Where should I be with my costs and income right now?

Hello All,

It’s been 5 weeks since I opened my shop. So far the response has been great!. People love the pizza and atmoshpere I am producing/ providing. My sales are steadily increasing and things seem to be running smoothly (for the most part). Here is my question to all of you expereinced pizzeria owners and operators:

My sales are averaging 10K a week.

Labor 24%
Rent is 5%
Utilities 3%
Insurance 2%
Food / Supplies 45%
Sales Tax (Back to the state) 9%
Advertising 5%

Leaves me with only somewhere around 7% profit…but I think things will get better once we level out.

Do these percentages look OK or are they too high? Remember that by business is brand new and the sales seem to be increasing. I have gotten my labor under control and feel confident I can cut 3-5%, but I dont want to sacrafice service.

We have a dining room for 80 and offer delivery as well. Our deliveries are weak and we average only 6 on weekdays and 10-15 on weekends.

Another strange thing is that Saturdays (we’ve had 5 of them) have been our second or third slowest day of the week…that seems odd to me but it been that way consistently since we opened…Fridays of course are our biggest day.

Any info you all could share would be greatly appreciated. I havent been able to post anything in a while and am finally able to take a breath. Thanks in advance to all of you for all your help.

Rookie

Take a look at your food cost. 45% is quite high. We shoot for 30%. What type of portion control are you using?

I agree your food costs are high. I personally would be having a heart attack if my food costs reached even 35%. Remember that as your sales go up your fixed costs (rent, insurance,etc.) will become a smaller percentage of your sales. You really need to look at the food and labor costs and see where you are able to trim those numbers because they are the ones that will make the most difference to your bottom line.

As has been mentioned protion control will play a big factor in getting your food costs in line.

Hey Rookie… First of all congrats since those sales numbers are decent for 5 weeks to say the least. I agree your food cost is too high. Shoot for 30-35% and you should be ok. Work on portion control and are you paying too much for your food? I know you are a new restaurant but shop around for food suppliers. Negotiate with your current ones and see what you can get. You might be surprised what you can get out of some of them…sometimes! Just curious… What town are you in? You say you are not doing a lot of deliveries…that will increase in time I am sure… but how much is dine in and how much is carry out? Keep up the good work.

When some people calculate their food percentage they base is solely on the amount of food purchased/sales dollars. Make sure you factor in beginning/ending inventory to get an accurate food cost %.

Also, check your menu pricing to make sure that your prices will allow you to run a 30% to 35% food cost assuming proper portion control.

At 10K a week we run food cost about 29%. That includes all supplies, paper, condiments etc etc

At lower sales levels like 5-7K in our slow season we run 32-34%

At higher sales during our in-season period like 25-30K per week, we run 26-28%

In our all time record weeks of 45-52K we ran 24%-26% cost.

The costs vary because some supplies do not vary by volume and because waste, emp food, promo freebies etc decreases when volume is up.

45% is out of any reasonalbe range assuming you are calculating it properly.

On the other hand, at 5 weeks, it is way too early to be paying attention to any costs other than food and labor. You should be focused on quality and service. Right now is when you make first impressions and you never get another chance to do that.

What’s your trade area like to be averaging 10k/ wk? Mostly single family homes? Where’s the competition?

Population? 10k/wk looks very promising for only being in business for 5 weeks. What you have to watch out for is when you start seeing customers drop or decline in repeat customers. I’m not wishing this on anyone but it’s something we experienced first hand. We had similar numbers as you on our first three months but drastically dropped, partly due to weak economy and high unemployment in our area. As people on here told us our honeymoon period was over. Once the excitement of trying a new place wears off the bigger challenge would be is how to maintain the excitement. This is where marketing comes in. 5% is a good ballpark but sometimes we have to spend 7-10%. Our area has all the big players within a 3 mile radius so we’re competing with the big boys marketing budget. Once you’ve worked all the kinks I suggest to consider allocating a bit more on marketing.

Agreed with the above posters. Food Cost should be in the 30-35% range

Also, Listen to Movvid… Honeymoon period will be over soon, and numbers should decline.
Have a marketing plan in place to counter it.

It looks to me like you are categorizing everything else in food/supplies. This would include beverage, uniforms, cleaners, boxes, paper etc. Correct?

On your labor are you getting a wage? Have you included work comp and taxes in this percent?

As the above poster stated you are in a honeymoon stage right now, sales will decline somewhat in the next few weeks are you ready? And what kind of marketing do you have planned?

Are you collecting names and addresses of your customers?

Grab an umbrella, here comes the rain.
I tend to side on being conservative. So…the first thought I had when I read your post was great sales!!
The second thought was you are still in what I call the honeymoon period. Your sales will drop off-not much we hope- in a few more weeks and level off. One of the earmarks used to judge future sales is how strong your grand opening was. The higher the sales the better chance you have of maintaining a high weekly revenue stream.
So…at this point in the early game, culture the customers info by obtaining their names and addresses and start your database mailings. It is more important to be consistent and mail them something more than the actual piece. You want to keep reminding them of your place monthly or close to it.
We call database mailing, low hanging fruit. They know who you are and have tasted your product. The hard part is over.
My biggest thought is to spend your time training your crew-and maintaining consistentcy, and focusing on customer retention.
Bubba

The one thing I noticed, is you are using a sales number including sales tax, most of the “industry standards percentages” do not include the sales tax as part of the income.

And I agree with the rest of the posters, for the first couple of months its good to know where you are standing, but the numbers shouldn’t be used for any budgeting or comparisons for future plans.

As for the Saturdays, mine are the same, my big days are Friday and Sunday, then Thursday and Saturdays compete for the third busiest.

I think the main message from above is:

a) look at your food cost and target 30%
b) start (if you haven’t already) marketing your area and database like crazy ASAP and stick to a marting plan. We had a crazy opening in store 1 and I took my eye off the ball for a few weeks only to get my butt kicked a few weeks later. Should have kept the momentum going…