Estimating sales from large apartment complex

[ryank]

Hi. I’m looking at a location in a major city where I can be the only pizza shop in a residential complex of 2,200 apartment units. It also is surrounded by several business high rises so there would be a decent lunch crowd too. Do you think the 2,200 apartment units would support a pizza shop with a $5,500 rent? What would be your guess on the volume of sales in the evening with pizza if 90% of my sales comes from these apartments?

 

[Piper]

How big is the place and what do the demographics look like outside of the apartment complex?

That’s an awful lot of rent (other things being equal) if your only customer base will be 2,200 customers potential customers.

 

[ryank]

Piper:

How big is the place and what do the demographics look like outside of the apartment complex?

That’s an awful lot of rent (other things being equal) if your only customer base will be 2,200 customers potential customers.

The size is about 1,700 square feet. There are high rises adjacent too, maybe 25,000 office workers within a few blocks, so that would be the customer source for lunches.

Demographics for lunches is your typical office worker in a city, and evening in the apartments are middle to upper class (most make between $60k-$100K).

Right now I’m guessing 20 $5 transactions for morning sandwiches, 150 $7 transactions for lunch, and 40 $10 transactions for the evening…summing to $1,500 per day during the week. Adding in 200 weekend pizzas would be a total of $500,000 in sales per year (estimating rent to be about 12% of gross sales).

 

[pjcampbell]

where is this… in a city?

 

[indie_pizza]

How close is your nearest competitor? The first thing that comes to mind when I see people post these scenarios here is: “Why aren’t the big three already there if it’s a lucrative market?”

 

[pjcampbell]

Maybe big 3 do not work where there is a high rise full of well to do people making 60-100k a year.

It sounds like a good idea. Everyone loves to have “their” own little place they can always grab a bite so close to their apartment.

 

[Pizza_of_the_Month]

pjcampbell:

Maybe big 3 do not work where there is a high rise full of well to do people making 60-100k a year.

I personally would not classify 60-100k as well to do. You might want to look closely at where they are getting food now. Maybe talk to as many tenants as you can. Talk to the management of the apartments also.

 

[Bubba]

The typical rule of thumb on rent is 4-10% of net sales. If you are at 12%, you will find it extremely difficult to be very profitable with this rent amt. You also are selling a low cost product, which also relates to lower profit dollars.
Any chance on having rent concessions?
Typically, most people only eat pizza about every 40 to 60 days.
Food for thought.
Bubba

 

[pjcampbell]

I guess it depends. The OP will/should know his market better. I think 100k is decent money, depending also on where this is and if this is singles and couples or families making 60-100k. For me when I think city + hi rise I immediately think singles and couples not families but I may be wrong.

40-60 days sounds like a long time to go without pizza!!! Everyone know I know eats it 1X a week.

 

[Bubba]

It does sound like a long time. However Dominoes avg time between customers is 38 days. Others I have spoke with is around 48 to 52 days.
Of course you have those that come in every week and others who are hit and miss.
I do a database mailing monthly for the previous 2 months. It is amazing the response you get from a simple “Thank you” mailing.
I’ll tell you this. If all my customers in my database ordered pizza once a week, I would be typing this from a lake house on the river while sitting on the bank with a fishing pole in one hand and a fried bologna sandwich in the other.

bubba

 

[Pizza_of_the_Month]

People do in fact eat pizza at least every 10-14 days. They just don’t eat at the same pizzeria every time. So if you are good at marketing you can enjoy your lake house. :lol: