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New to boards, pizza place is failing, need advice

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pizzagirl

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My husband and I opened up our first pizza place in October of 2006. We had a great grand opening, but since then our sales have slowly declined.

I won’t take up too much time explaining all the drama, but here is a short version of it:

My husband and I bought this pizza place with the BELIEF of everything the original owner said. We BELIEVED he made as much as he said, we were NAIVE, never asked to see tax returns or previous check copies from school accounts. He sold us on his word and our partner told us not to buy it until we saw prrof it was making as much as he said. We said “no, we really believe this guy and want to jump on this opportunity before someone else does”…stupi, I know.

We bought the place with the agreement of continuing to do school lunches. We do lunches for schools. The previous owner sold the pizza for next to nothing and we have to honor the contracts and keep the prices the same. We are busting our butts and not really making much off of the schools.

Our take out and delivery is not doing too well either. Sometimes we barely break $200 a day! Average on the weekends is MAYBE $500 a day.

My husband had to stop being at the pizza place due to circumstances beyond our control and during that time is when our sales really slowed. Our employees aren’t the most reliable so we think that during that time, we lost some of our customer base.

My husband is now back at the pizza place open to close. We are advertising like crazy, focusing solely on take out and delivery while the schools are on summer break.

It seems like we only do really well on the day we send out flyers, but at that, it costs a lot of money to have the flyers sent out.

Our pizza is good, we have the same exact recipe as our partner who owns eight other pizza places, all with a great client base. OUr place however, is struggling. I can’t be there full time because I am working a full time job myself to make ends meet while the pizza place picks up.

We are really overwhelmed. I try to keep up on the accounting part of it all, but with working a full time job and 2 babies at home, I barely have time to think let alone organize our pizza place finances. We don’t have the money to hire an accountant either. Our partner is a silent partner and that was the initial agreement so we can’t count on him to be there either.

The place is for sale. We have to keep the school accounts in order to find a buyer who will purchase it for at least what we bought it for. Until then, we are struggling, trying to make it work. Once we sell, we are going to purchase one of our partner’s places, but until then, we are stuck.

So where do we go from here? Anyone else in a similar predicament? This pizza place is all we have. We have to make it work. Any suggestions, words of advice?
 
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you say you have a contract with the school what are they paying for each pizza

around here school contracts are renewed annually so you might be able to get out of it or raise your prices

we charge $5 for schhol, church, special orgs

if you are in a small town you might try a banner saying “Owner Back IN charge” let themknow that he is back

boxtoppers, 2 for 1
 
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Thats good advice about the banner. Thanks! We are not in a small town, we are in a big town. We charge $6 a pizza for the schools.
 
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I’m not really understanding how you aren’t making money on these school contracts. Could you explain it a little better.

How many? How often? What time? What size (14")?

As for the departure…how long was your husband gone? Who ran the store?
 
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The school pizza’s are large. At first one of the school districts was ordering approx. 400 pizzas a day for 4 of their schools. After about a month, the order got cut to 200 per day due to the inconsistency of product during the time my husband was gone. Our morning crew was very inconsistent. One day the pizzas would be undercooked, the next overcooked, etc. The schools are VERY strict and our employees were having no consistency. With my husband not being there to overlook the operations, we lost business this way. So once you take into account all of the overhead costs that the schools cost us (payroll, food supplies, etc) we really aren’t making $ from them.
 
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Oh’ and we do the school pizzas 5 days a week, at lunch time.

My husband was gone for a good 4 months or so. The store was ran by our employees, with a little help from my father in law who has no restaurant experience. My husband would go in as often as possible, maybe about 15-20 hours a week, but we all know that runnning your own business is a FULL time job.
 
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Are these 14" pies? 16" pies? What kind of crust? Do you make your crust?

What time do they have them delivered? 200 Pizzas everyday?
 
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Wow I would beat down doors for that kind of contract.

Originally it was 2400 dollars a day in sales?

Now it is 1200 in sales?

I was typing as you were posting so we have crossed paths, but even still are my numbers correct?

And I know your immediate question was what to do now but it is not that simple so I am focusing on what I found to be of utmost importance in your post,
 
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Hi there,

If you’re in a big town, most of them have town websites with message boards just like this. If that is the case, have someone find it. Positive feedback in those forums get to a lot of people.

I did not know one existed in the town I was operating in until I got slammed a little after a month open. I did a soft opening so all the issues could be worked out. One after the other - " I read about you on the message board" (WHAT MESSAGE BOARD!!) When I went to the thread, already there were over 6000 views. My word of mouth advertising was my best. You really have to be careful, IMO, with that school account. It is huge word of mouth.

We worked our store 12/7 with major holidays, one graduation and one funeral off. I believe that in the first three years, you as an Owner have to be there to protect and improve your brand. That’s tough with kiddos.

Your numbers are bad. How is your variety outside of pizza? Salads etc…those are huge sellers. It is not just pizza; it is about comfort food with pizza there.
 
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I think the first thing we should try and understand is why you are not making money on 200 $6 pizzas per day. I realize this isn’t a fortune, but there should be good profit in that - especially since it is probably a pretty simple order - consistent and something you know is going to come everyday.

My food and paper cost on that would be $2.00 for cheese and $2.25 for pepperoni (14"). That’s about $800 in profit - deduct something for 90 minutes of labor (probably doesn’t even take that long) if you want.

How can you not be making money on that?
 
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pizzagirl,

Sounds to me like you have the makings of a relatively successful operation. All you need is a few “tweaks”. Maybe I can give you an idea or two…

You can make almost any pizza place work as long as you have a good population base and an area that is not over-saturated with competitors. All you need is a gameplan to go out there and steal some marketshare. You’ve already got a powerful showing during your lunch hours with your school lunch program. Now you’ve got to concentrate on getting people to order from you after they get off work… during your “rush” hours.

In marketing there’s one word I’d like you to remember. That word is FREE. That one little word can help drive your business if you use it correctly. Will you make a ton of money off the word free? Well, the answer unfortunately is no. However, what you will get is a new and vastly increased customer base. Read on and I’ll give you a plan of action:

First, you’ve got to set a marketing plan and follow it religiously. A special I did to significantly increase my customer base was to offer a Buy One Get One free, or BOGO special. I offered it to everyone that called… and boy did they call. My sales went absolutely no where but my customer base increased more dramatically than you could ever imagine. In your case, doing $200-$500/day, your sales will probably increase anyway.

You need to stay with this plan for no less than 4 weeks. I’ll tell you that after 3 weeks you will not want to see another buy one get one free coupon ever again… but you’ve got to maintain the course. Trust me when I say that final week will give you more customers than the previous 3 have given you.

Immediately following this BOGO promotion, you’ll want to switch gears a little bit. Instead of offering the buy one get one free, change it to buy one get one half price. This will significantly raise your ticket averages, decrease your discounts, and increase your cashflow… which translates to “money to pay the bills”.

This half price promotion has been, and will continue to be the staple of my advertising ever since I learned about it in this forum from TommieKnowsPizza, who incidentally doesn’t show up in here anymore, but kudos to him anyway.

Since you obviously have very little money stashed away for advertising I’ll give you some hints:
  1. Doorhang - This is the best method for low volume operators to get the word out. Yes, it sucks. Yes, you’re gonna get sweaty. But… yes, you will get results to the tune of about 5%-8% return, especially with a BOGO offer.
  2. Bulk mailings - I’m not sure if you’ve tried this yet but you will get a big bang for the buck going this route. Bulk mailings will not give you as good a return as doorhanging, but, even at 1% return rates, the total number of orders you create will greatly outnumber the orders created by doorhanging because of the sheer amount that go out in a bulk mail drop. Most bulk mail companies will drop as many as 25,000 pieces at one time.
  3. Lit car top signs - If you don’t have them already, I suggest you pony up some cash and invest in these lighted mobile billboards. You can purchase them from HTH signs for $120 each. I’ve said it many times before and I’m sure I’ll say it many times in the future: nothing is more important to a company trying to beef up delivery sales than the use of the lit car top sign.
You put these 3 major components to use and you might have a store you won’t want to sell. The return on this investment will be no less than 3 months so don’t expect everything to be rosy overnight. However, there will be a return on your investment. If you need ideas for artwork simply PM me with an e-mail addy and I’ll be happy to send you my latest flyer so you can get an idea of what my artwork looks like. It may give you some ideas.

Hope this helps. -J_r0kk
 
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J_rokk, excellent and much appreciated information. I will defenitely use some of your advice.

We do pass out 5,000 doorhangers usually each Friday. We get a great response from those, however, the sales don’t seem to carry over into Saturday or Sunday. We have had the flyers passed out on different days other than Friday and they are always a hit, but it only lasts a day. We can’t seem to keep any consistency with the sales.

How much does bulk mailing usually cost?

I’ll be looking into those car signs as well.
 
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pizzagirl:
We do pass out 5,000 doorhangers usually each Friday. We get a great response from those, however, the sales don’t seem to carry over into Saturday or Sunday.
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Maybe try door hanging on a different day? Like Saturday or Sunday? Include a Saturday or Sunday special on a door hanger even if dropped on friday??
 
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5000 doorhangers every friday? How are you getting these out? If doorhanging nothing but large apartment complexes, this would take 25 hours of labor. If doing houses, should take close to 50 hours. If you are paying a company to put these out, how confident are you that they are truely getting all 5000 out. My experience with doorhangers is typically a 2% immediate response and another 1-2% over the next week. Are you getting 100 extra orders from the area doorhung on the day it gets done?

If you are really certain that 5000 doorhangers are getting put out each week and you are still only doing $200-$500 per day, you definatly need to look closely at your operation. Something is definatly wrong. Bad food, terrible service, priced out of your marketplace, WAY too many pizza shops for the population. Something is definatly out of whack!
 
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pizagirl - no further information about these school contracts?

A number of us are trying to understand how you cant be making money from selling that many $6 pizzas per day.
 
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We are losing money on all the schools as a whole. The reason being is because the lady that the previous owner had working at one of our schools was OVERBILLING the school the entire time she worked there. So now we are paying THE SCHOOL back each week for the excess that was overbilled, until we can break even.

The schools I mentioned earlier aren’t all we do lunches for. One of the schools orders individual pans for $1.50 each. With all the hard work put in, the overhead costs, etc. its not worth the headache…
 
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pizzagirl:
We are losing money on all the schools as a whole. The reason being is because the lady that the previous owner had working at one of our schools was OVERBILLING the school the entire time she worked there. So now we are paying THE SCHOOL back each week for the excess that was overbilled, until we can break even.
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:shock: That’s one of the most awful things I’ve ever heard. I’m sorry that happened to you.

Hang with us and we’ll get you back on track. 😃
 
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You simply cannot be putting out 5000 doorhangers each week and going broke. Somewhere, there is a dumpster full of doorhangers. Stop killing yourselves on Friday. Spread them over a few days. Thursday is the best day for mail drops and I’m not sure that doorhanging should be any different. By the time most people get home on Friday, they have a plan for dinner already in their head.

If you’re putting 5000 doorhangers out to the same folks week after week after week, perhaps you’ve tapped the market. Are your employees hitting only “easy” targets like hotels (drop a stack), college dorms, mall parking lots, etc? Something’s incredibly wrong here.
 
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