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Author Topic: Are these numbers realistic for a NYC/NYC metro area pizzeria?  (Read 733 times)

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Offline PotentialPizza

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In the years ahead, I intend on opening a moderately upscale quaint pizzeria in either NY, NJ, or CT.

My numbers are below. I just need some feedback on how pragmatic you feel they are. (I'll only be using large pies in this thread, because they'd be the main seller and in this scenario will encompass all other items sold).

Cost to make an 18" large pie: $4
Asking price of 18" large pie: $20
Profit: $16
250 pies/day = $4,000/day
$4,000 x 365 = $1,460,000 gross sales

Expenses:

Food:

$4 per pie, selling 250 pies/day
$4 x 250 = $1000/day
Annual food cost: $1000 x 365 = $365,000

Labor: 5 employees, each earning roughly $30,000/year
Annual labor cost: $30,000 x 5 = $150,000

Rent: $7.26/sqft/month
$7.26 x 980 = $7,114/month
Annual rent cost: $7,114 x 12 = $85368

Utilities:
$10,000/year


Let's begin to add our expenses and subtract them from our gross sales.


Expenses: $365,000 + $150,000 + $85,368 + $10,000 = $610,368

Revenue: $1,460,000 - $610,368 = $849,632


I've heard that, on average, a pizzeria will earn just a 7% profit margin and some say as high as a 25% one.
These margins are drastically higher. Did I go wrong anywhere?

Thank you.

Offline Little bean

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #1 on: June 24, 2020, 01:22:52 PM »
If you are calculating fixed costs ( which product and labor before you are open are just estimates) you can make your percentage of profit be whatever you want it to be. Just increase the number of pies you want to sell and you could get a 50 percent profit if you would like to see that on paper. After your break even you are only accounting for product out of every pie sold which exponentially increases your profit....on paper....I could be missing it but I donít think anywhere in your projections you have accounted for any form of taxes. Sales taxes, payroll tax, income tax, you will probably be needing to pay these if you want to stay in business and it is not a throw away amount. Insurance as well.  I would do some research into that and throw that into your projections, and I have no idea your situation but 250 pizzas a day for 365 days sounds a bit ambitious to me, but Iím in Ohio.
« Last Edit: June 24, 2020, 01:24:28 PM by Little bean »

Offline chgorrell

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #2 on: June 24, 2020, 02:24:26 PM »
I now understand math teachers who would get frustrated when students don't show their work.
As little bean said, these are all estimated fixed costs.
How did you get to your labor cost> sounds like a google search number.
What are your hours of operations? Staffing will directly correlate to that, unless you plan to be a part of the operation there is also different pay scales needed for operations.
Where are your start up cost expenses? those need to be factored into your budget as well. How you choose to do that depends on a lot of things.
I would read read read read read, and constantly adjust your scope of your questions. Focus on the little aspects, then review your bigger picture plans, and adjust.
This forum is a wonderful tool, directing your questions to less broad subjects will help you get where you want to be.


Offline scott r

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #3 on: June 24, 2020, 03:03:49 PM »
For the amount of pizzas you are projecting I think you will find you need more staffing unless you are planning on buying premade/pre chopped everything and having very little prep. That will bring your food cost up and your quality won't be as good.   Even then, im not sure this is enough.   On a Friday and Saturday night I need 4 pizza makers to be able to keep up with the volume that I have.  I also have a line worker that does salads/wings/apps in addition to those pizza makers.

Also, If the climate is anything like it is in Boston 30k a year is not going to get you any employees that will stick around.   Up here $14-$15 would be considered a starting wage and you will need to move quickly up from there to retain good workers.

Offline PotentialPizza

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #4 on: June 24, 2020, 03:44:12 PM »
If you are calculating fixed costs ( which product and labor before you are open are just estimates) you can make your percentage of profit be whatever you want it to be. Just increase the number of pies you want to sell and you could get a 50 percent profit if you would like to see that on paper. After your break even you are only accounting for product out of every pie sold which exponentially increases your profit....on paper....I could be missing it but I donít think anywhere in your projections you have accounted for any form of taxes. Sales taxes, payroll tax, income tax, you will probably be needing to pay these if you want to stay in business and it is not a throw away amount. Insurance as well.  I would do some research into that and throw that into your projections, and I have no idea your situation but 250 pizzas a day for 365 days sounds a bit ambitious to me, but Iím in Ohio.

My estimates are predicated on the exact product I'd produce and average labor rates in the NYC metro area. As for the number of pies sold, I'm a bit puzzled--is 250 pies unreasonable? Where I am I'd estimate certain pizzerias can crank out hundreds upon hundreds of pies a day, so volume isn't an issue for them. If you don't mind me asking, roughly how many do you guys sell?

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Offline Pizza_Not_War

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #5 on: June 24, 2020, 03:53:21 PM »
Payroll taxes, insurance, legal, accounting, licences & permits, payoffs... Etc. A whole cornucopia of expenses will pop up.

Offline PotentialPizza

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #6 on: June 24, 2020, 04:00:34 PM »
I now understand math teachers who would get frustrated when students don't show their work.
As little bean said, these are all estimated fixed costs.
How did you get to your labor cost> sounds like a google search number.
What are your hours of operations? Staffing will directly correlate to that, unless you plan to be a part of the operation there is also different pay scales needed for operations.
Where are your start up cost expenses? those need to be factored into your budget as well. How you choose to do that depends on a lot of things.
I would read read read read read, and constantly adjust your scope of your questions. Focus on the little aspects, then review your bigger picture plans, and adjust.
This forum is a wonderful tool, directing your questions to less broad subjects will help you get where you want to be.

Some members of my family as well as friends have had pizzerias (and a few still do) in the NYC metro area. According to them, they pay their employees around $30k a year ($10-12/hr), and are open from around 12 AM to 8 PM (9 hours). For the rent, I've looked at suitable units all over the NYC metro area and found that I would pay around $7-8k/month for the space I'd need. I calculated the food cost based on the exact pizza I'd make with the exact ingredients. It came out to around $4.

Of course, these prices may not be 100% exact, but I'd say they're reasonable estimates. I agree that narrowing down the costs to the smaller elements is very effective.

Offline Little bean

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #7 on: June 24, 2020, 04:49:07 PM »
My estimates are predicated on the exact product I'd produce and average labor rates in the NYC metro area. As for the number of pies sold, I'm a bit puzzled--is 250 pies unreasonable? Where I am I'd estimate certain pizzerias can crank out hundreds upon hundreds of pies a day, so volume isn't an issue for them. If you don't mind me asking, roughly how many do you guys sell?

I am
A mobile operation in the final stages about to take over my own shop, 18 inch east coast inspired. I have just done all my projections and have labor and product much higher than you do. I agree with Scott, just know what we do on the trailer and what many friends in the industry do, and what their payrolls are, you have your labor around 10 percent. I donít think thatís a great projection in any restaurant, let alone an upscale New York style pizzeria being skilled labor to do that kind of volume. I always think itís better to take a slight it cut yourself and pay a little more to retain good staff, as opposed to having a revolving door of low paid employees. Honestly Iím not the right person to give opinions on the nyc metro area, but I would think no matter what your labor projection is way low, and that the most important thing is going to be watching portioning to be able to maintain that 20 percent good cost as well. Scott R Definitely has advice that I would listen to, as he is a veteran of the industry and always has great advice. Iím projecting for around 75 pies on wed days and around 150 on the weekends, this is my market.....in nyc I would go out of business with these projections.  We also have other menu items outside of pizza, gelato and alcohol.
« Last Edit: June 24, 2020, 04:50:49 PM by Little bean »

Offline chgorrell

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #8 on: June 24, 2020, 04:58:51 PM »
Iíd reread these comments and research them, and factor them into things. Your perspective isnít as relevant when your asking for others perspectives pertaining to business.
As someone whoís written a business plan, pizza not war is spot on, the hidden expenses and costs add up quickly, itís not about the mythical ďmarginsĒ of the pizza industry. Especially if you import goods, but thatís besides the point. Even if your number estimates weíre accurate or seemed close enough (from a banks perspective they play with horseshoes and grenades) the understanding of true costs of operating are of far greater importance. Pizza shops for the most part are cash till business that require a lot of business savvy to handle ebbs and flows of this industry.

Offline waltertore

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #9 on: June 24, 2020, 05:42:19 PM »
I have been gone from the NYC/metro NJ area for too long to comment on these numbers.  Back in my days growing up there rents were cheap, families and only close friends worked in the shop - there was only one shop.   You would start doing dishes, cleanup, folding boxes, and eventually graduate to learning all aspects of the business.  That ensured a reliable/skilled labor force.  I can say that I know a well known NYC pizzeria owner and they are constantly looking for help.  It is PITA to continually train how to make pizza.  IMO this is why so many NYC pizzerias have gone so downhill from what I grew up with.   How can you compare a 2 week pizza maker to one that has decades under their belts?  This is why we live in a smaller market and are able to make a decent living making pizza numbers that in NYC/NJ would put us out of business in a month when rent came due :-D 
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Offline Andrew Bellucci

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #10 on: June 24, 2020, 11:21:20 PM »
In the years ahead, I intend on opening a moderately upscale quaint pizzeria in either NY, NJ, or CT.

My numbers are below. I just need some feedback on how pragmatic you feel they are. (I'll only be using large pies in this thread, because they'd be the main seller and in this scenario will encompass all other items sold).

Cost to make an 18" large pie: $4
Asking price of 18" large pie: $20
Profit: $16
250 pies/day = $4,000/day
$4,000 x 365 = $1,460,000 gross sales

Expenses:

Food:

$4 per pie, selling 250 pies/day
$4 x 250 = $1000/day
Annual food cost: $1000 x 365 = $365,000

Labor: 5 employees, each earning roughly $30,000/year
Annual labor cost: $30,000 x 5 = $150,000

Rent: $7.26/sqft/month
$7.26 x 980 = $7,114/month
Annual rent cost: $7,114 x 12 = $85368

Utilities:
$10,000/year


Let's begin to add our expenses and subtract them from our gross sales.


Expenses: $365,000 + $150,000 + $85,368 + $10,000 = $610,368

Revenue: $1,460,000 - $610,368 = $849,632


I've heard that, on average, a pizzeria will earn just a 7% profit margin and some say as high as a 25% one.
These margins are drastically higher. Did I go wrong anywhere?

Thank you.

A couple of things:

Let's say 250 pies a day is reasonable - and to do that EVERY DAY OF THE WEEK is not easy for most shops.  Those numbers don't work with 5 employees at $10-$12 per hour - not in NYC - I'm talking the 5 boros. Minimum wage is $15 an hour in NYC and you are not getting a real pizza guy for under $18.  And that better be supplemented with a share of the tips.  Quality, high volume pizza men in NYC command a high number.

No way you're paying $10,000 a year in utilities.  Try tripling that. Or more.

$7,000 a month rent?  Outer boros sure, that's doable.

You're forgetting "costs of goods sold".  Paper plates, bags, napkins, spices, soap, towels, etc.  It costs $4.00 to make a pie? With average ingredients, sure. That's not "moderately upscale". I don't know that "average ingredients" warrant $20 for a cheese pie. That's what Joe's Pizza charges.  They've been around for a while and have a great reputation.  If you're getting $20 for a plain cheese, it better be good. Because your clientele at that price isn't the Domino's crowd.  It's people willing to pay a higher price for a higher quality product.  You putting that in a box?  Your cost just went up 20% from $4 to $5...

You're also forgetting a HUGE NUMBER. You wanna do 250 pies a day, every day of the week?  Then your delivery game better be strong.  I didn't notice any salary for in-house drivers, so are you going with the apps?  Say goodbye to 30%.

A few things off the top of my head: Sanitation pickup costs money, accounting, legal, website, social media.   Again, if you're doing 250 pies a day, every day, all of these little details need to be considered...

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Offline guybrush

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #11 on: June 25, 2020, 09:30:47 AM »
how do you plan on attracting and keeping customers? i donĎt see any marketing expenses. Billboards, Website, Google Ads, Social Media, Flyers, SEO, etc. 

What about equipment, will you pay for the furniture, pizza oven etc. with your saving or will need a loan?


Offline woodfiredandrew

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #12 on: June 25, 2020, 11:59:43 AM »
$6/pie x  250/day = $1500 /day  $1500 x 365 days= $547,500 cost of food
Labor went from $150 k to                                    = $300,000  labor
Rent stays the same                                             = $85,000
Utilities projection went from 10 k to                     =  $20,000 
Total cost                                                             =$ 957,500

Sale   $1,460,000 - expense $ 957,500 = $502,500 now need to pay taxes.

If you can pocket 200-250k from it i say it's worth it for me.
Initial investment around 125k for equipments and rest.
In houston those are high numbers, 70 pies on weekdays and 125 on weekend is doable here. 18" pie about $17-18 (depends on toppings)

Offline templinbeer

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #13 on: June 28, 2020, 10:49:40 PM »
We do about 280 pizzas on a Friday night.  We are open 3pm-8pm.  It takes: 3 dough prep people from 9am-3pm to prepare that much dough (18 hours of labor), 2 managers 1:30-9 (make sure we have cut up, sausage cooked et cetera), 5 pizza builders 3-8:30, 1 build manager, 2 cooks on 2 ovens, 3 cutters/organizers, 6 drivers, 4 phone people, 1 delivery manager, 1 pickup order cashier.  Take your 5 people and times it by 6.  These numbers are for pick up and delivery only.  My electric and gas is about 4,500-5,500
a month during the summer
« Last Edit: June 28, 2020, 10:51:26 PM by templinbeer »

Offline waltertore

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #14 on: June 29, 2020, 03:29:44 PM »
We do about 280 pizzas on a Friday night.  We are open 3pm-8pm.  It takes: 3 dough prep people from 9am-3pm to prepare that much dough (18 hours of labor), 2 managers 1:30-9 (make sure we have cut up, sausage cooked et cetera), 5 pizza builders 3-8:30, 1 build manager, 2 cooks on 2 ovens, 3 cutters/organizers, 6 drivers, 4 phone people, 1 delivery manager, 1 pickup order cashier.  Take your 5 people and times it by 6.  These numbers are for pick up and delivery only.  My electric and gas is about 4,500-5,500
a month during the summer

These numbers are not good.  Just an example - we can easily do 280 dough balls in an hour with 1 cutter, 1 baller, and me loading/unloading the mixer.   The other numbers are similarly out of whack.  I couldn't make a living with that work flow.
« Last Edit: June 29, 2020, 03:34:24 PM by waltertore »
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Offline Andrew Bellucci

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #15 on: June 29, 2020, 09:59:57 PM »
We do about 280 pizzas on a Friday night.  We are open 3pm-8pm.  It takes: 3 dough prep people from 9am-3pm to prepare that much dough (18 hours of labor), 2 managers 1:30-9 (make sure we have cut up, sausage cooked et cetera), 5 pizza builders 3-8:30, 1 build manager, 2 cooks on 2 ovens, 3 cutters/organizers, 6 drivers, 4 phone people, 1 delivery manager, 1 pickup order cashier.  Take your 5 people and times it by 6.  These numbers are for pick up and delivery only.  My electric and gas is about 4,500-5,500
a month during the summer

If you really have that much staff I think you're running at a loss.  I'm not saying you don't, it's just that in a post you made a few hours before this one you said you were using frozen dough balls and trying to determine if it was cost effective to make your own.

https://www.pizzamaking.com/forum/index.php?topic=63906.msg629472#msg629472

Or am I misreading these posts?

Pro Tip:  If you decide to buy a mixer and make your own dough, you'd use one bag of flour at a time, making roughly 80lbs. of dough per 50lb bag of flour.
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Offline templinbeer

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #16 on: June 29, 2020, 10:22:45 PM »
If you really have that much staff I think you're running at a loss.  I'm not saying you don't, it's just that in a post you made a few hours before this one you said you were using frozen dough balls and trying to determine if it was cost effective to make your own.

https://www.pizzamaking.com/forum/index.php?topic=63906.msg629472#msg629472

Or am I misreading these posts?

Pro Tip:  If you decide to buy a mixer and make your own dough, you'd use one bag of flour at a time, making roughly 80lbs. of dough per 50lb bag of flour.

Hi Andrew, I am 100% on board with any advice I can get.  As I said in that post we are really a craft beer bar that just happened to have our pizza explode during the pandemic.  We used to have a full menu (burgers, specialty tacos, salads, appetizers, homemade beer cheese, et cetera) and our pizza was a great addition to that menu.  We deliver to a 12 mile radius.  Our village only has 1,200 residents, and the nearest 2 towns are 10 miles away in opposite directions (8,000 residents and 11,000 residents).  We do use frozen dough balls.  The 3 prep people mentioned weigh, cut, press and par bake the dough for the night crew. I bought a dual heated dough press because we couldnít hand press enough dough.  We still even run out on Friday-Saturday nights and have to stop answering the phones at 6-6:30.  Even though we are only open 3-8 I am there 8am-9:30ish 7 days a week trying to prepare for the nightly craziness. When we were open 11am-2am I didnít work nearly as many hours, but we also didnít sell nearly as much food. 

Offline templinbeer

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #17 on: June 29, 2020, 10:38:34 PM »
These numbers are not good.  Just an example - we can easily do 280 dough balls in an hour with 1 cutter, 1 baller, and me loading/unloading the mixer.   The other numbers are similarly out of whack.  I couldn't make a living with that work flow.

We weigh, cut and ball that much dough in about an hour.  We however also press and par bake our dough for the night crew in that time frame.  We honestly just became this busy selling pizza and are very green in figuring our system out.  We typically have to stop answering the phones on Friday night around 6-6:30 because we just canít get enough dough prepped for the night.  Any advice from a veteran such as yourself would be greatly appreciated.  We went from doing about 30-40 pizzas a day (we are a craft beer bar that offered pizza with a full menu) to doing 280ish on a Friday night in 4 hours since the pandemic hit.  Itís honesty a bit overwhelming and frustrating to try to keep up.  We upgraded from a little peerless 4 deck oven to also adding a blodget 1060, both ovens are completely full from about 3:30-close on fridays, and now we ran out of hood space to add more oven space.

Offline Andrew Bellucci

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Re: Are these numbers realistic for a NYC/NYC metro area pizzeria?
« Reply #18 on: June 29, 2020, 10:40:15 PM »
I think it's great that you pivoted and that it's working out well for you.  It must also be hard to retrain staff on the fly to become a defacto pizzeria - that would account for some inefficiency.

I can tell you the Joe's setup in Ann Arbor (and pretty much the other locations):

2 pizza guys and 1 oven guy can max out 100 pies an hour, using 4 total decks, 3 pies in each deck.
1 oven guy
1 cutter, who also works the tablets for delivery
1 phone/register person
1 manager who deals with overflow (backup on phone, dealing with drivers)
1 counter person dealing with slices

2 prep guys during the day shift, 1 at night.

That's about as lean an operation you'll find for a high-volume shop.

Knowing that you'll get back to being a Craft Beer Bar in the future, I think you're in great position to ride it out until then.  Just keep it simple and steady as she goes...

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You bet on how the horse finishes.

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