Whats the easiest, less costly to close up shop for good?

Pizza Shop Talk The Think Tank
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Hey guys,

We’re not up to that point yet, but to start thinking about it… What is the ‘best’ way to close up shop for good? Bankrupcy? Sell all equipment, pay off some of the loan? I don’t have the slightest clue as to what or how that would happen.

We’re coming up on six months very soon and my hopes are pretty much shot. I feel we’ve tried a lot of things and nothing seems to be working. Yeah, we have our regulars, but they’re not paying the bills… We have yet to see a 2k week! We have about 550 customers in our database, and I would say maybe 20 of them are still active. I send out hand written addressed, signed letters thanking them for their first order and welcoming them back with a free appetizer. Out of about 200, we only got maybe 10 back. We’ve been in a coupon magazine for about 3 months for advertising and seen a good return on that, but maybe 1% have come back for a second time. We sent out about 300 free pizza letters to local businesses and only seen about 10-15 redeemed. Yet 0 of them have returned for a second time. Our lunches are about 30-50 bucks a day, if that. Today for example, we’re at 6 bucks. I really think the problem is our town is saturated with pizzerias, pizzerias that have been established for years. There are about a 50 places in total in our town.

We’re hemorrhaging a ton of money every month and I don’t know how much longer we can last. My future is on the line, and my dads credit, houses are too. We could probably survive a couple more months at this point, but at what mental cost? I drive myself crazy here, literally. My fuse has shortened considerably, I’m pretty much miserable. I have no life, can’t afford to buy the things I want/need. And working by myself really puts a damper on customer service. I’m so overwhelmed all the times, not to mention stressed.

We’ll be lucky to hit 60k for the first year. Even if I could bump that up to 150k per year, and assuming 15% profit/take home pay is only 22.5k per year… Thats not very encouraging…

Yesterday (Friday) we only didn’t even his 300 net… Thats by far our worst Friday yet… Last Saturday we didn’t even do 200 net, and that was our worst Saturday ever.

Thanks for letting me vent a little. But maybe its time to start considering throwing the towel. I don’t know how much longer I can last, physically and emotionally.

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Re: Whats the easiest, less costly to close up shop for good

Steve,

I feel your pain…I am in the process of going the very exact thing with another business and thats why I am looking to open up shop…Speak to a lawyer about BK and how it will affect you…Usally homes are safe as long as you do not exceed a certain amount of equity…Most will give you an initial consultation at no charge…I wish you all the best…I do how how hard it is and how much it effects all of your life…

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Re: Whats the easiest, less costly to close up shop for good

I know this has been very tough for you, Steve. Keep the long view. You have learned much in a short time running the shop, more that will become apparent as time goes on and you are out from under this.

Each state makes the laws governing creditors’ claims and protection of assets. Definitely need to consult an attorney.

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Re: Whats the easiest, less costly to close up shop for good

Hey Steve,

Really sorry to see you have to go through this. I went through it with my first restaurant and wound up selling the “business” to recoup what I could. At your sales level, you most likely will not be able to sell it as a “business” – meaning for a price based on sales. If selling is your choice at some point, finding a business agent may be a big help in finding someone that will purchase the place from you and do their own thing with it. A completed restaurant is still worth something to the right buyer. Selling off the equipment is really the last thing that you can do. Also, you need to check your lease to see what you landlord can lay claim to first since there is a lease commitment.

As far as continuing . . .

Its a touchy subject, but the first thing that jumps out at me is you have a problem with your product. Sounds like you are making earnest efforts in marketing and following up with customers. Excellent things you have been doing. The fact that you cannot “track” any return visits says its a product problem. And if the stress is putting a damper on your customer service you are really compounding the problem. While I can’t speak to the cleanliness of the store or how it looks, I will assume that since the place is new that can’t be too much of an issue.

My only other thought about your sales pertains to what kind of pizza shop you are. Sounds like you are getting good returns on your marketing/coupons and nothing otherwise. Usually this means one’s concept is all about price – not product or differentiallity. Maybe you need to be more aggressive with your marketing and find even more avenues to pursue??? Other people can help you more here as I really don’t have experience in that type of market.

There’s many things to consider besides product, like how inviting the place is and you, but that’s the big elephant I see. In any case, I wish you luck. As I’ve said, I went through this whole scenario and to this day I consider it the “dark years” of my life, lol. Looking back, however, I see many things I could have done better if I had more experience and had listened to people more.

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Re: Whats the easiest, less costly to close up shop for good

There’s a saying in any business. Six months, great, One year, very good; Two years good good good; Five Years you got it solid. In this day, it does NOT apply.

It might be a good idea to stop the bleeding and take care of everyone involved.

PD

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Re: Whats the easiest, less costly to close up shop for good

Thanks for your input guys…

As far as the product goes… I truly believe I have a superior product (and I’m not just saying that)… You would not believe the number of phone calls I get back from customers that take time out their day to call back and say how good their pizza was. I’m obsessed with our pizza, I literally eat 2 pizzas a day. We have a family recipe homemade dough, family recipe sauce, 100% REAL cheese etc etc. Quality is our middle name. My friends and family all tell me how good our pizza is, and I really really don’t believe they’re just being nice. You can tell when people are being nice and if people really do enjoy our pizza. Just other night, I had a customer call up about an hour after his order and word for word “I’ve lived in this town for over 27 years, and you guys have the best pizza in town”. Now I remind you, there are at least 50 independent stores in our town, along with all big 4 pizza shops, all within 7 miles. Us being the newest, in the last 5 years. Now thinking about it, 50 could be on the low end.

I really can’t even guess how many times I’ve received compliments and we’ve had ZERO complaints, about anything, since we’ve opened. Our regulars are really good loyal people that gloat about our pizzas on a constant basis.

When I sit in the front and watch out the windows, I see the dominos and papa john cars drive up and down all day and night long.

Our store front is very appealing. The front is very nicely put together with nice floors, nice clean walls with lots of decor to look at, and a tv. ALWAYS 100% clean. Nothing looks out of the ordinary, or dirty or old or used.

If I had to guess what the problems are, they would follow:

  1. Price - Our prices are competitive, but not as competitive as the big 4. We have no specials either other than a simple lunch special.
  2. Competition
  3. Lack of marketing, communication skills (yeah I do some simple marketing, but its all in-office marketing) I’m a very shy person, and sometimes, I’ll admit, it gets a little awkward when people are in my store b/c theres a lot of silence often… Yeah I can talk to people if they’re cool and usually if they do most of the talking. I quite often forget to tell people to tell their friends/family about us. Thats how bad I am…
  4. People don’t realize what they’re getting. I say this b/c I’ve been told before that our menu is a little confusing and hard to read. Our menu shows literally ZERO perception about what we’re about or what we have to offer. We still have our first batch of menus that have at least 10 changes on them since we worked out all the kinks.
  5. I thought we were in a great location when we first opened, but I’m starting to realize you have to know we’re here to see us. I still have people that come in here that lived in this town their wholes lives that ask how long we’ve been here. And when I tell them 6 months, their jaw usually drops to the floor. In fact, I have people that are walking distance from us still tell me that they just now found out about us.

*Edit- Forgot to mention, I think our website could be a tiny factor as well. We average about 10-15 new visitors a day, and I really don’t think too many of those become actual orders.

Most people in our town have resided here for 10-30+ years. I have yet to see a foreclosed home or even a for sale sign at that.

Not sure if that helps my argument or not lol.

But again thanks guys!

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Re: Whats the easiest, less costly to close up shop for good

Wow. So what do you attibute to your “problem”?

PD

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Re: Whats the easiest, less costly to close up shop for good

I don’t get what you’re asking…

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Re: Whats the easiest, less costly to close up shop for good

Wondered what PD meant with that, too.

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Re: Whats the easiest, less costly to close up shop for good

Steve, sorry to hear about your problems. Are you doing any community fundraisers (schools, Little League)? It seems like you need a cash infusion about now. Let me give you a real life example: My grandchildren are in Little League, and the season is just starting. In order to raise money for the league they decided to go with selling gift certificates from 2 locally owned restaurants, one Pizza, the other Mexican.

30 teams with minimum of 10 children on the team= 300 children
each Child sells 10 gift certificates (completely attainable based on my own experience, I can never say no to the kids)

300 x10 = 3000 gift certificates
each gift certificate is $25.00 x 3000 = $75,000
The little league gets $2.00 per certificate and are thrilled to receive $6000.00

Between the 2 restaurants $69,000 the split is $34,500 for which they did nothing but supply the certificates, kids did all the marketing and work.

The $2.00 per certificates works out to be a discount of 8%

Then factor in that 10% of the certificates will never be used based on being lost, sent through the washer, etc.

Anyway, I wish you the best of luck and hope that you can pull through.

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Re: Whats the easiest, less costly to close up shop for good

Yes. I had 130 kids last year sell $10.00 Coupon Magnets. They raised $11,000 and kept it all. I got about $70,000 in sales from it.

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Re: Whats the easiest, less costly to close up shop for good

steveo

sorry to hear that business is not good. I will put my cynical hat on for one moment. IF your pizza was the best around, your prices comparable with the competition, marketing was efficient (albeit limited), shop clean etc etc then customer would be coming back. The simple answer is that something is a miss as you’ve said the majority of customers are simply not coming back and you need to find out what it is. IF there isn’t a problem then maybe your market is oversaturated in which case most of your competitors will be in a similar way.

People will tell you that your pies are ‘the best’ and so will customers (obviously if they are regular customers they will like your pies - who ever uses a shop for a product they don’t like?) so the comment that ‘people tell me they like my pies’ is simply not objective/helpful overall.

You NEED to find out why non-customers aren’t ordering from you, specifically those who have used you previously but not again. The only way to do this is to ASK them. We’ve had this discussion on here previously and some people have said they are uncomfortable about doing this.

There are two ways I would go about this:

  1. Ring as many customers as time permits later in the day that they order. Its steve from xyz, I’m just checking that everything was ok with your order? would you mind if I ask a few other questions to help us improve our service etc etc and offer them a free side for their time. Then ask them about how was phone answered, how was driver, how hot was food, how do they find your pizza, are there any offers etc etc just 4 or 5 questions but if there is an issue you’ll see quickly, i.e., well the pizza was nice but it wasn’t very hot, or the toppings were all over the place or indeed (hopefully) everything was fine. Then offer them the free xyz to order next time.

When I’ve done this (over the years) I’ve had a range of answer from the driver had no change, I think the driver charged me more than the order was, the food was cold, the pizza appears to have been tipped up etc. In htese cases the customer HAD NOT called up the shop before so chances are they would have not mentioned it to us and maybe we’d have lost their business.

  1. For customer who order a long time ago you need a similar approach but initiated with a comment around 'you’ve ordered before but not recently, I wonder if you’d spare me a minute to give me some feedback on your experience with me so that we can improve our service etc etc. I did this some time ago on customer who had not ordered in 180 days and the results were interesting (I may have the script/questions somewhere). I know you tried this with a letter but people aren’t going to spend the time writing back to you - YOU have to contact and speak to THEM.

Without knowing this kind of info you ain’t IMO going to move on and maybe you’ll just discover one small gem which will help turn things around?

hope this helps
Wiz

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Re: Whats the easiest, less costly to close up shop for good

Steveo,

Wizzle is offering some REALLY good advice. I realize that isn’t the answer to your primary question. But start today and follow up with Wizzle’s advice. I’d also look at closing for lunch. Use the downtime to make your calls and get some rest. Concentrate on building your dinner trade. Then I’d start talking to your landlord about your options.

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Re: Whats the easiest, less costly to close up shop for good

Solutionsgal and P.O.T.M. - That really sounds wonderful. To be honest (don’t wanna be a downer), but it really sounds too good to be true. How did you guys go about setting something like that up? How are your negotiating skills? I have none lol. Other than the simple fact that they are kids trying to raise money, what would make someone want to buy a gift certificate from a pizza place they’ve A) Never heard of or B) Never tried before?

Wiz - You know what, for the past 6 months (other than the 2nd month cause I did screen people and 80% of the answers were price) I was against calling customers, but I’m starting to think you guys are right and I should just take the plunge and start communicating with those one time customers. The reason I never liked that type of contact is b/c to me, it sounds like I’m incompetent and non-confident with my products… Thats just me though. Should I offer them some type of incentive to return? Our town has over 75k people within. And thats not including surrounding towns. Theres enough business for all the existing shops to have their customers that suppor them. You can’t please everyone. My pizza may be great and all, but theres really no value involved. Our prices are competitive with most of the indie’s, but the prices do add up quick, especially with a 12% tax. People order from them cause thats what they’re used to, and the inde shop is established.

It just seems like the the majority of the population have their pizza place and have been ordering from those places for many, many years. What do I have to offer them that they don’t get from their current pizza place? I’m the new guy, what would make anyone change? For all I know, people could be worried that I’m going to leave them by going under one day. I mean, theres plenty of times people come in and eat, and there will be no action/no phone calls. OR they get their receipt and it says ticket #7 at 8 o’clock at night. For me, I wouldn’t eat out at a place that I had a feeling was going under, OR not making ends meat. Or they happen to come during our mini rushes and they have to wait an extra five minutes, or watch me running around like an idiot answering phones, making pizzas, taking care of carryout customers etc etc. I can’t imagine that looks good.

As far as those letters go… I’m wondering if my presentation AND/OR wording isn’t up to par. I’m not exactly the greatest marketing writer. I don’t know how to word things, or make things sound appealing or catchy. Sometimes I wonder if I’m doing more harm than good by sending those out, I feel like their scaring people off. Its just hard cause I LITERALLY do everything on my own and I quite often second guess myself but usually finalize something just to finalize it.

Again thanks for all your guys input. As always, its much appreciated.

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Re: Whats the easiest, less costly to close up shop for good

Steveo,

Try a letter similar to this:

http://www.pmq.com/mag/2003september_oc … letter.pdf

Include your menu and make sure to fold the letters with the headline facing out so it’s the first thing that the customer sees when they open it up. You can purchase a mailing list from http://www.melissadata.com or you want to save money you could also just trifold the letters along with your menu, staple a rubber band to it and door hang them EVERY day!

You mentioned that your menu is not the greatest. If you would like, I will design a full color menu for you. If you’re interested, let me know and I will pm you my email address. Then you can email me your current menu and I will get to work. Let me know.

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Re: Whats the easiest, less costly to close up shop for good

In reply to the ticket #7 at *o’clock- you can sart off your day at ticket # 100. Most POS systems have that option.

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Re: Whats the easiest, less costly to close up shop for good

What makes you say this? If I’ve followed these boards correctly, they always say that the pizza marketplace is just shy of $20 per household per month. At 75k people, that would be approx 30,000 households. 30,000 x 20 = $600,000

If you have 50 (which you say there are at LEAST that many) pizza places in that market, there are too many fighting for pieces of a small pie. Divided evenly, each store would get $12,000/month of that pie, which works out to under $3,000 per week. And for every big guy pulling in more than that, someone somewhere else in pulling in that much less.

So it does look like you went into an oversaturated market.

Not to say I think it is impossible for you to turn your business around. I think you have some very good suggestions in this thread.

If you decide to move forward perhaps you need to spend some money to make money though. You keep talking down your own ability to communicate and interact with customers. Do you have any employees or are you doing this 100% solo? It may be worth it to hire someone with good customer interaction skills to do much of the front counter/phone contacts/and call backs.

Don’t just talk down your weaknesses, find a way to overcome or accommodate for them.

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Re: Whats the easiest, less costly to close up shop for good

do the contact by phone. Its a fine line but if I were in your shoes I’d be honest and say that its tough starting your own business and that you’re trying to get as much feedback to make your product and service better. When I did my 180 day excercise I offered buy one get one free on delivery for those who took the time (5 minutes to answer questions. I made it structured and asked them how they found our product/service/ had they ordered pizza in the last 3 months (I knew it wasn’t from me - some told me they had and that maybe they’d called in got it from a friend, I had loads of info. Simple fact is some people don’t order pizza every day or even every month.

The key difference is that I spoke to people who had tried my food and who hadn;t come back (yet) and some of them came back that week and I also had a better idea of what I did well and what I didn’t do well.

If lunches aren’t working for you consider closing the quieter lunches and get out leafleting and talking to people.

tahst pretty much all I can suggest.

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Re: Whats the easiest, less costly to close up shop for good

In the name of painful honesty, it sounds like you are burned out and crispy around the edges . . . and need a serious infusion of 1) cash 2) marketing expertise and 3) new energy people/person. If you are not skilled or at least confident in your marketing skills, then you are never going to save the sinking ship. You need something fantastic and fast . . . it does not sound like you have the resources or the enthusiasm to pull that off. You are become (from reading your descriptions) your own worst enemy. You are giving off poor perception as a rulle . . . and no customer wants to come back to that. If it ain’t pleasant, they ain’t coming back.

The unfortunate reality seems to be that there is no graceful exit if there wasn’t already an exit strategy negotiated and built into the business plan. Personal guarantees on loans may not be protected so much by bankruptcies, used equipment is worth 20% of new cost, and creditors aren’t happy to negiotiate partial payments as much as they used to (they never really were).

The suggestion to get legal counsel is a great one. Same with consulting a business agent for potential sales possibilities. You will be surprised what some fools out there with money to burn will spend on a brand new restaurant in a super-saturated marketplace. Professionals will know if and how to market your place for sale.

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Re: Whats the easiest, less costly to close up shop for good

You live in a suburb of Chicago, right? I’m sure someone there would do a favor for you.

http://cache.kotaku.com/assets/images/kotaku/2008/08/godfather_l.jpg