Author Topic: For Experienced Shop Owners- some average #s?  (Read 17686 times)

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Offline maximillan

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For Experienced Shop Owners- some average #s?
« on: April 03, 2010, 12:20:53 AM »
Okay, so I've been a pizza freak since college, and before.  If there was ever a business that I should dip my toe in, it's the pizza biz.  So, I'm considering doing it; but, I do other things and may not be able to dedicate my entire effort to pizza.  Thus, I need to consider the profitability of an average (who knows what this is  ::) ) shop, and make some decisions.

Okay, so here is what I'm wondering, based on the following assumptions:

Assumption 1-   "large-average" town of 100,000 persons, with above average incomes

Assumption 2-   business is totally "average" for a business that will remain viable.  In other words, it's not a bust, but also not the #1 pizza place in town (yet  ;D )

Assumption 3-   this is a pickup and delivery only company  (that very well may not be the case, but I'll consider it first)

So, based on this, what can I expect in the following areas: ?

1)  Average Monthly volume of pies

2)  Average total GROSS revenue (daily, weekly or monthly....however you want to express it)

3)  Average GROSS profit (average sale price of the pies minus the cost of ingredients)...if you can express as a %, that would be quite helpful....since I can just apply that to the total sales, and see if fixed costs (rent, advertising, etc) covers it plus how much.

4)  Average net profit % for a delivery pizza shop in the town explained above (100,000 people)?

5)  For a decent (average to above average) pizza delivery shop, how much NET NEt profit $$$ can be expected to be generated (for owner's benefit) per location?  In other words, how much would the owner put in his/her pocket from the biz?  

6)  As a way of comparison, how much does the average Dominos, Papa Johns or Pizza Hut delivery shop do in
      a.   total annual sales volume ($)
      b.   gross margin % per outlet
      c.    net profit margin per outlet

 :-\ :-\
« Last Edit: April 03, 2010, 12:22:49 AM by maximillan »

Offline BrickStoneOven

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Re: For Experienced Shop Owners- some average #s?
« Reply #1 on: April 03, 2010, 08:49:49 AM »
I was working yesterday and we did around 300 and ran out, people kept calling for more and the owner had to turn them away.

Offline ExPizzaGuy

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Re: For Experienced Shop Owners- some average #s?
« Reply #2 on: April 04, 2010, 12:20:32 AM »
I will await answers from others but your less than 100% on site dedication to the business will be the biggest negative. Two of the shops that I sold in 2006 and 2007, which were very profitable, closed in March. Both were sold to absentee owners.

The big chains that you mention are just that - chains. They battle each other with huge budgets and inferior product. This does not sound like your approach but if it is, you do not have deep enough pockets part time. My stores (all seven) did well because I and my family ran them 24/7.

Good luck and I await others' answers.

Offline pcampbell

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Re: For Experienced Shop Owners- some average #s?
« Reply #3 on: April 04, 2010, 08:00:50 AM »
You might be better to ask on pmq.com/tt but I don't think anyone can make these assumptions for you....these numbers are all very specific to a lot of things, your location, competition, marketing, pricing, etc.

I can tell you that a large 16" pizza using basic not terrible but not amazing ingredients and a box is around $2.25 without bulk discounts.  How much you can sell that for I don't know. 


Offline GotRocks

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Re: For Experienced Shop Owners- some average #s?
« Reply #4 on: April 04, 2010, 12:49:53 PM »
Try this out.

It is said that 20% of the population eats pizza two times per month.

So that will give you 20K people two times a month for a total of 40K, divide that 40K by the number of pizza shops in your area and that should be your base customer flow.
I feel that 20% is high, so when I do financial projections, I like to use 12, 15, & 18 percent to chart out my P&L's in three different categories (the good, the mediocre, and the pessimistic)
I look at that 12% pessimistic number the most.
You will then need to have a menu written, and a realistic average price that you could expect each person to spend with you.
To be accurate on this, you should have figured your food-cost ratio, multiply you expected customer flow by that average price you can expect them to spend
So now you have these figures, how many will your dining room hold, how many times will you be able to turn the dining room over each night? use 80% of that figure.

It is a lot of screwing around, but this needs to be done! you need  to know if you are going to be profitable before spending any money on this.

You should also figure your monthly variable and fixed costs, divide that by the number of days you are open to get your daily "Break-Even" number.
This gets interpolated by using your combined food/labor cost percentage in those calculations too.
A combined food/labor cost should be no more than 55% of the menu price for each item, I have seen places run at a 66% combined cost, but they had huge volumes to make up for it.

I swear that projecting P&L's borders an alchemy, but it is something you need to do, especially if you need to finance this venture.

Oh, and good luck with the banks!!! They are not lending, even with a 90% guarantee from the SBA, so do not expect banks to want to lend unless you have the full amount of collateral in liquid assets and another job above and beyond the restaurant with income to cover the loan. How do I know this? Take a wild guess!

We have over $700K in assets, and no debt, but I am having difficulty getting $125K to expand my part-time catering into a full-time restaurant. it is friggin maddening!!
A skinny cook is not to be trusted!