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Considering Pizza Business

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iuhubie

New member
I’m currently looking into the possiblilty of buying a pizza business. Still in the very early stages of research and still weighing pros and cons of franchise vs. independent. I saw this site and thought that I could get some insight into the pizza business. As background, I’m currently involved in sales where I make approx. $100,000 a year. Unfortunately, I don’t think my job will last more than three to five years. Because of that, I’m looking at a fall-back position where I could have a safety net for the worst case scenario. I also have a history of small business ownership. Did that for ten years but it was not in the food industry. So I don’t have any food industry experience. I’m looking at pizza because I do think there is some possbibility for market share in my area, tho I do have all the big boys here (i.e. PH, Dom, PJ’s, CiCi’s, and LC) plus an assortment of independents. Plus, pizza is something I could be passionate about. That’s something I’ve always felt is the key to anything you do. I’ve done alot of the basic information gathering and am becoming more educated on what it takes to run, and what to look for in buying a pizza business or franchise. However, one thing I don’t feel I have a good handle on is how much I can make, not only as net profit at year’s end, but also as monthly income. I realize that this is quite variable so I was hoping maybe for some personal feedback as a basic guideline. Obviously, if I quit or lost my job, I would have to replace that income fairly quickly. However, if I could work part-time while bringing in considerably less, I could do that too. But, if the feeling is, it’s not gonna happen without spending 80 hours/week at the store and even then will be lucky to bring home $30K, then maybe this isn’t the right thing for me. I’m not looking for guarantees and I know a large part is based on many variables that are not addressed here, but any guideline as to maybe what the high and low-end expectations of a well-run operation could be would be greatly appreciated. I don’t have to do this on a shoe-string so I do have some financing available. However, I would want to be as frugal as possible. Dont worry, you can’t hurt my feelings so give it to me straight.
 
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many food service operations, be they pizza or not, only return $.05 - $.20/profit per sales $…

many shops gross less than $600K…

To earn $100K you will need 2 make a whole lotta pizza dough!..lol…

jokes aside…keep your day job going…learn the pizza biz, perhaps starting as a driver…lean & grow from there…

No, when you have several stores up & running…you’ll hit the $100K mark
 
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Thanks for the feedback Patriot. Anybody else out there got something to contribute. All input appreciated.
 
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Patriot is right.

Get a job driving part time at a shop first.

Mosts pizzerias are hands on operations. I would look at other options being your lack of experience with this business. This business is not the easiest, I would actually say it’s one of the hardest.

pt
 
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If you’re in Sales, and expect to be unemployed in 3 to 5 years (what are you selling? Glacial Ice?? 🙂 )

If I were you, I’d investigate ways of staying within my current profession. A salesman pretty much uses the same fundamentals and skill sets, and that knowledge allows them to sell almost anything. Look for other growth areas for products to sell. ie… equipment, real property, religion, faith, currency, credit, fuel, stocks, cattle, cheese, garbage, etc.,… You get the idea, you can sell anything if you have a buyer. Strive to become expert in your field.

As for pizza… You’re not going to make $100K/yr right out of the gate, probably have a better than 50/50 chance of winning a lottery ticket. Business is business, whether its pizza, burgers, casinos, banks, cars, theater… whatever. Business has been pretty tough the past few years, and the pros don’t think it’ll get better anytime soon. And most of them are already very competitive!
 
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If you have the passion for pizza then you have a start on what you need. One thing you mentioned
if the feeling is, it’s not gonna happen without spending 80 hours/week at the store and even then will be lucky to bring home $30K, then maybe this isn’t the right thing for me.
got me thinking about a book I just read where there was a statement that went something like this
An entrepreneur only works 1/2 days and since there is 24 hours in a day that means you work 12 hours a day.
Click to expand...
If you are lucky enough to get a great location with a great customer base and you have a great product, you might be able to take home a good wage but I am reasonably sure it will fall short of the $100k you are taking home now until you are well established. I am six years in and am not getting close to those numbers yet. I spend about 90 hours a week working in/on my business.

Let me explain the in/on part. I have found that working IN my store means I am doing work that I could hire someone to do for $10-$15 an hour which is far less than what I feel I am worth. Working ON my business is the part that is going to push me above the competition. Marketing, networking, etc. are what will take the business to the next level and there is no one that will do that like I want it done. This is being part of the community, giving back to those who support your business.

If you are serious about wanting to do this, I would encourage you to attend the Pizza Expo in Las Vegas in March. You will learn more about the industry there than you could anywhere else in that amount of time.
 
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As a general guide you can expect when starting up a shop to have 2-3 years AT LEAST will nil earning more likely losses, maybe a smallish income if you work in the shop. Buying an existing shop may ease this.

To be having a profit of 100k+ would either need a very high performing store (£20k+ pw) or more than one shop to be pulling in any where near that figure provided the shop runs very well. If you are planning on NOT working in the shop you will certainly need more stores.

There’s no magic rules in terms of profit which is why all of the franchises have very little written stuff about actual earnings from their stores.

I’d go with the advice given in the posts above. Go work in a store first before doing anything else to see if this business appears. It is NOT easy money (far from it) and as a store owner you are on call 24 hours a day 365 days a year. With 5 years+ experience I can think of other easier ways of earning money!
 
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Buy an existing shop with decent location, cash flow, customer base and track record…

And if you decide to open one on your own… ask the following two questions:
  1. What need am I filling? (Does the area REALLY need another pizzeria?)
  2. What is so unique about what I do that people will abandon their current favorite pizzerias and beat a path to MY door?
The pizza business eats many entrepreneurs alive… then flosses its teeth with their savings, borrowed money and maxed-out credit cards…

Kamron
 
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Kamron Karington:
Buy an existing shop with decent location, cash flow, customer base and track record…

And if you decide to open one on your own… ask the following two questions:
  1. What need am I filling? (Does the area REALLY need another pizzeria?)
  2. What is so unique about what I do that people will abandon their current favorite pizzerias and beat a path to MY door?
The pizza business eats many entrepreneurs alive… then flosses its teeth with their savings, borrowed money and maxed-out credit cards…

Kamron
Click to expand...
Well said.

I have a question for you kk.

The 80’s domino made its name by coining 30 minutes or less

Where do you see the pizza business trends headed in the next 10 years? Is organic really going to take off? Do you feel the local pizzeria that sells good pizza, gourmet pizza, wings, fries, salads etc…will always have a solid home in this industry?

pt
 
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PT,

My crystal ball doesn’t have the 10-year upgrade… but what I am seeing now are two things:
  1. Community based marketing is catching on big-time. Church, school and community groups promote your pizzeria in exchange for a percentage back on tracked sales. They essentially work for free and only get paid for results.
We have a flyer that will give you some ideas on how to do this: http://www.repeatreturns.com/docs/files … ection.pdf
  1. And yes… quality and “bulk” at a fair price will continue to gain steam. Think Costco… make a great pizza, but consider bundling deals and second pizzas at a price that almost forces people to buy - because it is too attractive to pass up…
Picture this: Large Pizza is $15. A second large is just $10 bucks… and a third large is $5 bucks. Now, before you start clutching your chest and dropping to the floor… consider this… You make a lot of margin on pizza #1. But you get more people ordering a second pizza at $10 because of the perceived savings (you make an additional 50%-60% margin on that one)… and then how dumb is it not to order a third for just $5? (you make a 30% margin on that one).

Or, you pitch it as: Buy two - get one free)…

Think about gross profit margin on the “sale” not per pizza…

Kamron

P.S. I just noticed the “attachment” option… uploaded the Community Connection sheet…
 
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the pizza business is not rocket science.
but. as an investor or owner you should at least do a bit of homework.
I don’t think you need to drive around as a pizza delivery boy though.
best to frequent a business a couple times a week and get to know the owner and ask question
obviously you are to busy to get a job in the place so asking questions and attending the convention in vegas will be a good chance to ask professionals questions.

regarding franchise or independent , well, independent you really need some experience.
the franchise route will train you and provide everything for you.

A good idea might be to offer someone a percentage of the business with no investment but that person will take full control of work duties, this will give the person an incentive to work hard as he is getting a salary and profit share!
this person will know all the ins and outs of the business, you take care of the admin side etc and still retain majority ownership.
location is key and luck plays a big part in it, if you go independent then you need to choose your theme and potential customers which you wish to attract. “what’s your gimmick”?

you plan to be a take out business or sit in or both?
you have a lot of questions you need to answer and narrow down before you get your hands dirty with flour.
 
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Um Guys I’m having a hard time with this

I can make 100k a year off of 1 store doing 8k a week
Only because I do this currently

If I was pulling in 20k a week I would make well over 300k a year

You need a spread sheet to look at your numbers
 
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25% profit on sales? Congratulations… That makes you… unusual. I could do that if I had no rent. Otherwise, that is a number very few people can hit. It is certainly not one I would advise someone looking at the business to use for planning on 400K sales.
 
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So ya think ya wanna own a pizzeria?

We have owned our pizzeria since 1994. My husband had been in the pizza biz for about 10 years prior. I had been in the restaurant biz for a couple of years and going to college. We had a passion for pizza. We decided to go for it and open our 1st location. We became debt free, went to auctions and planned for several years because we knew this is what we wanted to do. I quit college and we used those finances to save. We did get a loan for about 80,000. My uncle let us live in a cabin (actually more like a shack) for free so we had no rent. We worked open to close for several years and barely made the income we had made prior to opening. Wondered what the heck we had gotten into. Lived off savings and aggressively paid off the loan. Several years in life was getting better. We were starting to really make some nice cash, starting to get some more time off. Enjoyed that for several years but still on call 24 - 7.

Then 4 years ago we decided to open a 2nd location. We figured we had a very successful first place all we need to do is duplicate it. We took out loans for everything.

We went in with managers so we figured our schedules could still be maintained. We were assuming it would start off where the original location currently was. We had forgotten about the necessary attention a new place needs. We had forgotten what it was like to be in debt. We had forgotten that it was a TON of work. So we closed the location after 4 years while still paying on the debt till the property sells.

It never occoured to us that the location would not make it, perhaps it could have but we were not willing to do what it took which would have been to be there more. I like time off, I like a regular paycheck. I like only having one set of problems which travels down a management team which has been in place for 10 years time we already invested.

Your current job has probably had years of experience and growing pains you have already learned…much like us in pizza but don’t be nieve to think just cuz ya wanna do it it will work. You will have growing pains otherwise everyone would open a pizza place and instantly make 100,000 with weekends off, holidays off, birthdays off, school functions, vacations and a regular paycheck.

Good luck!
 
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48.png
PizzaPazzo:
the pizza business is not rocket science…
Click to expand...
Don’t lower the bar with that old statement.

Most people fail at this business because they think “its not rocket science” so jump in the gold rush—it’s easy! The pizza business is easy and all that profit- wow!!! Just open your doors and they will come.

KK said it best a couple threads ago .

Not that many people will ever make a business like this successful and thats a fact.

Those of us that have the battle wounds and succeeded, would disagree with this business being simple.

pt
 
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Here is a break down of my spread sheet that i use for one of my pizza places.
Its fairly accurate, and the food cost i always guess higher than it is, normally its 32% or so.

Gross Sales 33500

Food cost 11725 35%
Labor 7035 21%
3% Franschise fee 1005
Payroll tax 703.5

Variasble costs 20468.5

Fized

Rent 825
Power 275
phone 250
propane 375
deliverys 837.5
cc fee 670
trash 100
Repairs 250
Advertising 500
Misc 500

Total cost 4582.5

Gross profit 8449
 
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Our costs are a little different on the fixed side. Here is what they look like for us with some comments:

Rent 825
Ours is $3,500 (+$2,625)

Power 275
propane 375
Our combined gas and electric averages about $800 (+200)

phone 250
Same for phone.

deliverys 837.5
More or less the same. Ours runs about $1,000 per month on average, but for a smaller month like this $800 is fine.
(+165)

cc fee 670
Ours would come in little less on this amount of sales. Probably about $525 (-150)

trash 100
Included in our rent (-100)

Repairs 250
More or less what ours would be. I budget $300 (+50)

Advertising 500
That amount would cover our yellow pages ad. Total marketing for the store is 5X that much: $2,500 per month.
(+2000)

Misc 500
Sure why not.

Insurance?
Delivery Insurance?
Those two are $500 a month for us. (+500)

Employee benefits (ski passes for managers), employee party $300 per month

All in all our profit on this amount of sales would be 60% less.
 
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I can live with your numbers they seem just about on par with mine, However i do not spend 2500 a month on marketing.

I dont even have a yellowpages ad. I think phonebooks are out dated and not worth the money at all. Now adays with the internet i think the phone book is like a diansour i have not used one in 5 years or more.

So when you all are saying it takes 3-5 years to turn a profit are you saying it takes that long to get all your money from start up costs back? on top of your salary? Cause 3-5 years is a dam long time, We just opened out 3 rd shop and have been doing 40k a month every month since the second month we opened. And i have easily made back my investment if i was to only take a 3-4k monthly salary, however i have been taking around 8k a month salary give or take, from the new store. This new store cost me about 25k to open, since i already had some equipment.

I think alot of you guys are scaring this guy out of the pizza business. Yes its alot of work, however if your a hardworker and a good marketer and on top of your game it should be rather easy. I can do pizza in my sleep
 
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Kamron-

I value your input on this, so dont take this the wrong way. With obesity as a problem as it is, and will continue to be, do you really think feeding people till they are sick is a trend? When I dine out, more is not necessarily better. When a restaurant offers something like that it lessens the value of the product in my eyes. IE, why am I paying 17 dollars for this first pizza, which is all I really want. Yet if I get 3 it goes down to $5. I know they will not sell a pizza for a loss, so basically they are telling me I am getting raped on the first one and the product really shouldn’t cost that much.

I do not discount my pizzas. I use very good ingredients and make a very good pizza. When you come into my restaurant, you know the price on the wall is what everyone is paying, because that is fair price for the best pizza I can give you.
Of course I do not have multi millions in sales a year, and have not been doing this long, so there are always ways to improve sales
 
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