I am purchasing a pizza shop in a town that has 6 other pizza stores the population is aprox 30,000 / 15,000 households. 8 mile radius from the store = 20,000 households and 7 pizza shops.

I need $250,000 annually, is it likely, unlikely, very unlikely?

How much should this community be spending on pizza?


If you’re purchasing it from someone else, doesn’t that mean that for him it was unlikely ?

My delivery area has over 21,000 households and 34 pizza shops.

Holy moly!! Hows biz?

Barely making it. Included in that group are 2 PJs, 2PHs, 2LCs, Dominos, Hungry Howies along with a few local chains including one that has a drive thru.

The guy I’m buying from wasn’t able to be at this shop all the time, employee theft got him, or so he say’s and also only marketing was in the phone book.

Time to dust off that old useful information again. It really is useful and a good rough indicator of total market potential. National Restaurant Association determined through some sort of research that the average household spends $17.85 per month on pizza. This info is a couple years or so old, and I’ve not seen any really recent figures to replace these. For argument, we’ll use them.

17.85 x 15,000 households = $267,750.00 monthly market on average.
267,750 / 6 pizza shops = $44,625.00 estimated monthly even market share . . . that’s $535,500 annualized if everyone takes an even cut

That sort of money would make me just plotz! While others would file Chapter 11. You just gotta determine what annual gross sales you would need for “success” and determine if you can go in and carve it out of the marketplace. Part of the challenge for you is to figure out how much share the other places have and how much you will need to lure away from them versus “free” customers out there not being served at all.

It gets involved sort of after the theoretical estimation of total market potential. That’s where USP, market plan, business plan, product quality and the like become assets in developing clientèle and gross sales . . . then efficiency of operations to maximize profit returns, etc.

Great info, this is exactly what I wanted. Any more info would be appreciated.

The guy I’m buying from wasn’t able to be at this shop all the time, employee theft got him, or so he say’s and also only marketing was in the phone book.

We cannot stress enough the need (when you get to serious negotiations for purchase) for adequate documentation for all claims of expenses and revenues. Have an accountant review his books and tax records for a couple years.

If it smells a little fishy . . . it is.

the biggest problem I see with your calculation is that some people dont order pizzas at all. I once heard from someone that 40% of households dont buy pizza. I believe it was Big Dave that said that come to think of it.

That’s a pretty well researched AVERAGE statistic.
It varies by market, and OF COURSE it can’t be held true to an individual household - it’s a national average.
Meaning, for the house that never buys pizza, there’s one that buys double that amount. For the house that get’s pizza once a year, there’s a house that gets pizza every Friday. It all averages out to $17/house…

I see, that makes sense.

And then there are markets like mine where there are about 12000 people living inside our delivery area and 8 stores that deliver pizza. On top of that there are approximatly 17,000 “pillows” in nightly rental hotels, motels and condos and a few thousand second homes.

Also, never forget the race with a bear… you do not have to be faster than the bear, only faster than your competitors in the race. If several pizza stores are doing well, you can too. You do not need to be able to increase the market, you just need to be able to outcompete some of the competition.

D@mn well said. Being a “more desirable” product will win the marketshare.
[size=2](the skill and genius is in figuring out what "more desirable means in YOUR market.)[/size]

I agree with Nick, especially if the competition is national or national wannabe business model focused on price. If there is enough demand to support several pizza businesses there will be enough to support a well executed high-end strategy in the market. Going-high end gives you a lot more options on marketing and providing high service levels.

You have to deliver the goods in terms of great quality AND you have to tell the story via marketing. Even without going high-end there will be a nich for a unique local story and that will allow you to price as you need to rather than feeling you have to meet or beat the nationals. Fundamentaly, you can not get to national price structures without their buying power and still offer good product and have money left over to market.

“More desirable” product doesn’t always translate into higher quality like we would want it to. Sometimes the more desirable product is the quick and cheap crap we compete against. Sometimes the frozen truck-stop pizza is more desirable. The true marketing wizard can identify the market trend/desire and either match that desire . . . or lead the market systematically to the product they are offering.

It is a really big jump from a 14" $5 pepperoni pizza to my 16" 12.75 pepperoni pie. I had to lead them gradually and systematically to it . . . and calzones, and stromboli, and so on.

Successful Marketing is about both educating and enticing the market to see your product and services as more desirable than the other guy. Sometimes it is a harder “sell” than others. It really depends on the market, and the competing messages and products out there. Remember that “a whisper is often heard clearly when everyone is yelling.”