prep, might be easier to drain the lettuce in a collander for a while.

How to make a buisness plan
Do a search for “pizza restaurant business plan”. Does it mean anything? Wellllll…if you want a business loan, yes.

Pos system that actually helps both the owner with bookeeping and the order taker.
ie more then one adress per phone number?
Not sure what this means…if a POS doesn’t give you sales info, it’s not worth using. 2 addresses? meaning, home and work?

Whats a good labor percentage?
30% is good…28% is better. Pondarosa and other big buffet places shoot for 40%.

Are conveyor belts really as bad as people think?
Belts could be, but the conveyor ovens can work as well as anything else IF USED PROPERLY, CLEANED, AND USING A DOUGH WHICH IS COMPATIBLE.

Does anyone weigh their flour and water? What type of scale is best for this purpose?
If you don’t weigh, you’re not getting a consistent dough. Guessing only changes the final result, which changes the whole profile of your dough, which changes taste and texture. And, likely, appearance.

Is romano cheese wasted in sauce?
Or best spingkled on top of the cheese before putting in the oven?
Wasted? No, not necessarily. It shouldn’t cause any specific problems.

Question: You’ve been open how long, and don’t know about weighing, COGS, or your recipes? Wow…

13

Question: You’ve been open how long, and don’t know about weighing, COGS, or your recipes? Wow…

I know all about the impotance of weighing I could make you 1 dough ball or 1012 all the exactly the same, I asked what type of SCALE is the best for this purpose?

I know my recipes and COGS EXACTLY, but I dont have anyone else to talk to who also knows their recipes and expenses as precisly as me thats why I use the forum

14

any scale that gives you an accurate weight is what you need. A bathroom scale is not appropriate. You need something that will suitably weigh the amount of flour you are using. For heavier weights, like 25# flour and 12# water (or whatever) it’s probably cheaper to get an analog scale, probably calibrated to 1/4#. There certainly are digital scales for those weights, but they are pricey and many are not really suitable. Taylor is a good, consistent, reasonably priced brand.

15

Ive done se research and a recieving scale seems to be what Would work best