I’m looking for insights into the pizza business to add in my Business plan to help raise money for opening a small salad, pizza, fresh pasta and using fresh local ingredients in other entrees.
I’ve worked in the restaurant industry since I was 17 (now 32). And its not hard to figure out a rough estimate of what a business makes, I know what they pay for all items, checking in all deliveries and a good idea of what they pay out/take in. I’ve worked in all facets of food service including bars and pizza places to fine dining establishments where the cheapest steak was $55.
I have a little savings no where near what I need, but all the experience, schooling and practice. Anybody on forum with similar experience? How did you overcome the pitfalls of buying expensive equipment? paying for product before you made dollar 1?
I bought the place for $27,000. It covered everyhing but the furniture and hood system, which belonged to the landlord. I paid half up front and the other half within six months.
My suggestion would be find a place that should be making good money, but is failing to do so because of bad ownership/management. Buy the place on the cheap, or don’t buy at all. Restaurants typically sell for 30-40% of net sales or 2.5x free cashflow. Try to find a good bargain and take the plunge. This will likely be your best chance to get into the business if you’re undercapitalized.
Save money for a while so you actually are bringing something to the table. Try again in a few years.
Sorry to be a downer… but I have seen plenty of business plans (executive summaries notwithstanding) fail when they did not have to because there was simply not enough cash there to ride out the startup.
a) cutting the theft out. Before I bought the place, I worked there 2-3 months without any employees knowing I was talking about buying the business from the owner. They all just thought I was some college kid trying to make a buck. People were stealing cash, food and time (payroll fraud). When I finalized the purchase, I only retained the good employees. All theft stopped immediately.
b) changing the recipe. Go to the pizza expo in Las Vegas. It’ll set you back a $1,000 or so, but you’ll learn a lifetime’s worth of information on pizza both from a business and culinary perspective. Attend as many seminars as possible and use your time wisely. I try and go every year.
c) working like a dog. I won’t even say how many hours I put in during the first few years because you wouldn’t believe me.
Find a burnt out owner with a under performing business. Buy his place on the cheap. Work like your life depended on it.
Very true about being under capitalized. This might be the biggest reason restaurant owners fail early on. That’s why I recommend finding a business to buy rather than starting from scratch.
sorry Patrick…you are not ready to own/operate a pie joynt…yet…u gotta have some $$$ on hand…an ExecSum at this stage is worthless…that part needs to come from the heart, with wisdom & knoweledge…u r not quite there yet…keep the dream alive & save some cash…
Thank you Patrick the info you gave me was more in line with what I was looking for.
Do you want to know why, pizza houses fail in start up?
The rent is to high, 2 places I called to check the rent on were both $42,000/year triple net (real estate tax, building insurance and net common areas). The building just didn’t have a big enough serviceable area or passer-bys to support that. So they have an under performing asset sitting in their portfolio and eating the tax. The land lord can’t have my money he can have 10% of what his building produces.
I love pizza and have eaten at a lot of pizza places. However, In my area.
Next the product is wrong. Not enough protein in flour and under hydrated dough, for the type of oven they have. (technical problem)
No internal branding
no aromatics
the rest of the menu is inedible (pasta and salads)
Letting expensive equipment sit idle
furniture older than I am, poorly lit.
No call to action on advertising
and every place gets all business from word of mouth.
I have $10,000 and looking to borrow for equipment some leasehold improvements and printing.
Avg pizza cost in CT is $16 and Avg of 55 pizzas sold per day.
Mario Batali started Po with 25k
A guy in philli does 40 pies a day from $19-35 in a 300 Sq ft place
You can shoot holes in my story if you like, but my intent was to look for nuances not readily apparent. The type of nuances you can’t see from eating there or working there. So when I go and ask for the money I’m fully prepared.
Good luck. $321,200 gross year @ maybe 10% net return is $32,100 year Average # hours worked 3120 year. = $10.00 hour - payroll tax = $8.75 hour Not sure what CT. Min. wage is but it might be better off with a different way to make a profit.o_O
Enthusiasm and youth, seems to me you have that and it is worth ALOT !!! I started with no experience and 30k, bought an evicted business (didn’t pay rent), people predicted our failure in a difficult seasonal town, here is something that worked for us at that time- put in a good salad bar (cheap loss leader) that showed a lot of TLC -handmade dressings, house butter roasted croutons, hard boiled eggs,share the smiles with customers who decide to support you because of your Enthusiasm and youth, hammer, scrape, paint, CHANGE, create BUZZ, try new things, You can DO IT !!! believe in your co workers , make your own ice cream, give some away !
I grew up in the restaurant industry my parents had a burger joint since before I was born. Started working there at a very young age was 14 and a full time dishwasher. Started working the line at 17 like you. I learned to do everything in the restaurant or so I thought. In 2008 my parents bought a little pizza shop delco style and the next year at the age of 28 I decided to start a pizza place of my own because I thought it looked so easy. I thought I had restaurant experience but I was in for a surprise. Its one thing to handle the kitchen operations and recipes and all the food aspects that are involved with the business for me that is the easy part. The part that you dont think about when working in someone elses place which is also the part I didnt experience is the amount of financial responsibility that goes in to running a restaurant. I dread this part of the business like im sure most on here do. There is a lot more to it than just paying rent utilities and payroll. Equipment breaking down, payroll taxes, sales taxes, unsecured property taxes, health permit, business license, this list goes on and on it doesnt end as a matter of fact it starts over every month just when you have paid everything you gotta do it all over again. So I have to highly highly agree with the people on here who tell you 10k is nowhere near to being enough to start a business especially from scratch. I once read an article where a famous chef was asked what is the secret to your success and his answer was you need to have enough money to support yourself and your business for the first year of its life. Many people have great ideas but they dont get to see them materialize because they run out of money before they become successful. I experienced this exact thing first hand we went into the business with not enough money to back it up by the time we got the doors open there was nothing left to advertise with and to push the business and it never got to where it could have been because of the lack of money so we sold and got out of it. Now doing it a second time around with $$$ to back it up we are doing awesome. If I only knew then what I know now but I guess the experience was priceless. Believe in yourself and what you are doing and in your product but also be realistic. These are just my 2 cents from my experience.
You need working capital no doubt about it. I was able to get a loan for build out and equipment and I thought $10,000 working capital would be enough as well (that got spent before we opened). I’m 13 months in without pay $(40,000) working 70 hours week in shop. Have also put in around another $20,000 in working capital and credit cards are almost maxed out. I am just now starting to see a profit and positive cash flow. Georgiascp said perfectly you start to catch up and the roof starts to leak, sales tax is due, loan payment, rent, credit card fees, credit card payments, gas & electric, marketing mistakes, etc then it starts over.
The reason for the Executive summary is to show restaurant owners. What I have is a process to make better food. Its easy to teach. Works with any ingredients. And, a system to produce it. And, eventually take my unfair share of the food dollars spent in the area.
So if a restaurant owner wants to double his/her income they invest. In return, I give them 45% and create an asset worth 300k. And, they can put in as much or as little time as they want.
I never went to work for the money it was always to learn the system. A system I might add that has been around 200 years that Escoffier created
The discussion wasn’t supposed to be about whether I should open a restaurant. But, I did get a few great tips on other potential avenues of restaurant ownership.
Hmmmm. Interesting change of direction from your initial post where you clearly stated:
“I’m looking for insights into the pizza business to add in my Business plan to help raise money for opening a small salad, pizza, fresh pasta and using fresh local ingredients in other entrees.”
And
“I have a little savings no where near what I need, but all the experience, schooling and practice. Anybody on forum with similar experience? How did you overcome the pitfalls of buying expensive equipment? paying for product before you made dollar 1?”
Now you are a consultant with expertise to sell to existing business owners? You can double my sales and profitability even though you have never owned a business?
How much do you pay your cooks?
I work at restaurants , all of the money you make at your restaurants is off the backs of your cooks. And, cooks get the shaft. I’m tired of it. I can’t even find a decent meal on my day off.
I hope you do open your own business some day. Best of luck when you do. Be sure you pay your cooks well. You are correct in that all businesses depend on good staff. However, you have much to learn about how business owners make money and what it takes to succeed. It starts with risk and it includes more work than you know.