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Drastic Changes

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RichM

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I don’t need to tell any of you about how tough things are. I work to pay bills, and employees right now and I am finding it hard to even do that. All of the independents in town are Greek or Bar room pizza, mine is Handtossed Italian style.
I offer a 12 inch and a16 inch medium and extra large. I have subs , salads, pasta, apps, and buffalo chicken. I am open 6 days a week and do free delivery. What I am thinking of doing is opening at 4 and closing at 10. Cutting everything out of the menu except pizza and wings. I do very little lunch buisness due to HUGE layoffs at the buisnesses near me. I am located in a fairly bluecollar area but on the outskirts of town. I do very little walk in buisness. Making this move cuts my overhead in half and reduces the number of employees. I would also reduce the sizes of my pizzas to 10 and 14 inch to lower the food cost on them. Am I nuts?
 
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i can see getting rid of items that aren’t movers for you, but making smaller pizza at the same cost at the same time may be too much all at once
 
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Cutting unproductive menu items makes sense, especially if it allows you to drop items from what you have to inventory.
  1. Make sure they really are unproductive. Do they tend to be stand alone sales items or add ons? Add on sales are more profitable than they appear.
  2. Same idea applies to cutting hours. What are your total sales during the hours you are thinking of cutting? Would you have to have someone there during all or part of that time anyway to do prep? If you have somebody in the kitchen anyway, you might as well answer the phone! Even if you only do take-out during the day and start delivery at 4PM you might find that it pays. You could even offer a special that represented your savings from not having to deliver. I figure that delivering an order costs at least $2 above my $2 delivery charge.
  3. Have you contacted your insurance agent to ask about $$ saving options? What about your food choices? Are you slicing your own vegies or paying extra for prepped items? Are you shopping your food suppliers prices with the competion? Have you talked to your Landlord about a rent reduction? (believe me, they will value a tenant more than a vacancy if your area is as hard hit as it sounds) How many phone lines are you carrying? Do you need them all? What about that fax line?
  4. Are you negotiating your advertising costs? Most small businesses are paying a lot more than they need to for the ads they place. Right now, ad media is as cheap as it has been in my 11 years owning my store. If your rates have not gone down, you are missing significant $$s. BUT… I would not suggest pocketing that money, I would go to the media you use and tell you are willing to spend the same amount of money, but that they have to give you 30% more placements for those dollars or you will move to media that will.
Can you raise the price of things like soda by 10 cents, salads by 25 cents? Customer price concerns tend to be focused on the main item.

Last, I suggest that you do NOT go to smaller pizza. I would be willing to bet that if you work on it, you can find 10-30 cents cost savings per pie if you put your mind to it.
 
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bodegahwy:
I would be willing to bet that if you work on it, you can find 10-30 cents cost savings per pie if you put your mind to it.
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I don’t know what you are currently doing for delivery pizza boxes, but at the Pizza Expo (or maybe it was Napics - those show floors all bleed together) I saw a company that places ads for national companies (like cable and repair services) on pizza boxes and sells them to shops dirt cheap. If you’re not branding with your boxes, this might be a nice way to cut a major cost of delivery.

I know I saved some money in my Columbus, IN store in the months before our lease ran out by cutting the lunch hours to the bare minimum 11am to 1pm. Same situation - massive layoffs in a factory town. We still caught the majority of our previous sales and got the prep done just the same, but we eliminated 2-3 otherwise unproductive hours.
 
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My recommendation would be to take off things you don’t sell or sell very little. Try to work on items such as lowering your rent, and any other costs that can be changed without affecting your product. If you change your product by charging the same for less, I’m not sure the customer will be wanting to come back. They may feel that you’ve cheapened your pizza in a bad way.
 
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First I would never sacrifice the QUALITY of my pizza. I was looking to reduce the size to also reduce the food costs. Saving .30 cents on a pizza really wouldn’t help me. I cut all veggies by hand. I make my own sauce, dressing, dough, and meatballs. I do all of the prep myself before I bring in employees to work. My rent is dirt cheap and my landlord is my accountant as well. My wife works full time to support us and comes in 3 days a week to help me. I have cut down everything that could be cut. I tried charging for delivery and lost 30% of my delivery customers. I am not sure what else to do.
 
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RichM:
First I would never sacrifice the QUALITY of my pizza. I was looking to reduce the size to also reduce the food costs. …I tried charging for delivery and lost 30% of my delivery customers. I am not sure what else to do.
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Just to confirm - you are thinking of reducing the sizes but keeping the same retail price?

That might be fine - and I’m just thinking aloud here - but if your customers are not willing to pay a delivery charge, why would they be willing to pay the same price for a smaller pizza?

Since I don’t know your pizza, I don’t know if there are any substantial money saving changes that could be made that would “lower” your quality such a degree that your customers wouldn’t even care. I suspect there is - and I suspect that your customers are not as concerned about your current level of quality as you are.

Again, I have no idea - but don’t put yourself out of business or into the poor house as you tout the “quality” of your pizza.
 
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Are you zealously portioning your food?..Cheese can hurt you bad if not…

Sounds like you are caught between a rock and a hard place…And based on the current state of the economy it will be very hard to raise your prices and/or reduce the size of your portions…All you can do is a very small adjustment in prices and fees…And that will be tough sledding…

You say you lost 30% of your delivery business when you imposed a fee…I know that hurt your gross sales but what did it do to your net?..And did you endure for a while to see if your marketing efforts could bring some of it back?..
 
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Portion control is in olace and strictly enforced. I am not raising prices I am lowering the price. Looks like a moot point at this time as I think I am pretty well finished. 30% loss of buisness when 2 dollar fee was imposed. That was the net!
Thanks for all of your suggestions. Need to pull the plug.
 
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Before you pull the plug, ask yourself: “Did I do everything that I possibly could do to improve sales and give my business a chance to succeed?”. Are you door hanging? Email marketing? Sending out free samples to businesses? Mailing postcards? Are you box topping - bounce back coupons (with 2 weeks expiration date) on every pizza box?

I only ask this because you don’t want to have any regrets and what ifs. I’ve been in your position before and know how discouraging it can be. Try taking one last chance at saving your business. If you’re in an area where you can door hang - try that first. Print up some kind of letter with an offer for something like FREE bread sticks, Free 2 liter, and a FREE salad (if you do salads) or 2 free toppings with the purchase of a large pizza. Also mention FREE delivery. Take this letter and tri-fold it with your menu and staple a rubber band to it. Gather as many family and friends that you can and hit the pavement every day door hanging for as long as you can. If you can hit 1,500-2,000 houses a week, you will start seeing results. This will get the ball rolling and bringing in additional money so you can start doing mailings as well.

If you tried everything you could and are still forced to close the doors, at least you won’t have any regrets and have to wonder what if? What ever route you take, good luck and keep your head up. If you need help, there are a lot of experienced people here in this forum that will help you.
 
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What kind of lease obligations will you be left with?..This has to be figured into you calculations when determining the cost to close…Sorry to hear you might have to pull the plug…
 
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If plug is not yet pulled, please continue to read

Are you door hanging? We’ve had a tremendous boost in sales through a simple “walk the 'hood” program that generates zero increase in labor costs. I can’t give specifics because my competitors read this forum (but don’t contribute), so shoot me an PM if you want some more info. Actually, that goes for any established TT member.
 
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A friend of mine who owns a shop in Texas had a similar problem. Lunch sales for him were almost non-existent,while dinner sales especially on the weekends were booming. So what he did was to first cut his business hours on weekdays to 4 to 11 and weekends 11to 11. On the weekdays he comes in a hour early to make the dough and do the prepping himself. That helped him cut costs on utilities and payroll. He dropped his delivery charge from $2 dollars to $1 and raised pizza prices by at least 30 cents. He says he didn’t do anything to change the recipes he had been using and claims that sales for dinner are pretty high now.
 
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knightwing1995 said:
A friend of mine who owns a shop in Texas had a similar problem. Lunch sales for him were almost non-existent,while dinner sales especially on the weekends were booming. So what he did was to first cut his business hours on weekdays to 4 to 11 and weekends 11to 11. On the weekdays he comes in a hour early to make the dough and do the prepping himself. That helped him cut costs on utilities and payroll. He dropped his delivery charge from $2 dollars to $1 and raised pizza prices by at least 30 cents. He says he didn’t do anything to change the recipes he had been using and claims that sales for dinner are pretty high now.
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I am in texas also local economy hit hard by several factors, wondering if your friend is still open and how his hours of operation have worked out (I open at 3 and considering doing lunch, but I am carryout / drive thru only)
 
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Just be prepared mentally for the drop in sales that will follow. I’m not saying you don’t need to do it, but it will lower sales at least at first. It is very easy to fall into a trap of second guessing your decisions if you are not mentally prepared.
 
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