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Hostile Takeover

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PIZZANEO

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This might be a funny subject for some of you, but some may appreciate the insight gained. I am planning to open a shop in the next 6-12 months. Rather than buy or build I would like to move into an existing location with all nec. equipment.

I am currently researching all facets of the pizza / restaurant business from a business person’s perspective. I posses all the drive and creativity on the cuisine side, but realize that business must come first.

In my target market there is a shop currently operating that in my belief could be doing 2-3 times the business it currently does. There are a few road blocks preventing this from happening. 1 the product is less than stellar, being a food enthusiast first and foremost I will not eat there. The service is fine, but that cannot make up for sub-par cuisine. 2 the owner is a delusional fool wih respect to the quality of his product

Long and short I believe that the shop must be in the red most if not all of the time, I cannot figure out how they are staying afloat. They must do a large amount of delivery because the place is always empty.

I would like to approach the owner and make him an offer to buy the business. I believe that he leases so I would really only be purchasing the equipment and location. I would like to get in as low as possible. What can I do, or say to get to my desired outcome? I believe there is a tremendous oportunity in this location that is being wasted - What is my attack plan?
 
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I think it is a GREAT idea- you may want to quit using the term “delusional fool” no matter how true. You may have someone that is praying for an exit strategy. As far as price, you should carefully determine what the shop etc. is worth to you. As you probe for pricing, keep that figure in mind. At the end of the day you can alway move on- the current owner is stuck with a money losing shop.
 
Re: name calling I would never communicate that sentiment. I suppose I need to put together an equipment list that is similar to his to establish what his place is worth to me, plus the brilliant I mean so so location needs to be factored in. How does one consider the worth of a fialing business if it truly is failing - certainly not by potential right?
 
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I would start by contacting the owner and seeing if they are even interested in selling. If they aren’t interested you would be wasting your time trying to figure out what it is worth first without even knowing what the sales are, what shape the equipment is in, what the lease looks like, etc.
 
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Just because a place always looks empty, doesn’t mean it’s failing.

I do about 80% takeout. People are literally in and out in 2 minutes. The only time they line up is on Friday & Saturday.

During the week, my place almost always looks empty, but I’m not going anywhere.
 
Obvously there is a the chance that they do a huge take-away / delivery business, but after months of watching the pizza price tag on the sign outside drop month after month to some where near the $4.99 mark - I find it difficult to belive that business is growing.

I have not ordered in some time so maybe it has improved, but the last I heard it was the same old story - owner spouting off about no other pizza has anything on him - even NYC!!!

I’ll be contacting him soon to see if he wants to talk.
 
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“PIZZANEO” said:
There are a few road blocks preventing this from happening. 1 the product is less than stellar, being a food enthusiast first and foremost I will not eat there. The service is fine, but that cannot make up for sub-par cuisine. 2 the owner is a delusional fool wih respect to the quality of his product

Long and short I believe that the shop must be in the red most if not all of the time, I cannot figure out how they are staying afloat. They must do a large amount of delivery because the place is always empty.

/quote]

Dont be to quick to assume things cause ya know what happens when you do that. We have a burger joint in town that most people would look at like you are looking at this pizza place yet the guy does very well you would think he would clean his place up raise his prices but nope he keeps doing the same thing day in ans day out and keeps raking it in so the only way to know for sure is to aproach him and get his books. If it is bad he might just want to sell!
Click to expand...
 
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Neo, I have several stores which do less than $5000 a week. I used to think sales that sales that low were pathetic, until I changed my focus. I started building stores with used equipment for about $5 to $10,000.

I can build a pizza DEL/CO with maybe 10 seats of dining, in as little as 600 square feet. I usually find rents as low as $100 a month, but the average is $400 a month. My Fixed Operational Cost runs about $1000 a month, Plus $2000 for a salaried manager, who I also pay 40% of profit. My food cost runs about 33%, and my labor runs about 22%, I spend $1000 a month on advertising, and I usually donate another $500 to $1000 to the local PTA’s through “School Night” promotions.

Most of my stores look dead all the time, I am still a little unnerved about it. I have some giant swings in sales one week a store will be $6500, and the next week it is $3500. but I maintain my sanity, cause my overhead is really low. At $5,000 a week average, my stores profit about $1500 a week, or $6000 in a 4-week period. I am happy, my managers make a $2400 bonus check, with little or no stress, and my employee, and customer retention, and frequency is incredible.

I set my prices at the top of the market($22.00 for 16" 5-topping), and then discount down inside the mainstream market. My best offer is, BOGO on Sun & Mon, and Buy One, Get 2nd Half Off, we upsell alot of sides. Which raises my food cost generally, but my average ticket is about $35.00… I only make about 140 orders a week. Shoot I used to make 140 orders an hours back in the day, but I was only making pennies on every transaction.

I have learned to slow down and focus on the CUSTOMERS NEEDS, and send out a perfect orders every time. No more Forgotten toppings! Or Cokes! Or Sides! Or Condiments!

If you provide a quality product, and excellent service, and you maintain a good image, you will never loose a customer on PRICE.

Moral of my response!
Build your own store for much less than buying out your competition, and find yourself 500 regular customers, and another 1000 less regulars.

Focus on Low Overhead, and on Product, Service, & Image, Not on Quantity & Low Price. Focus on your making your Managers rich, and meeting the needs of your community, and you will be a very rich & happy man!!!
 
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Most people would suggest buying a closed and failing shop and it only makes sense- the equipment, layout etc is in place. However I would never rule out the way that you are suggesting as a way to get into business. I certainly appreciate the merits of both methods.

I will say that because of the style of pizzas that I create will most likely
hover around the mid to high mark in my market. A consistent high quality product is my first goal selling enough to make a living is my second.

I live in a place where there are people who will spend more for better, but I am also surrounded by broken tongues, underexperienced tongues, and the more must be better crowd. Like some of the higher end food places before me part of the job will be to expand the minds and palates of people who come in for a pizza - it just has to be handled in a ginger way. I appreciate your input and would like to hear about how you design one of your average shops.

Thanks
 
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I also forgot to add, when you buy someone out who has a failing business, you need to consider why he has a failing business.

If he has good product, but he is just manages his variables poorly, he might actually have some GOODWILL worth purchasing.

But if the product is terrible, like you say, and the owner is an arrogant bastard like you suggest, then I would run away. You will spend allot of time and money trying to turn the business around, and change people minds about the location, and its product, and/or managers.

When you build a store you need to determine how much of an area you want to service. Whether you want to offer delivery, or not. I focus on delivery, but allow enough room for a couple of families to come in and dine.

In my neck of the woods I can usually locate 600 sq ft. for about $300. mo. Here is a list of items you need.

— Dbl Stack of Lincoln Impingers, either 1000’s or 1100’s ($3k ~ $7K)
1000 have a capacity of 60 pies per hour each yet they have a very small footprint as opposed to the competition(i.e. Middleby), The 1100’s have a capacity of about 20 pies per hour each, and they have about half the footprint of the 1000’s, and they used have the electricity and/or gas or the 1000’s(low overhead)

— Hobart 60-quart Mixer preferably 1 hp or better. ($2500 ~ $4000)
Alway get a strong mixer, and make small batches. I make 50lb batches of dough in my mixer, and the mixer does it almost effortless.

— 10’ Makeline ($1000 ~ $2000)

— 2 ~ 2 door Refrigerator (Delfield or King Air) ($1000~$2000)
you could buy used household refers for much less but they hold much less also, it depends on your local health district.

— 1 ~ 2 door Freezer (Delfield or King Air) ($500 ~ $1000)
you could buy used household Freezers for much less but they hold much less also, it depends on your local health district.

— 6 ~ 72" x 36" Stainless Steel Prep Tables. ($500 ~ $1500)
Take 2 and build a cut table out of them, use a little plywood, and some simple ingenuity.
Take 2 and create you front counter
Take 1 and used it for prep
Take the last one and use it for your slap table.

— 1 ~ 72" x 48" Storage Rack & 2 ~ 48" Overhead Heating Strips ($500)
Use this to hold pizza while waiting for delivery, or pick up.

— 1 ~ 30" x 24" double tier Henny Penny Hot Holding Display Case ($500)
Allows you to sell pizza by the slice, for the impulse buyer, allow people to try your pizza out without divest a large investment the first time out.

— 2 ~ 48" x 30" tables, and 10 matching Chairs. ($500 - $1000)

Buy about $500 in smallwares, i.e. screens, paddle, dough scraper, dough docker, 4 oz. spoodle, Sauce buckets with lids, 6" metal 1/3 pans, 6" metal 1/6 pans, Mandolin, Dough Trays, Etc. Etc.

Determine your menu, hours, delivery area, purveyors, initial advertising campaign, create some signage(A-board, Vinyl Lettering on the Windows)Purchase you opening inventory, hire 2 dedicated managers pay them a livable wage and give them incentive like 20% of Profit each.

Find a good trustworthy bookkeeper/CPA, preferably someone who is much older than you, my bookkeeper in 70, she has an assistant that is 38. But the age is important, the older they are, the more value you will get out of them. Let her do your Payroll, and have her create a monthly P & L, and balance your books for you. Keep you own books if you like for the first six months or so just to double check there work.(and develop trust) Don’t ever let anyone have signing ability on your checking account, not even your spouse or your bookkeeper. List your spouse, or bookkeeper, or nearest relative as your “Payable Upon Death” so that they can access the funds if you leave mother earth a little early.

Open your doors with you and your managers. If the business climbs above $3000. a week. you will see the need to hire additional staff so that you don’t burn out.

Hire 1 PT inside/cook for every $1500 in sales above $3000.

Hire 1 PT delivery driver for every $1500 in delivery sales.

Most of my stores have 1 manager(salaried), 1 Asst. Mgr/FT Driver (hourly), 1 PT Inside, and 2 PT Drivers.

Good Luck.
 
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My only questions is about those ovens - I am sure they can do 60 pies an
hour, but are they capable of cooking my artesian style round pies with the crsipy bubbly crust like a deck oven with 500-600 degree stone floors?

I don’t know if I ever tasted a pizza cooked on this type of oven - in these parts there is only one or two places out of 50 or better that use conveyor ovens.

The highest dollar shop - chaps straight from NY have overcome the deck oven issues by having 3 sets of double decker BPs LOL, but that is neither
space or cost effective from a start-ups perspective.

cheers
 
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I just wanted to say that I am totally impressed with your answer and your way of looking at the business. Wish there were more out there with your attitude!
 
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Thanks for the kind comments!!!

I am not sure what you mean by Artesian Pizza, But my assumption is your referring to the Thin Crusted Pizza made in Primarly in NY.

My pizza’s are Chicago style, a much thicker crust, however I do occasionally make a thin crust pizza for the occasional customer, and the pies come out just as well.

I am sure you could call Technical Support at the Lincoln Oven Company
http://www.lincolnfp.com/general.asp?ar … tactus.xml
and they could tell you how to get the best performance out of your oven for the particular crust that you are running. I am certain there are just as many thin crust pizza companies using conveyors, as there are thick crust pizza companies. The reason for a conveyor is to create greater consistency in the bake of your products, and it is not as labor intensive as a deck oven. This labor saving, coupled with less mishandled product, should only increase your savings, and customer retention.

Consistency is so important. You ever go to a McDonalds and order your usual. And then a week later you stop at a different McDonalds two miles away, and order your usual, and it is completely different, or it is cooked a little off. Doesn’t that just ruin your experience. You were all primed for that great experience, and it get detroyed by the lack of consistency.
Well the same thing can happen in you restaurant. One week the customer gets a perfectly cooked product, and next someone newer is running the oven, and the pizza is just a little off. You won’t have that problem with a properly maintained conveyor oven.
 
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tommie,

I doubt this guy eats at McD’s…lol after reading his post!

Also, do you have a website?

Thanks!
 
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  1. LOL - I have eaten at McDonalds… Twice in 2006!
    I do thoroughly appreciate the message you are sending as consistency is one of my main gripes re the current crop of pizza shops that I have tried. I go in its pretty good tell my wife bring our friends then its S^&t and we look foolish.
    Sometimes the inconsistencies are minor, but they make the differene between an edible pie and a glorious dining experience.
 
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