FC and labour problems

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A pizza place which my sone has been working at for three years has been given to him by my uncle, he’s had enough and wants to retire. I need some advice as to whether it’s worth taking on or not.

They currently sell Pizzas, fried chicken, grilled items and subs. Currently open 7 days 11am-11pm. Uncle was working flat out 7 days, sometimes 11-11, for the last five years. Sales are currently at $14,500. Problem is labour (including delivery drivers) is at 35%, FC is at 40%, Utilities/Tax come at 20%, leaving 5% for improvements/advertising/owners cut. The reason for the high labour is the amount of different items they offer, there’s a lot of prep work. Carry-out is 75%, Delivery is 20% (total weekly deliveries of 180 with three drivers) and dine-in 5%.

Any suggestions as to whether this store could be a winner for us?
 
$14,500? A week? HECK YEAH!

You would do well to go over everything with a fine tooth comb. You may find a line that brings in $2k a week and cost $3k to do… cut it.

Seems that delivery is an area to improve. 20% is nothing. 75% c/o tells me that you have a good product, but poor delivery service.

Most people here would kill to start at $14,500 a week in sales.
 
I’d cut the chicken first thing. Frying is a PITA, there are lots of places doing it, and to do it right seems to be not too cost vs sale price effective. Plus, it takes a good chunk of space, adds a lot of smell, and isn’t exactly danger free. Concentrate on pizza and sandwiches, and find a way of increasing delivery. Use people to do more than one thing on a shift–dishwashers also take phone orders and/or drive; drivers do dishes and prep; cross train and multi task.

my tuppence worth.
 
More information coming through…

They’ve been running some crazy offers for a while with upto 70% FC, such as two 12" 5-topping pizzas for $7.00. They cook their own roast chicken and mince topping, which can have a shrinkage of 30%!
There are 2-3 other offers like this with the fried chicken and subs.

There’s no or little portion control, one guy maybe putting 7oz cheese on a 12" while another puts 5oz!

Deliveries on a busy Friday/Saturday can take upto 90 mins with three drivers covering a 3-mile radius.

Would it be better to decrease the FC or increase prices?
 
Crazy offers… Depends on what you hope to accomplish with the offer. In general, that is probably too aggressive to be used on a regular basis. At 70% food cost, you would be better off sending the Customer a dollar with a note thanking them for NOT ordering!

Shrinkage… Explain to employees that eating free food IS theft. Put inventory controls in place, and hold managers accountable. I usually give one warning on free food, then it’s “hit the road”. Theft is theft, and you need to be tough on it. Of course a generous employee meal program could help a lot.

Portion control… Get scales, make employees use them. It doesn’t take long for a $300 scale to pay for itself IF you use it.

Deliveries… Too long

FC vs price… can’t answer that until you fix other problems. If your food cost is high, how much is shrinkage and portion control? Your recipe might be perfect, but if you don’t control the operations…
 
90 minutes isn’t too long if 1) you’re really that busy and 2) the product is really worth it, which if people are willing to wait it must be. But, 3 drivers for a 3 mile range? That’s a lot of deliveries in a REALLY small area for a 90 minute wait, unless there’s other problems, like goofing around on delivery runs.
That amount of shrinkage is bad. It’s likely that getting that pre-cooked will save money, even if it’s a bit more expensive up front. Weigh the final product, see how much is really there…calculate the actual cost per cooked quantity, then add in labor etc.
 
Well i’ve just been reading Big Dave’s article on portion control and have told my son to give the portion cups a go. We’re gunna test them over a week. We were going to get a scale but i couldn’t be sure the employees would use it properly and portion cups seems faster anyway. Even though getting (all 4oz) 200 cups of cheese, 200 cups of chicken and 200 cups of mince ready every day seems a lot of work!
Anybody tried the portion cup method and found it useful? Did it slowdown orders?

Most of our staff is cross-trained, so the portion cups should reduce the FC rather than free-throwing, even though the staff say they can free-throw accurately!

The offers i listed in my last post have been running all day every day for the last 24 months, so it’s not really an offer!

I’ve also found that they have a large walk-in, but are also running two storage coolers and a freezer. They also have 3 AC units. The utility bills seem very high as well.

Looks like this place needs a makeover, even though sales are at $14,500!!
 
jimmyfloyd:
Looks like this place needs a makeover, even though sales are at $14,500!!
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Looks to me like all it needs is a good MANAGER. Your son sounds like a hard worker. If he puts his mind to it I bet he could squeeze out 20% of that $14,500 a week in cost savings and efficiency.

Good luck!
 
Well the portion control isn’t going down too well with some employees as i’ve explained. I’ve started a new thread about the portion control.

One problem my uncle found was that as FC and labour were so high, he couldn’t afford more workers. Currently they have 10 workers, including my son. When they did add a couple of workers, there was no money left after paying labour, FC, taxes and utilities every week. What do you do in this situation? How can we afford to hire a manager if there’s no money left?

The current split of sales are: Pizza (40%), Fried Chicken (15%), Subs (15%) and Grilled items (30%). eupher was suggesting we drop the fried chicken but won’t sales drop because some customers buy it as part of the combo deal. A lot of our customers like that fact they can get something for all the family in one place rather than ordering from 2-3 different places.
 
Well the portion control isn’t going down too well with some employees as i’ve explained. I’ve started a new thread about the portion control.
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Come to terms with the fact that you WILL loose employees. It is a fact of any transition. The employees that are there are there because they were comfortable with the way things WERE. You are changing things. If an employee worked there for a year, did things they way they did them, and still got paid, they probably can’t see why you would change things, and don’t care. Fact is, they make the same no matter what, right?

Second, employee perception is that at $13,000 a week in sales, you gotta be making $13,000 a week to take home. They just don’t get food labor etc. I once tried sharing P&L’s and a driver quit because it wasn’t possible that I was loosing money at $9,000 a week. He felt I was cooking the numbers as a way to say “no” to a raise.

On the manager issue, it’s the classic chicken and egg. If you can hire someone that can help you run more profitably, can you afford NOT to hire them? No one can answer that for you, but keep in mind, it is not hiring A manager, it is hiring the RIGHT manager that will make the difference.
 
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