Business Growth Dilema

[wa_dave]

Since November our sales have increased on a steady rate. In the 22 weeks since the start of 2007 our sales are up 16% and for the 9 weeks of the current quarter are up 26% (and growing each week).

We are now seeing a steady response from our New Movers promotion, with 75% ordering extra to the free Family size (15") pizza we are giving away free. The redemption from this promotion will increase steadily with new initiatives for new home buyers in our latest State budgets.

Last week we missed doing $10K for the week for the first time by $43.70 and this week we look like going well over the mark. I’m not at the shop tonight but dropped in a couple hours ago and they were pumping and were not far from the sales target.

All sounds great doesn’t it?

Problems with this success are as follows;

1. We are really under the pump on Friday and Saturady (and getting that way on Sundays for the last 4 -5 weeks) for about two and a half hours per night with orders backing up. We have problems getting the pizzas through quick enough with orders up to 30 - 40 minutes before customers get them. We are quoting this and they are more than willing to wait but I hate it. We have a single MM PS360 set at 7 minutes - speeding up the time is not an option as we have a premium product going through at the current speed and do not want to jeopardise it.
2. Our lease expires in 10 months and we “should” get a 5 year renewal (our landlord doesn’t do multiples - 5 x 5 x 5 - as it is a major shopping centre). We have asked for an immediate new 5 year lease so we can invest in more equipment - additional oven, more freezer storage, POS, and an new more efficient make line bench.
3. We have built a strong brand with minimal advertising mainly using box toppers (thanks to you guys) with some good effective cheap (for us) deals and having a fantastic high quality rproduct which brings in new customers from referals (yah for word of mouth advertising). Our success is currently becoming our own worst enemy. We are priced at the upper end.
4. Staffing is a real problem due to 3% unemployment in Western Australia and unbelievable wages being earned due to a red hot mining industry. We have the highest wages in Australia and one of the highest in the world at this time. Problem is nobody wants to work for the rates that are paid in the hospitality trade. Many restaurants and other food and liquor outlets have cut back opening times due to shortage of staff. One hotel (tavern) near us won the best restaurant in a pub/tavern this year for the whole of Australia but have had to close it down as they can only get 3 chefs when they need 14.
   We are in need of more staff very shortly but we can’t even get 1 response from adverts. We need drivers (currently have 5 but need at least two more), an additional cook plus a dishwasher/cleaner but can’t get any despite paying the best rates around plus incentives and other benefits.
5. The staff we have are great down to each and every one of them and are happy working with us. To keep them we are increasing their hourly rates and telling them it is in appreciation for their great efforts and work ethics. My manager and manager in training will commence incentive programmes as from 1st July which will put their potential earnings up around 20% more than what they are currently getting, making them some of the highest paid in the industry. This and the staff increases will increase our wages bill but increased sales will cover this - but refer back to points 1, 2, 3 and 4.

Until we get our new lease we can’t take the risk in outlaying for the new equipment. There are no equivalent empty shops around where we could re-locate if we couldn’t get a new lease ( centre management see no reason why we won’t get a new lease as the business is increasing, it is a strong business for the centre and we are good tenants) but until I get it in black and white we can’t afford the risk of outlaying around $40K + for the equipment and upgrade.

It is a real dilema with a booming growing business, need of more equipment, lack of secure long term tenure and shortage of future staff.

At the moment we are facing the reality of growing too fast for what we can accomplish at this time. I can envisage hitting $12k - $13K per week withing 4 months and going even higher by this time next year.

And on top of this we are only open from 5pm daily, 364 days of the year and haven’t started day trading yet (the demand is there for it).

By the end of the year we will have around an additional 1,000 houses withing a mile of the store and we are the closest pizza shop to them by about 2 miles so potential is huge. Theoretically we could be looking at $16 - $18K by this time next year.

In the meantime the dilema is how do we manage the sales with what we have and manage to keep customers happy for the long haul. The last thing I want is to start losing customers due to waiting too long for orders, even though some say they don’t mind waiting because they want a good pizza. Our main competition is Domino’s and PH both about 1 and a half miles away.

Domino’s have commenced roadside banner shaking outside our store on Tuesdays for their $5.95 large pizza (but our sales continue to grow).

Any thoughts or ideas would be appreciated.

Dave

 

[perfect_pizzas]

If I was in your shoes I would think very seriously about raising your prices. If you are close to maxxing out your current capacity and you can’t increase that capacity at this time a 15-20% price increase may be just what the doctor ordered. Operators are always very hesitant to raise their prices but when they do, 99% of the time they say I wish I had raised them a year ago. In your case, even if you initially lost 15% of your customers, your sales dollars would stay the same and as you built back up to the same number of pizzas, you would be doing 15-20% more in sales which can sometimes equal a 50-100% increase in profits. I would also think very hard about buying a 360 top oven. This should only set you back $4000-$8000 + shipping and would make a world of difference in your service on Friday and Saturday nights. If you did not end up renewing your lease, you could still sell the oven and recoup some of the purchase price. Good Luck.

 

[system]

i wish i had ur problems wanna switch places

 

[snowman]

It sounds like they have you between a rock and a hard place. You really need to get that lease renewal in motion. If not, you need to find a new place. I can’t imagine you’re willing to just walk away at this point. If you’re not willing to walk away, then it would seem that you need that second oven and it’ll move if you have to.

It doesn’t sound like you’re able to fill two ovens to capacity right now, so the other improvements could wait. You’re not very far behind yet, it’s just that you need to be able to put a little bit more pizza through the oven, and not being able to just backs you up. There will be other bottlenecks once you put another oven in, but at least you’ve moved the bottleneck back a bit.

 

[Daddio]

wa dave:

1. Staffing is a real problem due to 3% unemployment in Western Australia and unbelievable wages being earned due to a red hot mining industry. We have the highest wages in Australia and one of the highest in the world at this time. Problem is nobody wants to work for the rates that are paid in the hospitality trade. Many restaurants and other food and liquor outlets have cut back opening times due to shortage of staff. One hotel (tavern) near us won the best restaurant in a pub/tavern this year for the whole of Australia but have had to close it down as they can only get 3 chefs when they need 14.
   We are in need of more staff very shortly but we can’t even get 1 response from adverts. We need drivers (currently have 5 but need at least two more), an additional cook plus a dishwasher/cleaner but can’t get any despite paying the best rates around plus incentives and other benefits.
2. The staff we have are great down to each and every one of them and are happy working with us. To keep them we are increasing their hourly rates and telling them it is in appreciation for their great efforts and work ethics. My manager and manager in training will commence incentive programmes as from 1st July which will put their potential earnings up around 20% more than what they are currently getting, making them some of the highest paid in the industry. This and the staff increases will increase our wages bill but increased sales will cover this - but refer back to points 1, 2, 3 and 4.

It is a real dilema with a booming growing business, need of more equipment, lack of secure long term tenure and shortage of future staff.

At the moment we are facing the reality of growing too fast for what we can accomplish at this time. I can envisage hitting $12k - $13K per week withing 4 months and going even higher by this time next year.

And on top of this we are only open from 5pm daily, 364 days of the year and haven’t started day trading yet (the demand is there for it).

By the end of the year we will have around an additional 1,000 houses withing a mile of the store and we are the closest pizza shop to them by about 2 miles so potential is huge. Theoretically we could be looking at $16 - $18K by this time next year.

In the meantime the dilema is how do we manage the sales with what we have and manage to keep customers happy for the long haul. The last thing I want is to start losing customers due to waiting too long for orders, even though some say they don’t mind waiting because they want a good pizza. Our main competition is Domino’s and PH both about 1 and a half miles away.

Dave

Dave
I am in the same boat that you are. The staff at McD’s and the local cofffee franchise get $14 to $16 to serve from behind the counter (not waitress).

I was running with one oven for the first 2 years and finally put in a second. It has eliminated the backups on busy nights. The staff actuall work faster than they did with only one oven.

I have been afraid to do any advertising at all because of how it may impact my customer service level.

Anyone have any great ideas to get more staff without breaking the bank?

 

[wa_dave]

perfect pizzas:

. This should only set you back $4000-$8000 + shipping and would make a world of difference in your service on Friday and Saturday nights. If you did not end up renewing your lease, you could still sell the oven and recoup some of the purchase price. Good Luck.

Unfortunately the costs here in OZ for 2nd hand is around $12K - $14K and $27K for a new one, plus freight and istallation.

up23:

i wish i had ur problems wanna switch places

We did it hard at first but consistency, good quality and looking to work smarter rather than harder pays off in the long term. Live and learn from ideas on this forum - I know you are doing this already.

Dave

 

[perfect_pizzas]

Get busy with the wife, you’ll have dependable employee(s) in 15 or 16 years! :lol:

 

[Daddio]

perfect pizzas:

Get busy with the wife, you’ll have dependable employee(s) in 15 or 16 years! :lol:

LOL :lol: Already been that route my four are 20 to 27 and started on the second generation.

 

[wa_dave]

perfect pizzas:

Get busy with the wife, you’ll have dependable employee(s) in 15 or 16 years! :lol:

Past it already. Been shooting blanks for 20 years. :roll:

Son is 28 and lives 5,000km away and not interested, 2 girls 24 & 22, the younger 3,000km away studying nursing and the 24 year old just coming out of a break up with her partner who owns a pizza store.

Dave

 

[td_VP192]

wa dave:

perfect pizzas:

Get busy with the wife, you’ll have dependable employee(s) in 15 or 16 years! :lol:

Past it already. Been shooting blanks for 20 years. :roll:

Son is 28 and lives 5,000km away and not interested, 2 girls 24 & 22, the younger 3,000km away studying nursing and the 24 year old just coming out of a break up with her partner who owns a pizza store.

Dave

Heck, that’s the only reason why I had kids, they’re potential employees. That and the fact that they’re really good for getting the remote that’s alllllll the way across the room when I’m on the couch.

I have four btw. 16 yo girl, 13 yo boy(loves working in da shop), 2 yo boy(likes to sweep and knock over all the 20oz. pepsi bottles in the back) and a 15 month old girl. They’re all great kids and I love 'em all so very much.

 

[SaraH]

wa dave:

We did it hard at first but consistency, good quality and looking to work smarter rather than harder pays off in the long term.

Dave,

When you say “we did it hard at first”, how long ago was that? I’m always interested to know how long it takes for people to get to the level you are.

Thanks!

Sara

 

[wa_dave]

Dave,

When you say “we did it hard at first”, how long ago was that? I’m always interested to know how long it takes for people to get to the level you are.

Thanks!

Sara

Sara

We took over our shop in December 2005.

It was doing around $7,800 and hitting mid $8K at few times. The place was going downhill, was dirty in need of revamp, bad staff, equipment that decided the old age home was better than working plus all the other things.

To top it off withing 4 -5 months of being there petrol went from 95 centes per litre to $1.45 in one hit and sales fell 20%. Then we had three quick mortgage interest rate increases and this killed things for a while. After getting sales up to around constant $8,200 we dropped to low $7K’s.

We painted the place a vibrant red chilli colour put in new counter and dividing wall between the front and the kitchen (was open plan for all to see), new funky black and chrome furniture and a host of other things.

We had a solid base to start with but needed to throw about $40K at it to get it up again.
]
We changed our name from Currambine Pizza and Pasta to Pizza Pizzazz Currambine and did new signage, put the staff in uniforms with our logo on the front and right across the back of the shirts. The new name was meant to give the pizzas the recognition of quality and that something eaxtra.

Bad staff, we got rid of, or they got rid of themselves, and we got a lot of new enthusiastic young people in and trained them well the way we wanted things done.

Quality, consistent product was strived for backed by exceptional service. We dropped about 5 or 6 delivery areas that took drivers away for too long and strived for a maximum 45 minute delivery time frame, concentrating on the delivery areas that represented 85% of our deliveries.

All began to pick up around October then my manager fell down a seaside cliff and broke bones in his hand and was out of action for 17 weeks. I carried his shift plus my own for 7 days a week for the 17 weeks. Although this seemed hard it gave me an even better insight to the business which we then fined tuned and have not looked back since.

Late last year our state introduced daylight saving for the first time and this made a big impact on sales, but also increased our hours as people started coming in around the time we were ususally beginning to do close procedures. This bought in new customers which we have kept.

Our real turn around came about February which is normally our lowest months of the year with back to school after our summer holidays, after Christmas bills etc. Past records show sales went down to mid $6K’s - low $7K’s but for some reason we were hitting mid $8K’s.

We then commenced boxtopping and some other community involement where we got people to taste out pizzas or where we gave away free ones. We did community fairs and got the kids involved in dough tossing competitions where they won free pizzas etc. We also did some sample tasting in the shopping centre we are in which also bought in new customers.

From there on sales increased and have now shot ahead. We anticipate it to climb steadily with great response from our New Movers promotion.

No advertising has been done since May / June last year when we sent out our new menus with our new trading name by letterbox drop. This was not a real success as up to 14 brochures / catalogues were bundled in one which most people threw out.

Our best advertising has been word of mouth - we get about 2 - 3 people a week come in and say we were told that your pizzas are the best in the northern suburbs. We get them in and they stay, and then tell others.

One thing you MUST do is have a goal of where you want to get to. Break it down on how you are going to get there.

Our goal was to get to $13K per week within 2 years, because that is the minimum I think we should be trading at with our location, competitors, large catchment area and our product. $10K was our first mini goal to get with $11K the next by September and the $13K by April next year.
Iput the growth like becoming a millionaire - the first milion is hard but everyone after that is easy. To us the $10K was our million and now every thousand after that will be easier (I hope).

Things haven’t been easy and I was working 100 hours a week, 7 days per week, but now I’m down to about 38 hours in the shop and about 20 hours doing bookwork and marketing.

You have to put in what you want out and if you think you can sit there and reap the rewards without the efforts then think again. You must also be pro-active, forward thinking and want to succeeed, plus be strong enough to take the many knocks on the chin and get up and get going.

We put contingency plans in place after losing my manager - we promoted a young casual to Manager in Training and crossed trained as many staff as we could - so we wouldn’t be caught short again as well as setting up other marketing startegies and continue to look for new tantilising products that others don’t sell so we have an edge.

Sorry the reply is a bit long winded but there are so many variables (and I have left out heaps) that a simple reply can’t be made (or not by me anyway :lol: )

Dave

 

[MM1]

Just a couple brainstorming thoughts (unfiltered, possibly stupid, but also possible they’ll make you think of something that will help - my definition of brain storming…)

1. Get your own building. Gives you room to expand, and is a good long term investment.
2. Import employees. Recruit as far away as you need to to find people who would be happy making the money you CAN pay. Maybe even offer a “loan” to help someone moving to your town for a job with you (just enough to help, then recoup it from pay - or offer dropping the loan after 1 year working for you)?

 

[wa_dave]

MM:

Just a couple brainstorming thoughts (unfiltered, possibly stupid, but also possible they’ll make you think of something that will help - my definition of brain storming…)

1. Get your own building. Gives you room to expand, and is a good long term investment.
2. Import employees. Recruit as far away as you need to to find people who would be happy making the money you CAN pay. Maybe even offer a “loan” to help someone moving to your town for a job with you (just enough to help, then recoup it from pay - or offer dropping the loan after 1 year working for you)?

Nothing stupid at all.

1. This is our goal but unfortunately where we are there is nothing around. We are in a prime position with lots of housing going up real soon.
2. Many have tried this during the last two years but they are being snapped up by the mining industry 2,500 km north of us where labourers and kitchen hands earn around $80,000 pa and drivers and tradesman earn $120,000 - $200,000.
   What we can pay cannot even get adverts answered. The hospitality industry is in dire straights with many reducing hours due to lack of staff.
   The new noodle wok shop just opened a few doors down from us is importing labour from China and Taiwan but he is a millionaire and can afford to buy houses to put them up in.
   And many young kids just don’t want to work because mum and dad give them $50 - $100 a week for pocket money without having to do anything for it. Funny thing is a lot of my younger staff come from well to do families who own successful businesses. The parents get their kids out to work to realise the importance of earning a living, and these kids are all great workers.

Dave

 

[goomba]

Hello Dave,This won’t settle your problems,but we have a Dominos and a Papa Johns near us.What we do in our advertising is say things like we’re not the fastest food in the area just the best,so if its great food you want give us an extra few minutes.Sounds dumb ay?Butt believe it or not it works well,we have customers come in and say they love how we advertise so honestly and it seperates us from those ‘big’ guys.Also it opens the door for an excuse for you when your running a little behind.
Hope this helps you,
Niccademo

 

[goomba]

Hello Dave,This won’t settle your problems,but we have a Dominos and a Papa Johns near us.What we do in our advertising is say things like we’re not the fastest food in the area just the best,so if its great food you want give us an extra few minutes.Sounds dumb ay?Butt believe it or not it works well,we have customers come in and say they love how we advertise so honestly and it seperates us from those ‘big’ guys.Also it opens the door for an excuse for you when your running a little behind.
Hope this helps you,
Niccademo

 

[wa_dave]

goomba:

Hello Dave,This won’t settle your problems,but we have a Dominos and a Papa Johns near us.What we do in our advertising is say things like we’re not the fastest food in the area just the best,so if its great food you want give us an extra few minutes.Sounds dumb ay?Butt believe it or not it works well,we have customers come in and say they love how we advertise so honestly and it seperates us from those ‘big’ guys.Also it opens the door for an excuse for you when your running a little behind.
Hope this helps you,
Niccademo

I’ve seen similar where they say “the big guys food is fast, but our good food takes time”

We have Pizza Hut and Domino’s as our main competitors and they tell people 20 minutes and then don’t have it ready for another 30 or 40 minutes. We tell them straight up 20, 25, 35, 40 or whatever it is at the time and they know up front. I think this is why they accept it so readily, plus they can see all our dockets lined up above the make bench and can see the front staff rushing to the phones, the counter and back to the phones.

We don’t make excuses for being a little behind as our customers now expect it on Friday, Saturday and now Sunday nights. They don’t mind waiting because they tell us we make the best pizzas around and won’t go anywhere else. I think this is part of our problem as well as on the 3 busy nights everyone wants their pizzas between 6pm and 8pm.

Tonight, one guy came in and said “will that be about 30 minutes?” Couldn’t believe it when I said “no, only about 15”.

Dave