How long does a pizzeria take to become Profitable

[Nick1969]

I took over a pizzeria from dominos it was run down from privious owner and now its been 5 months and paying bills in the buisness but no profit
My question is should i be patient and wait a year does it take that long or is it supposed to happen sooner I have 8 other pizzerias im compiting with
in area with 20 thousand people.

 

[royster13]

If you are paying the bills after 5 months I would say you are doing very well…Work hard, continue turning out a great product, market, market, market and profits will follow eventually…

 

[NicksPizza]

Totally rough numbers I trot out periodically. NRA says each household will spend approx 17.85 per month on pizza. 20,000 people is about 9100 households (2.2 people per) in round numbers:

17.85 X 9100 = $162,435 estimated monthly pizza market

162,435 / 9 shops = 18,048.33 in fantasy ‘even shares’ (someone tell me if my numbers are off somewhere)

That would give you a rough benchmark of what an ‘average’ shop could do in that town. A strong shop could easily eat some market share away from the truly average joints. Exceptional managers with great product and service should do still better. Seems to me you have a potentially saturated market for 20,000 people. I suspect that the market is either broader than that, or there is a big draw from outside the circle of influence you are envisioning.

There are weak players out there that can be pirated for market share. An effective marketing campaign will grow sales, probably quickly. That does not mean that you will turn ‘profit’ in the higher food cost and fuel cost world we work in today. If you are playing in the “multiple pizzas for really low price” pool, then you gotta get huge volume numbers to get into good profit range. 20,000 people with 9 players could make that a challenge.

 

[eatmorepizza]

That may be the NRA numbers for pizza…most of us are in the QSR segment, meaning many items in addition to the “core” pizza sales. Much more homework is needed to determine the value or potential of a particular area.

 

[bodegahwy]

Much as I like numbers and use them in evaluating my own business, the most important thing I see in your information is that there are 8 pizza joints in the market.

A market where 8 pizza places can survive is one where a good operator will do fine. There is enough business. I never assume that the business will be split evenly. In fact, I would assume it is not. It may well be possible to get 25% or even 35% of the business rather than half that. It may also be possible to beat the averages by attracting customers that don’t order pizza for delivery since most shop deliver a lousy product or to increase the $$ by justifying higher prices with quality or interesting add-on sales.

I would not suggest going after the strengths of the nationals though. The cost advantages they possess make going after the low-price/volume model a tough row to hoe. The good news is that, simply put, the nationals make lousy pizza and offering something consistant, interesting and priced fairly with good service often does well.

In a race with a bear, I do not have to be faster than the bear, I just have to be faster than some other guy.

But, to answer your question; How long? Much depends on how you have set yourself up initially. For example, if you have leases on your equipment and computers rather than purchasing them outright to begin with, you have raised the monthly “nut” and changed the break even formula. How much time you spend working yourself will make a difference as will your opening marketing budget. If you are waiting for folks to find you, it could take a while, if you have 10K to spend telling them you are there it will go a lot faster. So… there is no one right answer to your question.