I must be missing something

15thStreetPizzaandPu

15thStreetPizzaandPu

Member
so we have bee trucking along for 4 1/2 years now and I hear all these post about what people are making and I am no where near close that. Can everyone look at these percentages and see if anything looks “out of line”

food 28%
payroll 26%
beverage(beer/wine) 10%
rent 5%
advertising 4%
utilities 3%
payroll taxes 3%
repairs 2%
insurance 2%
Credit card charges 2%
professional fees 1%
telephone 1%
linens 1%
Printing 1%
cable 1%
kitchen supplies 1%
the other 9% is in piddly stuff like…licenses &permits, uniforms, auto expense, maintenance, trap cleaning, bank charges, software, training, security, pest control and so on.

these percentages are based on sales of $404,000. The percentages came straight from quick book report. My wife and I had a salary of $26,000. and managers salaries that came pretty close to that.

So what am I missing that I can only get 6% out of the store? are the percentages way out of line? any thoughts are appreciated.
 
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food 28% - Not bad if it is the percentage of just food sales. If it is of total sales and the 10% on beverages gets added to it then we have found the problem: 38% cost of goods.

beverage(beer/wine) 10% - See above.

payroll 26%
payroll taxes 3% Combined is 29% wage expense. Including your 26K Not bad at all if that is the case.

rent 5% - Excellent

advertising 4% - on the low side

Printing 1% - I would ordinarily roll this in with advertising. Still an OK number.

utilities 3% - seems high to me. 12K but I don’t know your location

repairs 2% - Seems high to me. I would expect half that.

Credit card charges 2% - of your gross? Are all your sales by CC? If not, this is too high.

cable 1% - Cable what? 4K worth of TV?

kitchen supplies 1% - Everyone does it differently. I include this in with the food cost.

the other 9% is in piddly stuff like…licenses &permits, uniforms, auto expense, maintenance, trap cleaning, bank charges, software, training, security, pest control and so on. - Too much rolled in there to comment on.

I Hope that helps.
 
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Nothing jumps out as out of line – especially if your salaries are included. I assume you are rounding up all the 1% items.

You really just need to get your sales up. Do a performa based on your percentages at $5000 intervals and you will see where the big rewards start to come into being as your fixed percentages start to shrink. Years ago your sales level would have yielded you better results but since fixed expenses have moved up your good profit points have as well.

You also have to consider where a lot of the people here are posting from. Sales that work in one part of the country do not support others. State regulations, taxes and minimums have a big impact as well as real estate in the most desirable locations. I get the same reaction as you when I read some of the posts but it makes more sense when put into this perspective.
 
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Pirate’s point about sales growth is excellent. Figure what changes as sale rise. On the next 100K in sales your food and labor rise (not quite as fast as sales) but rent and for most part utilities, insurance etc stay the same. A lot of profit comes from the last dollar. That is one of the best arguements for bumping the ad budget if you think you can drive sales with it.

Aside from my question on the food/beverage cost I think you may find that increased earnings come from cost savings found in small amounts in many places. There was an earlier thread on finding savings from a couple of months ago that was interesting.
 
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One of the best ways to increase sales, especially right now, can come from a price increase. Another easy way is to cut down your discounts. If you normally discount $5.00, change it to $3.00 off and really play up the quality of your food. A minimal increase can go straight to your bottom line. I feel this would help your cost of goods sold as well. 29% payroll + 38% food & beverage = 67% prime cost. This should really be below 65%, and my .02 cent opinion would be that you need to raise prices. If you cut your prime cost down to 65% through price increases or less discounts and you’re looking at an $8,000 per year raise. (2% x $404000 = $8080)?
 
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I am going to assume your payroll DOESN"T include your salary and mgmt. because it would be more than 10% of total payroll…leaving you with only 16% for regular employees?

Look into that number.

I also noticed with a quick glance your phone…you pay 330 bucks a month for phone? It is a symptom of the other percents. Our phone costs under 200 bucks so just checking around can save you 100 bucks heck even 25 bucks a month.

Then we get to piddly stuff…anything costing you a combined total of almost 40,ooo a year is NOT piddly. You can be assured by looking over and breaking down these expenses you will find you can save tons here. Shop around for this stuff.

You are lookin for dollars to save…you need to be looking for quarters. I am sure between all those areas you can save lots and lots of quarters.

I don’t agree the answer is raising sales, until you get the numbers in line it won’t matter how much sales you get the quarters will get lost in the shuffle. (Sure you need to raise sales, but I think trimming and disecting your current numbers will help you find money now)

I totally agree with limiting your discounts. If we made menu price for all our products we would be cashing in…but we have gotten ourselves in a coupon bind…no sense in raising menu prices just coupon prices…maybe the same is true for you.

Just my two cents…

Kris
 
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You are doing pretty good from my view overall. However, if you could work on boosting your sales 2-4K a week, your food cost would be about the only thing that increases other than the cash you make.

PD
 
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Patrick,

Just glancing at your restaurant webpage, I would’ve guessed a higher gross than what you stated, just based on the overhead it appears that you have.

Obviously, more sales will cure everything.

While my concept is much leaner than yours (take out, limited dining, no delivery), I think your labor may be a bit high (at least given your sales). This usually means the owner working more and relying less on paid management, which isn’t always possible if you’re already doing 50-60 hours a week.

Of course, if this cannot be reduced without significantly impacting store operations, you might consider restructuring your manager’s salaries in such a way as to provide more incentives for increased sales/reduced costs.

While your food costs are in line IMO, having viewed your webpage, I think your prices are too low, especially on your 16". In smaller communities (and Stockbridge may yet count), brand loyalty is earned only through superior product quality and service. Price is secondary. I know that my loyal customers would rather pay more to get more, than pay less to get less. Perhaps slowly increasing portioning and price, as well as making a conscious effort to educate your patrons as to the value of your product will slowly impact your gross, and assuming you keep your costs in line, you’ll end up with more.

Without going into details (and believe me, I’d love to but don’t have the time), I have never been more convinced of the role of the owner in driving sales, customer relations, employee performance and product consistency. You may be able to pay a manager to be a caretaker, but there are very few hungry enough to actually grow your business. That is your job. As long as you’re still in the growth mode, your involvement is absolutely essential. It is the fertilizer. No one loves the business like you! (Kind of like being a parent with children, and with eight of them, I should know!) :shock:
 
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I did not realize before that you had a website with your menu. (Nice website by the way) With regard to your cost of goods problem (38% of sales) I agree with the poster above that a good portion of that problem is likely your prices. With the changes in food costs in the last year, your need to be getting another dollar or two across the board.
 
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I don’t agree, I think your menu prices, for the most part, are right on target. My sense is (by your coupons) you are not getting menu prices for most orders. Instead constantly running specials. I would try and raise your specials and limit them…before raising your menu prices. I didn’t see your website until now either. Great job and your place looks fabulous.

I would look at the 40 grand and your other expenses. I would increase your marketing and feel good about charging menu price on your products.

When your sales increase food and labor are the only expenses which will really increase so you will make better profit.

Kris
 
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Your menu prices are out of whack just like mine are! It’s the exact same pricing structure almost, too.

Look at price of 16" versus the 12" and 10". If you use the area of the pizzas and divide into the price, you are selling the 12" & 10" at a ratio of .079 and .076 respectively . . . . and here is the kicker I found in my menu just after we reopened last June . . . you are selling the 16" at .055. And then you are reducing it further with special offers.

there is no way we are going to get $15 for a 16" cheese pizza, but I am bumping mine up to 12.00 (from $11.00) just to try to catch up a little. I don’t know what your portion sizes are for your toppings, but even a bump of .05 or .10 can add up fast.

You can get a little less aggressive in the specials, (like Kris said) and bump your prices just a little to cover rising food costs . . . and you will be closer to what you want to bring in. If your POS can tell you how many of each special you sold, you can find out how much you “left on the table” with the specials. Then you can decide how much you really want to leave on the table going forward.

Your product was good when we ate there last year, so that isn’t a knock on your bottom line. Controlling your pricing should get you where you want to be . . . away from the Econo-Pizza 2 for 1 ideas and economy.
 
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