Quote:
Originally Posted by PamWinterReturns
A friend is a few towns over. He owned a pizza parlor, as he calls it, with a friend. Free delivery with $10 order and pizza was $8 then. Gas went up to $4+/gal and he still kept free delivery. He lost quite a bit in a month and went to $5 delivery, minimum order $25. He closed in March.
He said his losses
Pizza $4 to make, $8 price
Toppings .50 to make, $1 price
$4-$8 depending on area within 15 miles
Two pizzas delivered North cost them $16. Customer pays $16. Employee pay is a loss. Toppings earn almost nothing if employees have to chop, cut, slice or shred. Nothing earned on most overhead other than electric.
With. a delivery charge, three one-topping pizzas cost him $13.50, gas is up to $8, employee time is $15. Customer pays $$32 . Store loses $4.50. They upsell tonic err soda at $2.50/two liter so they make $2.25 on total order.
He tried no delivery but the area wasn?t great and people didn?t drive there. The handful of walk-ins made him a little but not enough. He had ?authentic? Italian pizza in an ethnic neighborhood (Portuguese). No linguica or chourizo ? cha-rees ? and boom. The location is still vacant.
Being just an investor is good IF you have a say in how it?s run. Great food, great appetizers, great atmosphere, kid friendly, date friendly, senior discounts and great parking are a must. Check the local competition, too, for coupons, specials, web deals, and visibility.
Good luck!
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That formula would never work.
In NYC there are $1 slice places, so a whole pie is $8. But there is no delivery. And they only have stores in high volume areas. At that price point they use a fast food formula: 2.5% of walk-by traffic will make a purchase. It's purely a numbers game.
And you'll get killed if your food costs are 50%. That's more than what your cost of goods sold % should be - 40% is the top. That includes everything (condiments, napkins, paper plates, boxes, etc). Then you have labor and rent.
Last note: if you don't have these costs monitored and under control on a DAILY basis you will close. No room for error at those margins.