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How to start a pizzeria

Updated on August 4, 2015

Introduction

The pizza business is a good business to run in the United States, because 93 percent of American consumers buy pizza at least once a month. Building a successful business with that many potential customers is fairly simple, if done right. The average pizza consumer knows what type of pizza they are looking for, and as long as you provide it, you stand a good chance of getting their current business

Wherever you live in this country, you can be successful running a local pizzeria, as long as you have the right information about what the local pizza eating habits are. It is hard to sell a Chicago pizza in New York city, or other areas along the east coast. However as long as you tailor your pizza to the area you are in, you shouldn't have any problem.

In order to open a local pizzeria there are certain pizza business concepts that you need to understand. The following are things you need to have a knowledge of, before attempting to open a local pizzeria. The items are listed in the order in which they should be investigated.

  1. The type of pizzeria to open

  2. How much will it cost to open the pizzeria

  3. How do I find the right location

  4. How do I deal with local authorities.

  5. How do I market a modern local pizzeria

  6. Obtaining the right recipes for the pizza dough and pizza sauce

  7. How do I handle pizza deliveries

  8. How to handle the carryout side of the pizza business

  9. How large a menu do I need

As you read through this article, we will look briefly at each one of these ideas, and then show which other hub you need to look at for more information on the subject. Then reading that hub should give a thorough explanation of the idea. You can proceed to any of my hubs by clicking on the pizza Dave logo in the upper corner of the present hub.

When you can't find the information you need just send me an email at dave3808@gmail.com and ask for the needed information. I will now try to give a brief answer to each one of the above points and then refer you to more information if I have it available


Carryout style pizzeria

The type of pizzeria to open

The first concept to consider is the type of pizzeria to open. The only type of pizzeria that makes economic sense at the present time is a carryout and delivery type of pizzeria. The reason is the rental and renovation cost of opening and operating a pizzeria.

The cost to open this type of pizzeria in most parts of the country is about $75,000.00. If you try to add a dining room you will have to at least double the cost when opening your pizzeria, and there are also added rental, utility, and labor costs in operating a dining room. In most cases you won't be able to recover this added cost from the increased sales of the dining room.

When you examine how the average person orders a pizza you will see why I recommended the course that I did. Pick up type pizza orders are 45 percent of the total pizza business on a nationwide basis, and another 35 percent is made up of delivery orders.

However if you live in a colder part of the country you will probably find that these two numbers are reversed. The dining room portion of the business is only 20 percent of the total pizza business on a nationwide basis.

The facts as I have laid them out should provide a good answer as to why I said a pick up and delivery pizzeria is the only type of pizzeria to open. Next we will look at the cost to open and why it costs that much to open a pizzeria



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Remolding a store for a pizzeria

The cost to open a pizzeria

We will now take a look at the costs of opening a pizzeria. The first item to consider is the cost to lease the store. You have to allow for a rental deposit and the first months rent when you lease the store, and because of reasons I will explain in other articles you should allow $1250.00 a month for rental. This means that you need to allocate $2500.00 for the rent and deposit. You then need to allocate another $15,000 dollars for remodeling the store.

You need to allow about $35.000 dollars for buying the equipment to outfit the store. I have an article purchasing equipment for a pizzeria that gives more details. You also need $2,000.00 to buy the initial supplies for the store, and $2,000.00 to do the marketing for the store. You can see why you need $75,000 dollars to open a carryout and delivery place from scratch. In a separate article I will go into much greater detail on getting the doors open in a pizzeria



The right location

How do I find the right location

The single most important item in opening a pizzeria is finding the right location. As you probably understand by now you can go out and buy an existing pizzeria cheaper. However most of the time you are buying some other owners problems.

The better way is to carefully research the general area where you want to open, look for the right zip code, and the best location inside that zip code. You need to examine the demographics that make up a good area to open a pizzeria.

The first statistic you will look at is the number of residents that are under the age of 35. The higher this number is, the better the profit your pizzeria will make. The second number you are looking at, are the number of children between the ages of 3 and 11 living in the zip code.

These two age groups eat the most pizza, and this makes the zip code good for starting a pizza business. The third statistic is the number of apartments in the zip code. Consumers who live in apartments are more likely to have extra money to spend on pizza.

All of these statistics can be had from city data. Com, by typing in the zip code you are researching. You can also go to Google and type in the words demographic data and the zip code you are looking for. You can get the needed data from a lot of other sources however city data is one of the best.

Once you determine the best zip code it is time to look for a good location in that zip code. You probably want to be near the center of the zip code, and in a smaller strip type shopping center with easy access. The easy access is very important as pick up customers are very wary about turning across heavy traffic to enter a parking lot.

When you have found a couple of shopping centers that are in decent locations it is time to locate the right size store for your pizzeria. You will be looking for a store that is around 1,000 square feet, and that rents for about $1.25 per sq ft.

When you find the right location it is time to begin your negotiations. You will be trying for a five year lease with two months free rent at the beginning for remolding time on the store. You need to do this remolding in the summer time if possible, because that is usually the slowest time for pizza places.

When you are ready to start remodeling you should have most of your equipment bought and available. That way as you remodel you can install the equipment. I have an article on finding the right location where we go into a lot more detail. Next we will look at dealing with local authorities, and what they need.


How to deal with local authorities

One of the hardest jobs in opening a pizzeria is dealing with the local government deptartments. When you find the right location the first thing you want to do is schedule a visit with these local authorities, and get any input they have on the pizzeria you want to open.

One of the first things you will need to get is a sanitation license, and the local health department can tell you where to take classes and be tested.

The building department can tell you of any requirements they have before they will allow you to open. The local fire department will let you know about any codes they have before they give you their approval These three city departments will all have to give their approval before you can open.

The most important one is the local health department, as they will inspect you about every three months. You will also have to go and buy a local business license on a yearly basis. These are about the only local authorities you will have to deal with and how often. Next we will look at obtaining the recipes for pizza dough and pizza sauce


Making good dough

Getting the right recipes for pizza dough and pizza sauce

Using the right recipes for your pizza dough and your pizza sauce is very important to your future success as a pizzeria.

When you are making dough for pizza it is important to first understand the type of pizza you are going to make. 61 percent of the pizza market is taken up by regular thin style pizza, and we will assume that is the style of pizza you want to make.

When producing this style of pizza it is absolutely essential that you use high gluten flour for your pizza dough. You can buy all purpose flour for a cheaper price, but it is a false economy. There is a noticeable difference in the taste of the pizza, and it will affect your pizza sales if you use the wrong type of flour.

The second thing to consider is the size bag of flour you use. If you are using a forty or sixty quart dough mixer you should only use a 25 lb bag of flour. Yes you can use a fifty pound bag of flour in a sixty quart mixer but you shouldn't, because you will wear out the mixer a lot faster.

If you need an exact recipe here is an article How to make pizza dough that gives an exact recipe for a twenty five pound bag of high gluten flour. This article also talks about how to treat the dough after mixing.

The next item to consider is making the right type of pizza sauce. When you are making pizza sauce the only puree that I would recommend is full red puree. I have been dealing with pizzas in the Chicago area since the early 1960's, and the only puree that the big places would use is full red.

If you start your pizza sauce with full red puree as a base you are sure to have a much better pizza sauce to use in pizza making. If you need an exact recipe I have an article making a good pizza sauce that gives the needed recipe. It also talks about how to treat the pizza sauce after mixing.


How to market a modern pizzeria

All large pizzerias understand that marketing is about 80 percent of having a successful pizzeria. Having a good marketing program is absolutely essential to having a successful pizzeria.

You also need to understand that the marketing function has changed a lot over the last fifteen years. The way we marketed in 2003 at a pizzeria I ran by northern Illinois university and the way you should do the marketing today are a lot different.

Back then to get college business we would pass out fliers everyday at the dorms. Then each evening we would get a lot of calls after 9pm for dorm deliveries. That university business was the backbone of our pizzeria business in Dekalb Illinois.

However if I was doing business today at the same pizzeria I would market quite a bit different. First I would have a POS system which I didn't have then to keep track of all my customers, and how many times they ordered.I have an article The POS system guide which gives a lot more details

Second I would have a website for the pizzeria that all customers could order from if they wanted to. That website would be integrated with an online ordering service which customers could use, and not have to order over the phone.

The orders would then be printed out at the pizza make table ready to make. I would also have the online ordering site set up so customers could place orders using their smartphones. The online ordering site collects email addresses that can be used for email marketing.

I would be using text messaging to do marketing to customers that signed up for it. I would also be signed up on social media and would market through it. Most of these ways to market weren't available ten years ago, and are the essence of how you market a pizzeria today. I have an article how to market pizza that goes into much more detail. You can still use some of the older methods if you incorporate these new ideas into your marketing campaign. Next we will look at the pizza delivery business and making it a success.

pizza delivery man

Running a successful pizza delivery business

Running a successful pizza delivery business is a matter of timing. Customers have to understand that they are going to get their pizza in a reasonable amount of time, and in a warm condition. You have to hire and fire delivery personnel according to how well they know the area, and how fast they can handle deliveries. If they can't get deliveries out fast enough then you have to get rid of them.

The second thing needed is to spot check with customers and find out if the driver was fast and courtous. You are interested in three things. The first thing is whether the driver delivered quickly enough. Second what was the condition of the pizza when they received it. Third did the driver have correct change when they delivered the pizza.

Next we need to look at how the drivers are paid. In most local pizzerias the drivers are paid by the delivery. At the current time that should be between $2.50 and $3.00 per delivery, and that takes into account the higher price of gas. The delivery charge is added to the carryout price of the pizza order, and when you checkout the driver, you add up the carryout prices, and collect that amount from the driver. The rest is his pay.

You are not interested in what the drivers make, and you don't need to keep track of their daily pay. That is why you collect the carryout price for each pizza that is delivered. The drivers are independent contractors and responsible for what they earn. Unlike your other employees drivers only deliver pizzas, and you don't have to keep track of the amount they earn.

Drivers are responsible for their own cars, fuel, and insurance. When you hire a driver you should check that he has the state required insurance, and a proper license. Other than that drivers are responsible for themselves. Next we need to look at the carryout side of the pizza business.

the pickup side of the pizza business

The pizza pickup side of the pizzeria business accounts for 45 percent of the total pizzeria business on a national basis. Since the pickup business is so important to gross sales we need to consider how to increase this segment as much as possible.

Coupons are an important way to promote your pizzeria's pickup business. However in the new type of pizzeria the coupons need to be displayed online to be really effective. The online sales of pizzas is becoming very important to the gross sales of pizzerias. By putting your coupons online you are pushing your customers to place their orders online. Also customers will get use to accepting the current online coupons. Another benefit is you save on labor by having less order takers when you are busy.

Not all of your customers will order online, therefore you also need coupons to get people to order by phone. Just keep in mind that about two thirds of your coupon business should come from online business. You need a couple of coupons that are distributed locally at all times to bring in new customers that order by phone. If you follow these ideas in general you should have an effective carryout pizza business.

Summary

The running of a successful pizzeria is quite a bit different today than it was even just ten years ago. The big four pizza franchises are using the latest marketing devices, and if you want to compete against them you have to do the same things.

Papa Johns is trying to get to where they can guarantee a pizza pickup that you can get in ten minutes. They are buying pizza ovens at $34,000 apiece, because the ovens can cook a pizza in four and a half minutes. At that rate they can guarantee a ten minute pickup. Pizza hut is getting close to getting 50 percent of their online orders over mobile devices. You can have the same thing but it will take a lot of effort on your part. I also have an articleHow to manage a pizzeria

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      Luke 2 years ago

      I just did a presentation in college about starting up a business and my business was a pizzeria. This was a great outline to follow for my paper and presentation!

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      David Thompson 2 years ago from Kingman Arizona

      No in most parts of the country you also need a delivery business. With the higher costs involved in opening a pizzeria you need to be able to do every dollar of business possible to support the infrastructure you have set up. In a future article I will explain the relationship between sales, fixed costs, and variable costs for a pizzeria. There you will see the need for using every means of sales consistent with your model of a pizzeria. Glad that you enjoyed the article

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      PG 2 years ago

      Great article. Curious if you think a strictly pickup business is doable?

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      Joe 2 years ago

      Id like to know if there are ways to cut some of these costs, such as buying equipment used.

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      David Thompson 2 years ago from Kingman Arizona

      Your very welcome! My main agenda is to show more people how to go into business for themselves.