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Can I ask a weird question?

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Freddy_Krugerrand

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I’m doing some numbers on a couple locations I am looking at and was wondering if I could ask a weird question. About how many of your large pizzas (14"-16" with at least 3 toppings) a day do you have to sell to cover rent, employee cost, electric/gas, and food cost? I don’t need a concrete number just a ballpark.

15-25
25-35
35-45
45-55?
 
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Just to clarify, are you asking what number of pizzas we have to sell to cover our costs(break even). For me to cover my employee costs, I have to sell many more than the break even point as at my current volume I have profit. While I haven’t done a breakeven analysis in a while, I imaging I would have to sell more than the 55 on the upper end of your threshhold if I were to adjust my labor down to the level needed to make that number of pizzas to break even. If you want some more specific numbers from my operation, send me a PM.
 
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Let me break down what I am looking at right now and let me get some feedback. For simplicity sake I am not including any deals or discounts just pure purchase price. I am also not including smaller things like napkins, business insurance, cleaning supplies etc. With that said here is what is breaking down for me.

Rent $8,000
Electricity $5000
Employee cost $11,000

= $24,000 a month . Divided by 30 days is $800 a day. Add 30% to that for food cost gives me $1040 a day. A large pizza here is $25 so I am getting 41.6 pizzas a day to break even, being open 30 days a month.

Does that sound typical? Any feedback greatly appreciated.
 
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Conventional wisdom would be that with $8000 rent you would looking at needing to do $2500 to $3,000 per day as an average.

Even with the outrageous electical costs you posted about a few months ago( viewtopic.php?t=10474 ) , the $5000 per month you mention increases the amount of sales you need to do by $250 per day above typical costs. ($3000 per month excess utility costs = $100 per day extra gross margin required. Gross margin after variable costs =40%. $100 per day / .4 = $250)

Wage costs per month on $3,000 per day in sales are going to be closer to $25,000 than 11,000. That would include something like $4-5,000 for a general manager or owner if that role is occupied by an owner.

I would expect costs other than the ones you mention to run about 10-12% of sales.

I am not sure which of the numbers presented are real and should be used as a foundation for a proposed business model, but the combination of them leans toward a business model that needs to sell over 100 pizzas per day on average, not 40. Furthermore, that is an average not a peak. You will need to be able to produce and sell 300+ at peak (think oven/kitchen capacity and seating/turn) to hit that average.
 
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I realized that I never actually answered the OP’s original question… We need to sell about 80 14" 3 topping pies per day (assuming typical coupons) to break even. Our best selling size by far is 16" and we would need to sell about 65 of them to break even. (What really happens is that in our peak tourist season we sell that many per hour and more and in low season on off days we might sell only 20 all day)

But that is not a very realistic metric since, besides other sizes of pizza, we also will sell a bunch of apps, salads and beverages in addition to pizza. It is also unrealistic since very few pizza stores sell 3 toppings as an average. We do sell a lot of high end pies priced out as high as 9 toppings and even with that our average pizza comes in just under 3 toppings.
 
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National Restaurant Association says your cost of occupancy should be no more than 8%. Obviously, that’s not hard fast rule but it’s a good start. So back into your weekly sales number from there (you should be thinking in terms of weeks anyway, not days. Friday and Saturday will probably be double your weekdays.). So .08 x X = (96,000/52). That’s about $23,000 a week. For the record, most would agree that’s a very tough nut to reach - given we know nothing about your operation. If you’re paying higher rent than 8%, you better be making it up somewhere else…

Sorry, I haven’t followed your previous posts so there may be valuable information I’m missing but hope that guideline helps.
 
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I’ve used the break even calculator posted already for my own business and another we started, plus several business plans and it always seemed a little awkward. But, I finally found this one a few months ago and I absolutely love it. Especially the profit predictions which are a great motivational tool. The break down of costs is a lot more involved too, which I like.

http://www.michaelhartzell.com/library/ … recasting/
 
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