Helping A Friend

[tmp]

Hello everyone,

I’ve been interested in business and marketing for a long time. I really have a desire to learn more and I’m hoping that I will learn from this forum (and site).

There is a friend of mine that owns a pizzeria, and I would like to help him out. I’ve come up with a lot of ideas, but I don’t know how practical they are. Instead of asking him a lot of questions and taking up his time, I would like to be much more organized. I’m hoping that by coming here I can get more organized and see which ideas are practical so that I can talk to him and help his business grow.

Now, let’s get started.

First of all, let me say he doesn’t have a website or a Facebook page. To start, I think it would be best to get a Facebook page up and running. What do you think about that?

I think having a Facebook page is similar to an email list, but it seems easier to manage. I think adding an email list in the future would also be a good option. Please let me know what thoughts you have about that.

I was trying to think about some specials to offer. I’m not sure if I am going about this the right way though. Initially, I was thinking to discount the pizza. There would be less profit per pizza, but the more that come in for the special, the more that would be made. For example, if an average of 10 pizzas were sold per day at $10.00, that is $100. If the cost per pizza was $4 (just a guess, I don’t know what his cost is), that would mean $6 profit, or $60 after the 10 pizzas. If he were to discount the pizza to $7.99, that would mean 16 pizzas would need to be sold to make the same as before. I’m thinking that the offer would bring in those extra 6 people. I’m not sure if I’m going about this the right way though.

This is how I got the $7.99 large price (as a special).

The regular price for a medium pizza is $7.99. He is currently offering that as an everyday special for $5.00. That is a 37.42% discount. If he were to discount the large pizza at 35%, that would make it $6.49 for a large. If he were to make it include one topping, and charge that topping at full price ($1.50), that would make the deal $7.99 for a large 1-topping. It would ultimately be the same discount as the medium pizza, just with a full priced topping. He normally charges $9.99 for a large pizza.

So, that was an idea I had. I don’t know how practical that is though. Do you think something like that would attract customers? I think a $7.99 large 1 topping pizza is a good deal.

I was then told that if he were to discount too much, people would start expecting discounts, and that’s not a good thing. So, I was thinking it would probably be best to have that as a temporary special, and not an everyday price.

I’ve read on the Internet that it was good to “increase the overall check”. I was trying to figure out a way to do this, while still making the customer think he or she is getting a deal. What do you usually do for this? I was thinking he and his employees could ask the customer if they would like to add something else to their order, such as garlic knots and a 2 liter bottle of soda for $5.

I’ve had many other ideas, but there are too many to post here. I’ve learned a lot from this site already, and I really appreciate it.

Thank you to anyone that is willing to help me and my friend out.

 

[NicksPizza]

1st thought . . . you are suggesting that reducing/discounting the price will raise business volume by 60%. That’s unsustainable at best.

A common strategy to raise ticket prices is to build “bundle” offers. It enciourages people to buy multiple items they may not normally buy together. EXAMPLE: 16" two topping pizza, 2 liter soft drink and cheese sticks for $24. You can give a slightly recuced price, but not required. Also offering two pizza bundle: FAMILY MEAL - 16" up to 4 toppings and 12" one topping (for the kids) for maybe a 10% to 15% discount.

Generally, cheap pizza is a fight we cannot win against the national chains . . . we are giving away money that isn’t really easy to give up. People will also start to equate our quality pizza with cheap econo pizza. Plus, 1. Existing customers generally need less discounting to generate new sales, and 2. New customers who come to cheap pricing have an alarming tendency to hop on the next good pricing when we raise to realistic levels.

Specials using uncommon conbinations or new features pizzas can work to generate repeat business from existing customers. New, ingenious, tantilizing, creative, healthy, fresher ingredients, are all beeter ideas to start with instead of discounting. Remember you are spending money to begin with in getting word out/marketing that this “NEW” whatever is happening.

 

[26.2MilesforPizza]

tmp:

I’ve read on the Internet that it was good to “increase the overall check”. I was trying to figure out a way to do this, while still making the customer think he or she is getting a deal. What do you usually do for this? I was thinking he and his employees could ask the customer if they would like to add something else to their order, such as garlic knots and a 2 liter bottle of soda for $5.

“Extra Cheese on that?”

Say this with every pizza sold. Its a great way to increase the ticket average. Customers love cheese and won’t mind paying a little extra for it.

Also, just put a piece of paper on the counter for email sign up. When we first started, I just attached a pdf with 4 coupons and BCC’d everyone. Very inexpensive, you just need to stay on top of it.

 

[system]

If your friend is already selling medium pizzas at $5 then he is trying to beat the big guys with cheap pizza and that is a market that your only answer to making any profit is super HIGH volume. If you sell a $5 pizza and you are only making a dollar or two profit…if that… and using low quality food to produce this item… I doubt he has the buying power or customer base to sustain this. So you sell 100 pizzas at $5 to earn maybe $100 or so? Instead sell 25 pizzas at $15 dollars and make the same! Even upselling the ticket with add-ons and toppings… you are still trying to make very little money on a whole lot of work.

I think if you want to help this friend I would first start with taking a look at the big picture and figure out which direction his business plan should go. With the numbers you talked about already in play…he is selling dirt cheap pizza right now. It sounds like he bought into the $5 pizza hut pizza deal a while back and forgot to stop the offer! Even the big guys stop these marketing tactics because they are not great money makers. They get cheap people in the door and then get them back later for at least an order when they realize the offer is gone. They can do this because they sell low quality high volume food and can carry stores that lose money with the other profitable ones. It is going to be very hard to increase profit when you already discount a pizza almost 40% to start with.

What are the competition doing in the area? I would normally say run your own operation based on your plan and not others…but this current plan will end in running out of money. Who is your target customer base? What is the demographic of the area? Number of households? Schools? How long has he been in business?

 

[tmp]

NicksPizza:

1st thought . . . you are suggesting that reducing/discounting the price will raise business volume by 60%. That’s unsustainable at best.

A common strategy to raise ticket prices is to build “bundle” offers. It enciourages people to buy multiple items they may not normally buy together. EXAMPLE: 16" two topping pizza, 2 liter soft drink and cheese sticks for $24. You can give a slightly recuced price, but not required. Also offering two pizza bundle: FAMILY MEAL - 16" up to 4 toppings and 12" one topping (for the kids) for maybe a 10% to 15% discount.

Generally, cheap pizza is a fight we cannot win against the national chains . . . we are giving away money that isn’t really easy to give up. People will also start to equate our quality pizza with cheap econo pizza. Plus, 1. Existing customers generally need less discounting to generate new sales, and 2. New customers who come to cheap pricing have an alarming tendency to hop on the next good pricing when we raise to realistic levels.

Specials using uncommon conbinations or new features pizzas can work to generate repeat business from existing customers. New, ingenious, tantilizing, creative, healthy, fresher ingredients, are all beeter ideas to start with instead of discounting. Remember you are spending money to begin with in getting word out/marketing that this “NEW” whatever is happening.

Alright, I guess my $7.99 deal was unreasonable. Thank you for helping me to realize that.

I’ll try to think of some bundle offers. I have his menu here, so let’s see what I can come up with, without reducing the price too much. I just talked to a couple people, and they didn’t really like the idea of bundling an appetizer with the pizza (they’re just two people, so I don’t know what the majority would be interested in), but it was suggested to me that a bag of chips could be included in the bundle. Let’s try that: $9.99 for the large pizza + $3.50 for the chips + $2.50 for the 2-liter = $15.99. How does that sound?

I’ll talk to him about trying something with an appetizer such as mozzarella sticks to see what he thinks. I thought about doing an “appetizer of your choice” so the customer can choose.

Thank you for your time and help. I really appreciate it.

 

[tmp]

26.2MilesforPizza:

tmp:

I’ve read on the Internet that it was good to “increase the overall check”. I was trying to figure out a way to do this, while still making the customer think he or she is getting a deal. What do you usually do for this? I was thinking he and his employees could ask the customer if they would like to add something else to their order, such as garlic knots and a 2 liter bottle of soda for $5.

“Extra Cheese on that?”

Say this with every pizza sold. Its a great way to increase the ticket average. Customers love cheese and won’t mind paying a little extra for it.

Also, just put a piece of paper on the counter for email sign up. When we first started, I just attached a pdf with 4 coupons and BCC’d everyone. Very inexpensive, you just need to stay on top of it.

That is a good idea (to ask if they’d like extra cheese). Have you had a lot of success doing that?

How do you make the coupons with the PDF? Also, do you just send them from a regular email address? I thought about trying Mail Chimp but some of the legal things made me think twice. I don’t want to risk breaking any laws from not having a special “unsubscribe” link or something. I guess I could also state to reply to the email if they no longer want to be on the list.

I don’t have Photoshop or Publisher if that’s how you make the coupons. I could always consider purchasing it if that would definitely help save money in the long run instead of going through another company to do it.

Thank you for your help. I’m learning a lot already.

(I hope I’m quoting these correctly. I don’t see a multi-quote option that some forums have. Maybe that is a Vbulletin thing.)

 

[tmp]

qcfmike:

If your friend is already selling medium pizzas at $5 then he is trying to beat the big guys with cheap pizza and that is a market that your only answer to making any profit is super HIGH volume. If you sell a $5 pizza and you are only making a dollar or two profit…if that… and using low quality food to produce this item… I doubt he has the buying power or customer base to sustain this. So you sell 100 pizzas at $5 to earn maybe $100 or so? Instead sell 25 pizzas at $15 dollars and make the same! Even upselling the ticket with add-ons and toppings… you are still trying to make very little money on a whole lot of work.

I think if you want to help this friend I would first start with taking a look at the big picture and figure out which direction his business plan should go. With the numbers you talked about already in play…he is selling dirt cheap pizza right now. It sounds like he bought into the $5 pizza hut pizza deal a while back and forgot to stop the offer! Even the big guys stop these marketing tactics because they are not great money makers. They get cheap people in the door and then get them back later for at least an order when they realize the offer is gone. They can do this because they sell low quality high volume food and can carry stores that lose money with the other profitable ones. It is going to be very hard to increase profit when you already discount a pizza almost 40% to start with.

What are the competition doing in the area? I would normally say run your own operation based on your plan and not others…but this current plan will end in running out of money. Who is your target customer base? What is the demographic of the area? Number of households? Schools? How long has he been in business?

I’ll ask him how the $5 medium pizza is selling. If there are a lot of people that get that deal often, would you still take it away? If so, would you try to find another way to make the customer happy? I think he has this deal for several months now so I’m thinking there are some that get it often.

The $5 medium pizza is the only deal that I know is a huge discount. He sells his large pizza at $9.99, and toppings at $1.50 each. So, I wouldn’t really say it’s a dirt cheap pizza place. The other pizzerias around are selling their pizza for $10.50 or so, which isn’t much more.

I’ll try to ask those questions to him and get back to you.

Thank you!

 

[NicksPizza]

tmp:

I’ll ask him how the $5 medium pizza is selling. If there are a lot of people that get that deal often, would you still take it away? If so, would you try to find another way to make the customer happy? I think he has this deal for several months now so I’m thinking there are some that get it often.

The $5 medium pizza is the only deal that I know is a huge discount. He sells his large pizza at $9.99, and toppings at $1.50 each. So, I wouldn’t really say it’s a dirt cheap pizza place. The other pizzerias around are selling their pizza for $10.50 or so, which isn’t much more.

What really is needed here is a bigger vision of how to market this store effectively. Making up quick offers on the fly will not be much overall help unless you have some way of figuring out if it is effective (that means how many people use the offer and how much added $$$ came in the door because of it). Losing money to make customers happy is a complete and total disaster waiting to happen . . . and not waiting very long.

What is needed is plan on how to generate more business over a longer period than a quick coupon is goona help. Creative offers, visibility, repetition of message into the marketplace, community involvement, identifying new potential customer groups, identifying large clusters of people to target with messages (office buildings, colleges, apartments, athletic programs), getting samples of ffod into the mouths of influential people who can tell lots of people about it (news writers, radio personalities, public safety people, local businesses, real estate agents, property managers, company secretaries, and the like). Review the menu and pricing to make sure it is profitable with cost of food for each and every item being basically 30% or less. Get rid if stuff that flat doesn’t sell, and bring in fresh new ideas to inspire customers again.

Suggestive sell every single call . . . be it extra cheese, ask if the need a soft drink, tried your shop baked cookies?, cheesesticks for an appetizer, salads for healthy addition to the meal, whatever they have. Every order needs a thoughtful suggested add-on.

Ask customers for written feedback on food and service. Ask some regulars to fill out a questionnaire about what they like, don’t like and would like to see if anything was possible. Offer a discount on their next order for helping. Ask if/when the business performed better, same if they know of when it used to be “not as good”.

Business and marketing for most of us are both about generating more revenues for the business. Every choice and action should be about increasing efficiencies, increasing profitability, increasing employee performance and committment to quality, increasing new customer attaction, increasing repeat patronage from existing customers, and BIG ONE HERE . . . increasing visibility and awareness in the marketplace.

80% of all revenues come from 20% of the total customer base. Your best chance for increased revenues of from existing customers. So, direct efforts at them . . . and find ways to add more customers so you havea bigger 20% to hit.

 

[goodmank]

My most popular offering is:

2 Large 1 Topping Pizzas and (1) Cheese sticks, Chocolate Cinnamon Sticks, or Bavarian Cream Cinnamon Sticks, and (1) 2 liter drink. $21.99

 

[bodegahwy]

Most popular combo: $21.50 for a 16 inch.
Next most popular combo: $23 for a 16 inch.
Order of breadsticks: $4
Two pints of Ben & Jerry’s ice cream: $12
Four 20 ounce sodas: $8

Best coupon available for this order: $10 off 2X 16 inch pizzas

delivery charge: $2.50

total with tax: $66

 

[tmp]

Thank you all for your help so far.

I am going to talk to him soon so I can gather some more information.

How would you go about create coupons yourself? It was said above about creating a PDF with the coupons on them and then sending an email out. I’m not sure how to do that. I do not have Adobe Photoshop, if that is required. Also, is it legal to send out coupons without having an “unsubscribe” link, or is it best to go through a company such as Mail Chimp?

Thank you.

 

[26.2MilesforPizza]

I just created a one page flyer with dotted squares around a couple of offers. I created it using Google.docs but you can use Word or any other program. Just download it as a PDF and attach it to your email. (make sure to BCC all email addresses so your customers do not see who else you are sending the emails to).

If your friend doesn’t have a work specific email, the easiest thing to do is just create one such as [email protected].

I don’t have any idea as to whether it is illegal to send a bulk email without an unsubscribe button, but just put a signature at the bottom telling customers to reply with “unsubscribe” in the heading if they do not wish to receive any further emails.

In the end, it may be easiest to part with $7 a month and get the basic package with an email marketing provider.

 

[bodegahwy]

Go to www.mailchimp.com and set up a FREE account for bulk email. You can send up to 12000 emails per month if your list is under 2000 addresses and the whole list management thing is taken care of for you.

We print box toppers 40,000 at a time. Full color comes down to about 2 cents each. We have four offers on it.

 

[brad_randall]

tmp:

Also, is it legal to send out coupons without having an “unsubscribe” link, or is it best to go through a company such as Mail Chimp?

Please go through Mailchimp or Constant Contact or Loyal Rewards. There can be seriously expensive penalties for violating the U.S. CAN-SPAM Act and any of those companies will either prevent you from making those mistakes or at least make you aware of them.

 

[aldismiller]

Hello everybody !
This is aldis Miller. I am also very much interested in learning new Business Strategies.
"Think out of Box " in a large niche, is a basic rule of establishing new business…

 

[boatnut]

Quote…
“The $5 medium pizza is the only deal that I know is a huge discount. He sells his large pizza at $9.99, and toppings at $1.50 each. So, I wouldn’t really say it’s a dirt cheap pizza place. The other pizzerias around are selling their pizza for $10.50 or so, which isn’t much more.”

Trust me, a large pizza for $9.99 is dirt cheap… A medium for $5 should be illegal.
Neither of those could possibly be pizza. They may have some form of dough, something on top that might have started out in life as a tomato , processed chopped,formed, pressed and rolled pellet toppings and a white covering that they call cheese but it is NOT pizza… If your friends product is in fact better than the above description, they are selling at a loss.

I am a firm believer that as independent pizzerias we will live or die on our quality, not our price. We CAN NOT COMPETE ON PRICE.

Others have said this store should not try to compete with the large chains. They are right. The large chains can buy what I call " Rabbit Pellet" toppings for a whole lot less than your friend. ( Selling pizzas at the price you state they have to be using low grade toppings/cheese ).They get an even better buy on their fake cheese. You can NOT compete with them on price. PERIOD.

Do your friend a favour. Suggest he/she increase the quality of his/her product/toppings and raise the price so as to be the highest price in town. Then brag about the quality of his product, not the price. There will be a whole lot less work, more time to actually spend on quality control/inventory control/costing/management etc etc and, surprise, more profit…
It WILL work.
It may NOT work if you are located in an economically challenged town or you do not
fully embrace the concept.
I have just opened our second location. Very proud to have the highest price in the area. Zero discounts. None. Our published menu is the price. Period. Menu doesn’t change. Opening specials? Easy, Best pizza in town. No free anything. Nothing “off” for pick-up. No price reduction on anything. Been open six days now. Have not spent one dollar on advertising and reached break even on day four.
Had somebody else open up three weeks before us less than two blocks away. Offers “all you can eat” pizza for $11.99 . We are absolutely smokin em. Why? Because they are trying to compete with the Little C’s down the road offering the $5 medium.
They will not win.

 

[NicksPizza]

reminder . . . this thread is 18 months cold and resurrected. The 2012 post is from a first-time poster.

Welcome, and jump right in.

 

[Liz_Barrett_PMQ]

Lots of great ideas in this thread for those just getting in the business. Don’t forget also that for even more ideas you can find all of the back issues of PMQ online anytime at http://pmq.com/digital/.

Good luck!

Liz Barrett
PMQ Pizza Magazine

 

[NicksPizza]

Absolutely! I should have been clear that I was suggesting people to respond to that new member and not the OP that was some time back. I was nowhere near connecting that thought.

The gentleman will definitely find a wealth in the back issues.

 

[tmp]

Thank you all for your help. I really do appreciate the assistance you have all provided.

boatnut:

Quote…
“The $5 medium pizza is the only deal that I know is a huge discount. He sells his large pizza at $9.99, and toppings at $1.50 each. So, I wouldn’t really say it’s a dirt cheap pizza place. The other pizzerias around are selling their pizza for $10.50 or so, which isn’t much more.”

Trust me, a large pizza for $9.99 is dirt cheap… A medium for $5 should be illegal.
Neither of those could possibly be pizza. They may have some form of dough, something on top that might have started out in life as a tomato , processed chopped,formed, pressed and rolled pellet toppings and a white covering that they call cheese but it is NOT pizza… If your friends product is in fact better than the above description, they are selling at a loss.

I am a firm believer that as independent pizzerias we will live or die on our quality, not our price. We CAN NOT COMPETE ON PRICE.

Others have said this store should not try to compete with the large chains. They are right. The large chains can buy what I call " Rabbit Pellet" toppings for a whole lot less than your friend. ( Selling pizzas at the price you state they have to be using low grade toppings/cheese ).They get an even better buy on their fake cheese. You can NOT compete with them on price. PERIOD.

Do your friend a favour. Suggest he/she increase the quality of his/her product/toppings and raise the price so as to be the highest price in town. Then brag about the quality of his product, not the price. There will be a whole lot less work, more time to actually spend on quality control/inventory control/costing/management etc etc and, surprise, more profit…
It WILL work.
It may NOT work if you are located in an economically challenged town or you do not
fully embrace the concept.
I have just opened our second location. Very proud to have the highest price in the area. Zero discounts. None. Our published menu is the price. Period. Menu doesn’t change. Opening specials? Easy, Best pizza in town. No free anything. Nothing “off” for pick-up. No price reduction on anything. Been open six days now. Have not spent one dollar on advertising and reached break even on day four.
Had somebody else open up three weeks before us less than two blocks away. Offers “all you can eat” pizza for $11.99 . We are absolutely smokin em. Why? Because they are trying to compete with the Little C’s down the road offering the $5 medium.
They will not win.

This seems to be a good idea, but I don’t see how a change this big would work when they already have customers that are happy with their current product. If they were to completely change all of their ingredients, there is a chance their current customers will be upset since they liked the way the pizza used to be. I would think maybe there could be another option such as adding a new pizza with different ingredients, and gradually switching to new ingredients if people like it. I’m not sure if that would work, having multiple ingredients, different sauce, making different dough, etc. If you think it is a good option and not too much of a hassle to add a new kind of higher quality product in addition to the current product I will try to mention it.

What are your opinions regarding text messaging (SMS) marketing?

Thank you again for all of your assistance.

Have a good day.