Author Topic: Advice on Opening Pizzeria in NYC ?  (Read 4343 times)

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Offline GaryH

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Advice on Opening Pizzeria in NYC ?
« on: March 10, 2010, 03:31:09 PM »
First off I'd like to say that this is a great forum, its been helpful

I have done some research and know that location is very important in this and that good pizza is a must. Even though I dont have any restaurant experience I believe  I have a great location in New York and a wife thats a great cook to help with the sauce.

I have some questions regarding liscensing, I know I need a food and beverage liscense but not sure about what other liscenses I need? (I emailed the Chamber of Commerce but havent gotten a reply yet)

Also are these needed before or after I open or apply for a loan?

When applying for a small business loan do I need to have some of my own money or can I borrow almost all of the startup, considering i have good credit?

I've heard that its great to get a mentor and if anyone would help out I would appreciate it


Offline widespreadpizza

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #1 on: March 10, 2010, 05:16:30 PM »
Gary,  not to disappoint you,  but getting money out of a bank for a restaraunt in this economy is very unlikely.  They do expect you to be personally invested as well and will likely use your house or other collateral to guarantee the loan.  They say these days it would be easier to get the money from friends, family,  or enemies.  I have looked into the situation myself,  and a bank is not the place to look. For advice seek out your local SCORE chapter.  They will try to help you,  if they can. -marc
« Last Edit: March 10, 2010, 09:28:49 PM by widespreadpizza »

Offline Puzzolento

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #2 on: March 10, 2010, 07:11:04 PM »
I would learn how to make pizza and check out the market before doing anything else. If you can't make good pizza now, you may not be able to make it after you open. And there is plenty of competition in New York, so if your work isn't great, people will walk two blocks and buy something better.

Offline GotRocks

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #3 on: March 11, 2010, 12:10:19 AM »
For someone who has never ever been in the foodservice industry, and not knowing what is all involved yet,  there is so much you need to learn there is little doubt you will find it so overwhelming even if you were given the full amount of money needed for start-up that it would still be a tough decision. (or at least it should be )

Your first step should be to receive an education and certificate in proper food-handling & sanitation techniques through a "Serv-Safe" course which is endorsed by the NRA (National Restaurant Association)
Then I would visit your county health department's website, and download the county food-code, and see what is required for licensing and the fees required.
Then you should probably speak to the county zoning office to see what is involved there. things like ADA compliant restrooms can bite you in the butt if you were not expecting it and be a deal breaker for many possible locations.

My next few words may seem very rude, I do apologize ahead of time, but I feel you should know the cold hard truth of the business from someone who has been involved in the restaurant industry for 25+ years. (Me)
The husband & Wife team of operating a restaurant is usually very short-lived, Neither of you realize what is all involved, and how stressful the job is, and I predict a separation and/or a divorce before you get 6 months under your belt.
Even though the wife may be able to put a good meal on the table for a few people most of the week, the volumes required to meet your daily break-even point would probably put her into shock.

Maybe looking at the numbers would be better. Chew on this for a little while, for every $1.00 that you get to put in that cash register, you may get to only keep $0.04-$0.07 of that to call your profit.
So how many dollar bills will you need to stuff into that register to meet only your fixed expenses such as rent, insurance, licensing, loan payments, Etc Etc Etc?

before spending a dime on any restaurant or food venture, go work at a place first. You will only be qualified to wash dishes or mop the floor at first, but then you may be able to work your way up to "fryer Cook" from there and if you succeed at that, you may be given more responsibilities as you progress.

I incorporated our catering-only business 4 years ago, we are trying to expand to meet demand of our product. And it is overwhelming for me. It only seems easy for you right now because you are not aware of what is all involved.

I "had" (emphasis on the word HAD) a friend who decided after 30+ years in the automotive industry, he decided that he and his wife were going to open a restaurant for themselves. I nicely asked what made him think he could handle a restaurant and his reply kinda shocked me, he told me that he has seen me cater events of 350 and larger with only one other cook, and 5-6 servers, that if i can do that so easily, there is no reason that he cannot have a breakfast & lunch place with just him and his wife as the employee's. And that she is a great cook, and he always wanted to wait tables because it looked fun.
The bank would not loan him a penny even though they had great credit, but the loan officer saw he was destined to fail and tried to save him.
I could not talk him out of this foolishness, So I offered to help in any way that I can. He was already pissed off at me because I tried to talk him out of this venture so he didn't want any help at all. he got financing through another bank but they wanted 100% collateral through his home, cars. retirement savings, and everything else not in that restaurant building.
 He purchased the building, they wrote a menu, then placed their first food order before getting the proper permits, so they got shut down, paid the fines, and lost their inventory! They are already in the hole now. after getting permits, and the inspector letting him work on a promise to get his serv-safe training, he ok'd them to open.
the menu was priced by using the "This seems about right" pricing method instead of using the standard food-cost percentage pricing strategy.

Then he could not understand how they lost money after their first full month, I showed up at the restaurant unexpectedly just to wish him well and see the operation, and I almost filled my shorts when I saw his menu pricing because I knew he was heading for disaster even quicker than expected.
I took a copy of the menu home, looked up what my costs would have been through my suppliers, and re-priced his menu showing my costs so he could compare to his pricing and show an acceptable profit if he had the clients to feed. I also gave him typical cost-ratio percentages to use for pricing, with explanations of how & why. He threw it all in the garbage and said "This is what I want my prices at, and I priced it that way for a reason!"
another month goes by, him and the wife are living in different places now and she is working at her old job to try and save their investment, he is now trying to both cook and serve! And instead of firing that large griddle in the kitchen to cook with, he bought a little hamilton beach griddle from wal-mart to try and save money on utilities. I offered to work for free to try and get him past the hump, he refused help again. I sat him down and told him I was trying to help, that is it. I just do not want to see him lose everything. He still refused help.

4 months!!, that is all it took for them to lose everything. When they were in bankruptcy proceedings, they were lucky enough to have adult children with great jobs, the kids had to jump in to save the house & cars. But he lost everything else that he had worked to have over those 30 years in the automotive industry.
they are now screwed! Just because they thought a restaurant was so easy to do from what they saw when they went out to eat.

Q: what is the easiest way to make a small fortune by owning a restaurant?
A: Start with a large fortune!

It is not easy, even though some people make it look easy. Some people just get lucky, most fail. even with interest rates being so low, I know it is tempting, just please research everything before spending a dime. I would learn as much as you can, work in the industry and maybe look at opening a place again 1 year from now and see how it looks then.

A skinny cook is not to be trusted!

Offline scott r

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #4 on: March 11, 2010, 12:14:50 AM »
and whatever you do, dont open a pizzeria until you are making AMAZING pizza at home first.    It is critical that you have your product perfected right on opening day because those first few months are going to see them most traffic from locals checking out your product.    Its sad when you see a place that has an amazing product, but didn't before, and nobody is trying it because they already tried the pizza and made a decision about its quality early on.     

Offline GaryH

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #5 on: March 11, 2010, 09:32:54 AM »
Thanks for all your advice, I'll consider it all

I wasnt aware that acquiring a loan would be so difficult, that will be a major problem if so

I was thinking if all worked out to open up around May 2011,right in time for summer, to give me time to figure things out, I also planned on getting a weekend job in a pizzeria to kind of learn the ropes

I will also look into a Serv Safe course, thanks

I have been thinking about this idea for a few months and believe I have a great location, the other pizza place is about 10 blocks away but pizza sucks, and the other is about 15 blocks away in another direction, to the other side there isnt a pizzeria for at leat 25 blocks, I planned on this being more a pizza and chicken parm place, since its a blue collar neighborhood, so not very big and only maybe 10 tables

I planned on started to play with sauces soon to get a good recipe and have friends and family give their honest opinions

If you guys got anymore advice or criticism it will be appreciated

Offline Bill/SFNM

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #6 on: March 11, 2010, 09:52:15 AM »

If you guys got anymore advice or criticism it will be appreciated


I hope you don't take offense, but I have never seen a clearer train-wreck in the making. On all levels -  business experience, restaurant operation, and pizza making - you seem totally unprepared to enter into one of the toughest pizza battlefields in the country.

Also, friends and family rarely will give honest opinions.

Sorry.
 

Offline scott r

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #7 on: March 11, 2010, 10:17:06 AM »
Gary, if you do decide to open a pizzeria even though everyone is warning you, it might be a good idea to think about hiring a consultant to help you get your product to the top level.....especially if you are opening in New York! You might be surprised at how low the cost is compared to what you can achieve by having a perfected product on your opening day.   I am not trying to pimp myself....there are a number of people that do this and are highly qualified, but I recently had an eye opening experience with a place that I helped out.   I was called in to consult for a pizzeria opening in a major US city where the owner had never owned a pizzeria or any type of food service business before, and was actually brand new to making dough.   In less than one year of the opening the place won the award given by a local news paper for best pizzeria in the city,  and immediately had a line of people that was three hours long and went out onto the street.   This level of business went on for many months, but with winter slowed to a constant full capacity for lunch and dinner every day.  There is enough money coming in now that there is plenty left to not only make a large profit, but also to open a new location.   This goes to show you that you can do it, but make sure you are smart about how you move forward!   

Offline GaryH

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #8 on: March 11, 2010, 10:33:57 AM »
Thanks both of you

Although I have no experience in the restaurant business I do believe I see an opportunity, being in the field of finance for 10 years in midtown for large billion dollar worldwide companies I believe this to be a smart move, although you would know better then me, im looking at it in terms of supply and demand of good pizza

I'll do my research and crunch some numbers and see how it looks in a few months

Thanks all

Offline Puzzolento

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #9 on: March 11, 2010, 10:43:41 AM »
Some people do open pizzerias and make money.


Offline David

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #10 on: March 11, 2010, 10:43:51 AM »
1) Get a job in a Pizzeria.

2) Work in a Pizzeria for at least six months to a year.See how seasons / Holidays have an effect on your business and determine what style of pizza you wish to make.

3) See if you love it.Even if you decide you don't like one style of operation you may determine a different one is better suited to you and your desired life style.

4) Meet with a SCORE mentor after you have done the above and do not part with any of your own money until you have done all of the above.
If you're looking for a date... go to the Supermarket.If you're looking for a wife....go to the Farmers market

Offline Mo

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #11 on: March 11, 2010, 10:57:45 AM »
It's all about cash for start-up.

It usually breaks down two ways: 1) somebody with no experience has bunch of their own money and a dream. Some are successful, most are not (in the food biz, anyway); alternately, 2) somebody has the required experience/knowledge and only a little money but as a result of their trade-specific knowledge is deemed a good risk by investors/banks.

You need a lot of money to open a restaurant.

If you can't cover the nut on your own, then you need to borrow either from private investors or banks. The SBA will guaranty some loans (or portions thereof, up to 90%) made by private banks but only after the bank determines the strength of your proposed venture. Remember, the SBA doesn't lend the money directly, the bank still makes the loan. Best case scenario, even with a 90% SBA guaranty, the bank is still on the hook for 10% if you fail. Banks, generally speaking, try to avoid losing money on poor credit decisions. Private investors probably will not even look at a restaurant project of this size.

Without experience in the field or a substantial amount of your own cash, I have a hard time seeing how you will get financing.


Offline GotRocks

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #12 on: March 11, 2010, 11:59:46 AM »
Mo has it nailed,
except in my current venture I am not seeing a 90% guarantee from and SBA program, the best I am seeing right now, is 85%, and more realistically only a 70% guarantee program on a loan.
My proposed expansion into restaurant would not have any direct competition within 100 miles of us, and I already have 4 years of incorporation under my belt serving our product in a catering situation only.
So we have already proven ourselves in this market, and I am still having problems gaining financing with that and 25+ years in the industry. The loan officer I am currently trying to work with has been to a few of our catered events, and loves the product and it is not helping. Now imagine telling a loan officer that you have never cooked commercially and wait to see the look on their face.

I wish you all the luck in the world, I truly hope it becomes reality for you! but you really need some time in the industry first to learn what it is going to take. No more holidays, no more weekends, you give up alot, and it is hard work.
A skinny cook is not to be trusted!

Offline tdeane

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #13 on: March 11, 2010, 02:44:04 PM »
 I opened a pizzeria with my wife a little over a year ago and we are doing very well but I wouldn't recommend it for everyone. Honestly, I think that if you haven't worked in a restaurant before, it is more than likely that you will fail. Even if you can make good pizza, even great pizza at home it is very likely that you will fail. It takes a different kind of person to do prep for several hours and then make pizzas as fast as you can for 4 hours straight with no break. Anyone that has worked a busy dinner service knows what I am talking about. It's not just about making good pizza. You have to be fast, organized, calm and to have stamina(and a comfortable pair of shoes  ;)).
 Mario Batali says that the number one reason restaurants fail is because someone is a good home cook and their friends tell them that they should open a restaurant. They do and to some success, then they get a good review. They are all of a sudden so busy that there is no way they can keep up(because they are just a home cook) and the business fails.

Offline RoadPizza

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #14 on: March 11, 2010, 06:03:19 PM »
Everyone's been giving you really good advice.  People come up to us every other day, asking if they can franchise or sub-franchise for us.  Many are very earnest like you.  They see the long lines and it clouds up their eyes.  They start thinking that it's easy money.  It's not.  It's a lot of long hours and hard work.

The restaurant business is tough.  It's heartbreaking.  It really needs to be in your blood.  Remember: it's a service industry.  Your customers are always right.  Even if you think that you're doing everything right, there's always going to be someone dissatisfied with your product.  You just can't please everyone.  Just look at this forum.  Everyone has a different idea what makes a good pizza.

tdeane is right.  You need to work in a pizzeria.  You need to see if it's in your blood.  It takes a week or two to learn to make a pizza, but it takes months and years to get really good at it.  Do you want it that badly?

You can say, "well, I'll hire a good pizza man.  HE can make the pizzas for me."  Fine.  But what if he leaves or tries to hold you up for more money to stay?  You need to be able to do it yourself.  You need to be able to develop your own people as well.

Home cooking is a lot different from restaurant cooking.  You need to refine some of the things you do.  You'll need to idiot-proof your recipes also (unless you have the money to hire some really good people).

I don't want to burst your bubble/dream.  I don't think any of the other posters do either.  Your friends and family will try to support you on your venture by telling you to go for it and to follow your dream - but that's their job.  But reality is often harsh.  A great many restaurants open every year and an incredibly high percentage of them fail.  The competition really is that intense and a lot of them are better prepared than you are.

My father has been in the restaurant business since his teens.  My first job at a NY pizzeria was at the age of 12 (strictly under the table).  I rarely saw my dad growing up because he was such a workaholic and a perfectionist.  He was his company's first area manager and when he left, he ran the food service division for a large NYC bank (MH).  And even HE had a hard time when he opened his first restaurant.  It eventually became successful, but it's been a really wild ride.

And even though I think I know a lot about making pizza, I would have a lot of hesitation about starting over with a new concept.  It's just a crapshoot and I don't know if I'd have the nerves to do it.  I applaud you for wanting to do it.  I just think that you need to learn a lot more about being a pizza maker and about the restaurant business first hand.

Offline tcarlisle

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #15 on: March 15, 2010, 06:59:00 PM »
Do you live in NYC or the metro region? I assume you are talking about Manhattan?

You can't swing a dead cat in Manhattan without hitting at least three pizza shops, and to get something noteworthy usually involves a subway ride to Brooklyn. I doubt there is a location that really doesn't have competition within 25 blocks.

Anyways, just looking quickly there is a decent place available for 3400 a month at 600 sq ft.It is generally agreed that your lease be no more than 10% of your sales. So you'd have to generate $34K in sales a month to have a healthy business. The average price for a slice and a soda in Manhattan is $7. So that's about 4850 customers per month, which comes to 15 customers an hour assuming 7 days a week ten hours a day open for business.

Ignoring start up costs, etc.you have to think really hard how you will generate that much sales. That is 5000 people a month that are currently eating somewhere that you need to draw away from where they are currently eating into your place. And realistically speaking, your place is not going to appear to be top of the food chain. You won't have decor working in your favor at all as a startup. By the time you build out the kitchen and eating space, and all the stuff required to pass code (fire suppression, grease trap, etc) you won't have much left over for decor.

Then consider that many people will want wine or beer with that slice. If you don't have a liquor license, that is a significant part of the market you won't be able to capture.
« Last Edit: March 15, 2010, 07:10:40 PM by tcarlisle »

Offline tcarlisle

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #16 on: March 15, 2010, 07:31:08 PM »
Ah, my bad -- that location I found is NOT a decent location. To open shop at that location, you'd have significant monthly security costs. Found another at a decent midtown location -- $14K a month lease.So that's 140K a month in sales, pr 20 THOUSAND customers a month.... 66 customers [er hour, 10 hrs a day 7 days a week.

20,000 people you have to draw into your place.It is not a touristy location, so it won't be fed automatically. Suppose you do that -- somehow come up with a plan to generate 20K customers a month. If your product is not stellar, there won't be repeat business and not only do you have to find another 20K people next month, you have 20K less people available to you -- because they already tried you and determined it not worthy of repeat. You can't afford to miss on your first shot -- there are only so many people available in an area to form your customer base.

Offline GaryH

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #17 on: March 16, 2010, 10:53:58 AM »
Thanks for the input

The location is in Queens, and $7 is about the price for 2 slices and a soda in manhattan around midtown

Offline sarduyjorge

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #18 on: December 13, 2011, 11:09:43 PM »
Now this forum even made me think of my plans

excellent !!! :chef:

Offline Repguy

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Re: Advice on Opening Pizzeria in NYC ?
« Reply #19 on: December 19, 2011, 09:50:08 PM »
Save yourself time and agony.  Give me $50,000 and I'll crack you in the knee with a baseball bat. The financial loss will be less and the pain shorter lived.  ::)


 

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