What is your Prime Cost?

[pizzapiratespp]

For anyone who wants to reveal, I was curious as to what your prime cost is? I’ve been researching this a lot lately and let me tell you there is a wide range of opinions as to what it should be.

Prime cost = Food% + Labor %

So if you run 30% food and 30% labor your prime cost is 60%

Ours is 28% Labor and 37% food making our prime cost 65% That seems to be the sweet spot for us. We can run good service and the feels the value of our product.

Our labor cost includes every one but my wife and myself. We don’t work the stores day to day too much even though we do work every day. We don’t open or close. I usually only help make pizzas in an emergency. The labor cost does not include payroll taxes or insurance.

Our food cost include all food and paper supplies. Including things like TP, napkins and dish soap.

So what is your Prime Cost? If you manage your store you should include the labor that it would cost to replace you.

I hope to learn something from this.

 

[Short_Rib]

37% food is very good. I have seen 55%. 28% not including payroll or tax is not bad
how many suppliers you have now to obtain 37%? do you have a supplier for flour, cheese and sauce separate from other items?

 

[December]

My prime cost is 51%
Food cost (including paper) 36%
Labor (including payroll tax and workmans comp) 15%
My brother and I work a lot of hours

 

[Pizza_of_the_Month]

My prime cost is 62.71%
Food and paper is 29.75%
Payroll (including tax, insurance, benefits, and my salary) is 33.96%
Profit margin is about 16.5%.

 

[d9phoenix]

Target %s are 30% food and 25% labor.

Lately food has been running 35 to 38%, and with cheese and meats staying up i am expecting it to stay that way.

 

[314]

32 food/ 20 labor Store #1 (Residential) = 52 Average Sales 30k
37 food/ 24 labor Store #2 (Campus) = 61 Average Sales 30k
35 food/ 25 labor Store #3 (Residential) = 60 Average Sales 12k

Like PizzaPirates My wife and I do not work shifts and profit margins are holding at 10-16%

 

[jokergerm]

We run about 29% food cost and 25% labor including payroll taxes and all the fun stuff

So about 54%

our profit margins around 21% at my wifes shop and 27% At my shop. 50k a week sales combined +/- 10%

 

[pizzapiratespp]

32 food/ 20 labor Store #1 (Residential) = 52 Average Sales 30k
37 food/ 24 labor Store #2 (Campus) = 61 Average Sales 30k
35 food/ 25 labor Store #3 (Residential) = 60 Average Sales 12k

Like PizzaPirates My wife and I do not work shifts and profit margins are holding at 10-16%

Sales are looking good I thought you only had 1 store at 30K

 

[314]

Sales are looking good I thought you only had 1 store at 30K

Thanks! My Longmont location could jump to 40k this fall. Boulder will get to 40k with the kids back.

 

[Ouzoshots]

Pizza pirate, 314, joker germ, can I politely ask how big are your stores? Meaning patio seating, or are they take out places?
By they way great posts. I’m opening my first take out only store in several months so these are good benchmark numbers! Thanks for sharing.

 

[pizzapiratespp]

Pizza pirate, 314, joker germ, can I politely ask how big are your stores? Meaning patio seating, or are they take out places?
By they way great posts. I’m opening my first take out only store in several months so these are good benchmark numbers! Thanks for sharing.

We are delivery and take out. 900 to 1200 square feet. Our 1200 square foot unit is doing 50K a week right now, and let me tell you, we are topped out. We are getting shipments 7 days a week right now. The Sunday shipment is me bringing stuff over from another location. We could probably do more but we have to throttle our orders during peak time because the ovens are over capacity. If I could figure out a way to get more oven capacity here we could ad more phone lines and kick it up a notch. I just can’t figure out how to fit them in hear without disruption. I would love to add sit down here but we would need one of neighbors to close down and I don’t think thats going to happen any day soon.

Prime cost at this location is lower because lower because the payroll is lower. Prime cost is 62%

 

[jokergerm]

My big store is 3200 feet with seating for around 65. We focus on delivery but also do casual dining

My wifes shop Is 1800 feet with seating for 30, but we are in the process of my moving her store to a new building with a way way way better location. The new shop is 2800 feet and will have seating for around 65

We are hoping to boost sales 30% in the new spot.

Pizzapirate I’m jealous man, I can only dream of a 50k a week Delco. If I’m ever down in socal I’m gonna have to see how you do that. Blows my mind

 

[Short_Rib]

We are delivery and take out. 900 to 1200 square feet. Our 1200 square foot unit is doing 50K a week right now, and let me tell you, we are topped out. We are getting shipments 7 days a week right now. The Sunday shipment is me bringing stuff over from another location. We could probably do more but we have to throttle our orders during peak time because the ovens are over capacity. If I could figure out a way to get more oven capacity here we could ad more phone lines and kick it up a notch. I just can’t figure out how to fit them in hear without disruption. I would love to add sit down here but we would need one of neighbors to close down and I don’t think thats going to happen any day soon.

Prime cost at this location is lower because lower because the payroll is lower. Prime cost is 62%

What kind of cheese? flour? do you use sysco at all?

 

[Ouzoshots]

Pizza Pirate that’s awesome. I admire your business model! Food cost at 37% sounds good considering prices of your pizza. You mentioned your ovens are over capacity, are they deck or conveyer? Playing with those prime numbers sounds tricky, if your doing such volume looks like you’ve found the sweet spot. Just a question but other then shopping for less expensive ingredients or paper goods what else do you think could be done ? Raising prices or cutting labor sounds risky.

 

[pizzapiratespp]

What kind of cheese? flour? do you use sysco at all?

We use 3% whole milk loaf and chop it in Hobart HCM. Flour we use a 13% gluten from Con Agra. Our supplier is Cerenzia Foods, a local family owned operation that supplies the southern California area. They specialize in pizza and Italian.

 

[pizzapiratespp]

Pizza Pirate that’s awesome. I admire your business model! Food cost at 37% sounds good considering prices of your pizza. You mentioned your ovens are over capacity, are they deck or conveyer? Playing with those prime numbers sounds tricky, if your doing such volume looks like you’ve found the sweet spot. Just a question but other then shopping for less expensive ingredients or paper goods what else do you think could be done ? Raising prices or cutting labor sounds risky.

The reason I posed this question is because we topping up over that 37% food cost this last few weeks with the cheese spiking up. I milling over a price increase to compensate for it. The problem is that I just raised prices July 1 to make up for the labor increase we just had in California. Our stores have high percentage of low income families that are price sensitive. But I think they are more quality sensitive that price sensitive. So price has to go up. I’ve done lower quality and lower portions in the past to account for cost increases and it never works. Customers always notice no matter how small of a change you make.

I’ve trying to model our business from a burger chain out here " In N Out " These guys kill it. They have the busiest restaurants anywhere. They have great service and one best burgers you can get. They pay their people above market wages and yet still have low prices. It’s mystery to me how they do it all. One of the posters here has the “Service / Quality / Price, pick 2”, slogan on his signatures and that makes sense. You have to leave one open for your profit. But this damn burger place does all 3. I’m making it my mission to pick all 3.

Our ovens are the Middleby 555 triple stack. The only 2 ways to increase capacity is to add a 4th deck to the unit or change out to the 570. Adding the 4th deck is bad because the top conveyor is 71 inches off the ground. You would have to be about 6 foot 6 to actually see the pizza coming out of the oven. Switching to the 570’s is a problem because we don’t have the footprint space. We are already crammed in. I will have to put in a new hood either way.

 

[jokergerm]

Do they make a triple stack ps360EWB?

I’ve never seen a triple

44" belt would crank out some pizzas in a triple stack

 

[Pizza_of_the_Month]

I’ve trying to model our business from a burger chain out here " In N Out " These guys kill it. They have the busiest restaurants anywhere. They have great service and one best burgers you can get. They pay their people above market wages and yet still have low prices. It’s mystery to me how they do it all. One of the posters here has the “Service / Quality / Price, pick 2”, slogan on his signatures and that makes sense. You have to leave one open for your profit. But this damn burger place does all 3. I’m making it my mission to pick all 3.

I visited a few In N Out burger stores on my recent trip to the West Coast. My observation was that they do well because they have great food…except the fries…great service, and a great price. I think that because their menu is simple, their procedures are simple, and they are high volume, they can achieve all three.

 

[royster13]

I think one has to be careful when aiming at a certain % for food cost…While one obviously has pay attention, a flat model can cost you money on the bottom line…

For example…Say a cheese & pepperoni pizza has a food cost of 35% and sells for 8.00…The contribution on this item is 5.20…Now take a more loaded pizza that has a food cost of 45% and sells for 11.00…The contribution is 6.05…So it far better to sell 45% pizza than 35% pizza…If you were to set the price of the more loaded pizza t 14.15 to achieve a 35% food it may mean more customers end up buying the 8.00 pizza and you leave some of your bottom line on the table…

Now my numbers are not real but I hope it helps you understand my point…

 

[pizzapiratespp]

I think one has to be careful when aiming at a certain % for food cost…While one obviously has pay attention, a flat model can cost you money on the bottom line…

For example…Say a cheese & pepperoni pizza has a food cost of 35% and sells for 8.00…The contribution on this item is 5.20…Now take a more loaded pizza that has a food cost of 45% and sells for 11.00…The contribution is 6.05…So it far better to sell 45% pizza than 35% pizza…If you were to set the price of the more loaded pizza t 14.15 to achieve a 35% food it may mean more customers end up buying the 8.00 pizza and you leave some of your bottom line on the table…

Now my numbers are not real but I hope it helps you understand my point…

So true. We have an account that comes in at a whopping 60% food cost. But the labor and other related cost are only about 20%. This leaves us a 20% margin on that account.