Long slide may be ending......

[bodegahwy]

Our local market stayed strong several months or even the better part of a year after the economy elsewhere went south. There are a variety of reasons for this, but the main two reasons are that we had a lot of real estate development already underway in '06 and '07 that carried most of the way through '08 which provided a lot of local employment and the fact that resorts tend to lag the outside economy by 6 months or so. People plan trips in advance and the impact of the collapse of the financial world in late '08 did not really hit us until Spring '09.

We saw sales slide slowly (single digit declines) in Oct-Dec 2008. For all of 2009 we had significant double digit declines with the sole exception of April '09 (due to the resort being open a week longer than in 4/08, business for that month was only down 2%). Declines continued Jan-April of this year, but each month’s decline was smaller until we were looking at 9,8,6,4% declines.

We concentrated on cost control. As an example, we ran $15,000 less labor in April/May 2009 than we did in 2007 and 90K less for 12 months. We were actually more profitable even though sales were down about 30% in that time. One silver lining of this mess is that we have been made a better operator by it. Another silver lining is that it is MUCH easier to find and retain good employees. We have the best crew ever in our 11 year history.

As of yesterday’s business we have hit our first 28 day day period with a meaningful sales increase since September of 2008. I am optimistic that we will see that trend continue for the balance of the year.

 

[Chris]

Sounds good! Sometimes a scare like that can really help you become a more “operationally excellent” business. All the best, and good luck with sales moving forward =)

-Chris

 

[royster13]

I am starting to see my clients get a little more aggressive with their purchases…Also, this morning “Stats Canada” issued an economic outlook that was mostly positive…So 2010 should finish strong…

 

[Napoli_Pizza]

I imagine these difficult times have made us all leaner and meaner, and better opperators.
Probably should start a new thread of lessons we have learned, and might want to share…

did we change the times we do prep…
how did we find was to cut staffing…
did we eliminate certain marketing and focus on others…
did we find better prices on overhead expenses…

in essense, did we rethink things we had always done, and found a better, more efficient and profitable way!

 

[Piper]

We’ve had the exact same experience as Bodega, right down to the timing (late into the recession, started pulling out in January '10). April '10 was our most profitable month ever despite well below a record sales month. And then May '10 beat it on slightly more sales.
Napoli Pizza:

did we change the times we do prep…

Very much so. We eliminated quite a bit of prep hours during the day and started getting more done during the lulls at night. This won’t be changing back; we learned a valuable lesson here.
Napoli Pizza:

how did we find was to cut staffing…

We cut kitchen staff on Friday and Saturday nights and trimmed hours the rest of the week. When things were slow we actually increased the pay for our top cooks and told them they had to earn it by being more productive. Sure enough, we were able to execute just as well with a cream of the crop staff. My best guys made more money, we saved on labor and we let the bottom rung of employees go through attrition. That was a valuable lesson that I will carry with me in any business. If you pay way above everybody else and get the best guys out there, you’ll end up paying less overall labor dollars. Add to that less turnover and therefore less training costs and it’s a winning combination.

We’re saving about $20,000 per year in labor at our current sales levels versus where we were at 18 months ago. Unfortunately for the economy, we eliminated jobs that will never be coming back because we learned to do more with less. I think many, many businesses have done the same and that’s what’s going to stall job growth.
Napoli Pizza:

did we eliminate certain marketing and focus on others…

Yes, we started to focus much more heavily on delivering specials via e-mail versus sending out postcards to our existing customers. We did this through a simple sign-up sheet at the front counter and box-toppers explaining we would no longer be sending out coupons via mail and they would need to sign up for our e-mail delivery. Something that used to cost us over $1,000 per month became a $30 per month cost (saving over $11,000 per year). We have signed up over 4,000 people for or e-mail list in the past year. Beyond the money it has saved me about 10 hours per month that I used to spend processing, producing and sending direct mail, plus it’s much more effective and agile marketing.

We also negotiated significantly better pricing for our third-party mass mail pieces. We reduced the cost on those by 50% overall, which saved about $5,000 per year.
Napoli Pizza:

did we find better prices on overhead expenses…

Oh yeah…

• We negotiated our rent down about 10% saving $6,000 per year.
• We switched phone companies (and may still switch again to VOIP) to save $600/year.
• We changed all of our dining room and kitchen lighting to CFL’s where we used to use halogens. Between the savings on light bulb replacement and reduced electricity we calculated a savings of over $1,000 per year. When the CFL’s start to go we plan on replacing them with LED’s for even move savings.
• We used to leave one deck oven at 525 over night and then immediately fire the second one when we opened the next morning. Now we turn one oven down to 300 degrees over night and we don’t fire the second one until 4 o’clock the next day, if we are going to use it. Monday, Wednesday and Thursday we don’t even fire it any more because we have just enough capacity on one deck. I figured this change saved us about $700 per year in gas cost.
• We started paying our sales tax monthly when we are required to pay quarterly. The state offers a discount for paying monthly and that equates to about $600 per year.
• Hammered our credit card processor for better rates, amounting to a $1,000 annual savings.

Napoli Pizza:

in essense, did we rethink things we had always done, and found a better, more efficient and profitable way!

Absolutely! Over the past 18 months all but one independent pizzeria in my delivery zone has closed up shop. I truly believe the survivors of this are going to be poised to make it big as the economy turns. If we ever return to the sales levels of 2008 and maintain our new efficiencies - Wow. Lessons Learned.

 

[pizzasource]

Yes, we started to focus much more heavily on delivering specials via e-mail versus sending out postcards to our existing customers. We did this through a simple sign-up sheet at the front counter

What information did you request on the sign up sheet and did you offer any incentive to the customer for signing up?

 

[Piper]

pizzasource:

What information did you request on the sign up sheet and did you offer any incentive to the customer for signing up?

We request their first name and e-mail address. There’s no incentive. It just says “Would you like us to send specials and discounts right to your e-mail address? Sign up here!”