The restaurant industry is notorious for eating new businesses alive and forcing them to close in the first three years. Luckily, pizza is America’s favorite food and a $37 billion a year industry1. If you decide to open a new pizza shop, you’ll have a leg up on the competition by catering to the masses.
Top ten tips for pizza shop success:
- Make good pizza. The first and most important thing you need when starting a pizza business is good pizza. A lot of people who go into the restaurant business have already tinkered around in their home kitchens or have an old family recipe that has been passed down for generations. For those who do not have such a solid foundation, there are several basic pizza types that you can choose to offer. It is also important to set up your business up for success by designing a kitchen that fits your needs. This includes how your equipment is set up and how servers, delivery drivers or counter help will pick up completed orders.
- Decide between franchising and going independent. 53% of the pizzerias in the United States are independently owned or small chains.2 Staying independent means that you have complete control over your business and your brand, which some people prefer. However, franchises already have brand awareness and have already solved some of the problems that new restaurant owners run into.
- Overestimate your startup costs. A lot of new restaurant owners underestimate how much it costs to open a restaurant. In order to plan for unforeseen expenses, adding an additional 15 to 25% to your budget will help you get through the crucial first year.
- Offer delivery and/or carryout. The fact of the matter is, a lot of people enjoy the convenience of being able to place a phone call and have a hot pizza delivered to their door in under an hour. With over 1 billion pizzas being delivered each year in the United States, having some sort of pizza delivery or carryout option will assure that you are not turning away customers that want to eat at home but do not want to cook anything themselves.3
- Offer more than just pizza. Very few restaurants survive by offering a limited menu. Many pizza shops offer calzones, pasta or other Italian favorites to cater to individuals who are in the mood for tomato sauce and comfort food, but not necessarily pizza.
- Lock in commodity prices. Cheese and flour are the most heavily used ingredients in the pizza industry. Unfortunately, the prices for these basic ingredients can fluctuate greatly on a daily basis, which can affect your bottom line. To better control your costs, you can contract with a food supplier to lock in a price for cheese, flour or other commodities so your prices are not subject to the whims of the stock market.
- Control your portions. Portion control is crucial to controlling overall ingredient costs, reducing waste and providing a uniform product. Use food scales to measure dough ingredients, flat bottom ladles for saucing a pizza and measuring cups for your other toppings to ensure that you are not losing money by putting too many mushrooms on a pizza.
- Cater to the masses. If you provide delivery at your pizzeria, then catering should be easy to implement. Schools, offices or any event that needs to feed a lot of people can easily be catered by a pizza shop. For most parties, you can expect to serve two or three slices of pizza per person. You will also want to include some of your other menu items on the catering menu, at a discounted price.
- Insure your delivery driver. Restaurants are required to carry insurance against loss of their business, worker’s compensation and basic liability insurance. Establishments that provide delivery services will need to carry additional liability insurance to cover their drivers when they are on the clock.
- Be wary of discounting. Pizzeria customers are accustomed to the coupons that come on their pizza box. Coupons and discounts are a good way to bring customers in the door, especially during difficult economic times, but those discounts will eat into your bottom line. Also, if you discount too much for too long, it can erode your brand value. If you feel the need to discount, only do it for a limited time to protect your brand and your bottom line.
Starting any new business can be a daunting task. New restaurants in particular face a steep uphill battle, because the majority of the concepts fail within the first three years. Luckily, you have chosen to provide a food that 94% of the U.S. population enjoys eating, so as long as you educate yourself on starting a restaurant, you stand a fair chance of succeeding where others have failed.4
1 Rick Hynum, et al., “Pizza Power Report 2014,” PMQ Pizza Magazine (December 2013): http://www.pmq.com/December-2013/Pizza-Power-The-2014-Pizza-Power-Report/ (Accessed September, 2014)
3 PizzaDelivery.com, “Everything you ever wanted to know about Pizza…” http://www.pizzadelivery.com/funstuff/funfacts.aspx (accessed September, 2014).
4 Pizza.com, “Pizza Fun Facts”http://pizza.com/fun-facts (accessed September, 2014).