Newbie question- COGS for a pizza shop

[cls550]

Hello, I am looking at buying existing, long-lived pizza shops in CT. My skills are in digital marketing and digitalization, not making pizza.

I came across a pizza shop that looks like a possibility. One thing that really puzzles me is that cost of good sold is $503K on sales of $1M. Doing online research suggests that COGS for a pizza shop should be under 30%. Is this still accurate in 2023? To be clear, COGS only includes the cost of food and drinks (including wine and beer), nothing else.

Thanks!

[Pizza_Not_War]

Don't know the answer, but that is an odd looking income statement.

[foreplease]

I agree, it look unconventional. The credit cards and ATM? Are they paying for ingredients using those? The two banks at the bottom, the only thing I can think of are the remittance of payroll taxes?


If you acquire this cls550, less ambiguous account names will raise fewer questions with banks and the IRS, fwiw.

[Jimbolini]

Long story short, the goal is 30-30-30 with 10 profit. (A lot more research on this if you search the forums)

Have you worked in pizza before at all?

[deb415611]

As Tony says it looks unconventional.   To me it looks like it may have been done by someone that wasn't a professional, there are several things that would make me want to look at the underlying detail - accrual vs. cash (there is inventory change but in a P&L that isn't correct it may not mean that it is accrual), what is in those credit card/atm accounts as that general an account would make me question whether all cogs purchases,  whether they are recorded in correct period and if there is also interest expense in there.   Sales tax shouldn't be on P&L but assuming it is there should be a corresponding expense item which we don't see in COGS.  Also, small but what is the "deposit" account - recorded as it is I'd question whether non-sales item like employee retention credit or credit card advance or what?   Also - why ATM w/d's in a business that would have cash sales.   If there are costs in cogs that aren't cogs your original question doesn't matter as you can't know what cogs % should be for this P&L.    The notes that aren't expanded might have some of the answers.

If you don't have already you would want to have an attorney and accountant help you look at these things, they will know or be able to find what your percentages should be plus be able to analyze the data you are looking at.  Help you with a business plan.  Setup your entity, payroll, sales tax, etc,  etc....    Also, I'd be careful what you post on the internet - what did you have to sign to get a copy of that P&L that you are posting in public - Fairfield County CT is not that big.

[cls550]

If you acquire this cls550, less ambiguous account names will raise fewer questions with banks and the IRS, fwiw.

Indeed, I can't believe it that this business runs their books like this, especially since they have been trying to sell for over a year.

[scott r]

Doing online research suggests that COGS for a pizza shop should be under 30%. Is this still accurate in 2023?

Yes, still accurate.  These days you need to raise prices to make the numbers work. 

[cls550]

Yes, still accurate.  These days you need to raise prices to make the numbers work.

Thank you!

[Swinger-mike]

Long story short, the goal is 30-30-30 with 10 profit. (A lot more research on this if you search the forums)

Have you worked in pizza before at all?

waiting for Craigs response on that one