Any Pizza Owners out there?

[tvadera]

Hi All,

I am planning to open a pizza shop with a friend of mine. My friend currently has a retail business and I have an IT job, so business is completely new to me.

Details:

Below are the approx set up costs:
1 Oven 25,000
2 Canopy 8,000
3 Banbury 2,000
4 Gas Connection 2,000
5 Misc 10,000 {signage, cash register, etc}
Total approx : 50,000 (set up)

Ongoing costs:
1 Rent 4,000
2 Gas 500
3 Chef Salary 6,000
4 Kitchen Staff 3,000
5 Marketing 500
6 Telephone 100
7 Insurance 150
8 Electricity 300
9 Driver Part Time (x2) 3,500

Total approx: 18,000 per month

Hours of operation: 11 am -10 pm (7 days a week)
Location: In Melbourne,outside a busy Zone 1 train station
Size of shop: 50 sqm (small shop suitable for pizza joint)

Sale Items:
1. Pizza Slices
2. Pizza
3. Coffee
4. Fries
5. Drinks
6. Sandwiches
7. Garlic Bread

I am looking for feedback with regards to set up costs and monthly expenses, would like to refine my workings based on valuable feedback I receive from exp members on this forum

Any feedback/suggestions/tips from people who have gone down this path would be great.

Do's and dont's of this business would be highly appreciated.

Goal is to diversify from the day job, have a side business and then once it replaces job income, make the switch or open a new business

Regards,
TV

 

[kathryn d]

Will you need to compete with the low prices offered by Dominos or Eagleboys in this area?

 

[tvadera]

Hi Kathryn,

There are Pizza Hut, Dominos everywhere. I had a look at their model and it actually takes lot of sale to break even. With an independent store, I can operate it way I like and hours I like. I can sell items that I think would sell.

As the shop is close to the train station, it would have lot of foot traffic and there is a tram shop just outside the shop so combo deals like pizza slices, fries, drinks would sell a lot

But to answer your question I would be competing with franchised stores for sure.

 

[Peter_Tersteeg]

I did own a pizza earlier today at lunch time, but alas it has since been consumed.

I don't know what it actually costs to set up this sort of venture, but consider that many franchises are looking at $250k+ to get in the door. Your own business would probably be cheaper, but I'd hazard a guess that it's a lot more than $50k.

Also not sure what the various award rates are in this industry, but make sure you've also factored in Workcover & super into the ongoing costs. Your equipment insurance might only be $150 (probably more for a commercial kitchen), but have you considered PI insurance?

What's the cost of running the delivery vehicles? Purchase upfront with cash or lease (either option is missing in your costings).

Don't forget to pay yourself in all this as well. You've gotta make a profit.

Most people are very suprised to find out what it actually costs to set up and run a business.

 

[tvadera]

Thanks PT, point noted for Work cover and Super.

 

[pinkboy]

^^^ What PT said! ^^^

Also the rent @ $960/m2?
Outgoings as well I presume?
Solicitor and Accountant fees?
Food and disposible material costs like packaging/cutlery/cups etc.
Waste costs?
Ongoing council certifications?


pinkboy

 

[weg]

Have you done your market research on the area? Who are your customers? How are similar businesses around you doing?

Are you doing your own DD as well, or is it just your partner doing this? How successful have his previous businesses been (track record)?

Have you satisfactorily sorted out how the partnership will work - finances, distribution of work, etc?

How will you deal with problems associated with this if things go wrong, and what will be in place to protect yourself?

Just some things to consider.

The better prepared and knowledgeable you make yourself the more likely you are to succeed.

 

[wylie]

I know nothing... except that friends once ran five (maybe six) pizza shops, one of the cheapie franchies ones. I recall that they lived out of Brisbane and some stores were in Brisbane so one of them spent a couple of nights in Brisbane overseeing the Brisbane stores. They had small children and didn't see much of each other.

I do recall them saying it was pretty hands on, that they helped with the preparation, and cutting up of toppings, and that they didn't make much money per pizza but relied on the huge turnover.

I also recall that soon after this conversation we heard that they went their separate ways. Perhaps they were other issues at play, but having a very hands on business requiring being away from home a couple of nights a week probably didn't help.

It made me think "not for me".

 

[weg]

My observations are that these casual partnerships (as in not bound by legally detailed contracts) in small business often end badly, sometimes with one person being lumbered with more debt than the other if things go wrong.

That would be my biggest concern here.

Personally I'd prefer to do something like this on my own, unless it was with family I knew and trusted.

 

[Nemo30]

3 Chef Salary 6,000
4 Kitchen Staff 3,000

My son used to work at Pizza Hut - definitely no chef there...

 

[jim1964]

I also recall that soon after this conversation we heard that they went their separate ways.

Having experienced the pain of divorce through running a business,my advice would be to "always" make time for your partner,and always pay yourself 1st.Good luck with the venture.

 

[kathryn d]

I also know nothing about pizza places.

I wonder why you need a chef. Is there only one chef?
Does this person work 7 days a week?

Is the chef the manager?
What happens if this person calls in sick?

If I am personally going to invest money into a business, I would be very hands on, at least initially.

It's very much like property. No one will look after your interests, better than you.

If you decide to move forward, I do wish you well.

 

[tvadera]

hi,

Chef: I mean person who would make the pizza's , so need an experienced personnel to do the job, he would not have a chef degree as such, my bad should have worded it differently.

All the contracts would be done through a solicitor and DD is in progress to find out more about weekly takings, % of expenses, net take home income, etc

 

[Nemo30]

hi,

Chef: I mean person who would make the pizza's , so need an experienced personnel to do the job, he would not have a chef degree as such, my bad should have worded it differently.

All the contracts would be done through a solicitor and DD is in progress to find out more about weekly takings, % of expenses, net take home income, etc

At Pizza Hut they have 15year olds making the pizza. Not sure you necessarily need an experienced person to make the pizza, however a good manager is essential.

 

[MsAli]

I'm surprised with the electricity costs of just $300?

 

[DaveM]

I'm surprised with the electricity costs of just $300?

Same, power for my office with 4 staff is $300pq, and thats without cool rooms and make tables and dishwashers and so on.

 

[Corey Batt]

My first job was a pizza maker through high school and early university. You need to understand the industry to get it right.

I worked for an Italian family, so there wasn't much English being spoken most of the time. It's not that difficult to train people, the only part that makes or breaks a person is stretching the dough. If they pick that up within 2 days, you'll have them trained on everything with a week to perfection.

No qualified 'chef' staff necessary, just two+ pizza makers who know what they're doing, plus another two + ancilliary staff who take orders, serve, clean, top up toppings, prep work.

Staffing numbers is highly dependent on your turn over. To give you an idea, in 5 hours I used to make 300+ pizzas whilst doing food prep + clean. At $15/hr! If you've got a number of staff only doing a couple hours a week (which is the case for some uni students + high schoolers) they might not even meet the threshold for super payment reqs.

Your staff age demographic will be 15-22 age group most likely. Good for cheap wages.

Cover your *** with insurance, ovens at 230 degrees, lots of chopping going on. You don't want to have to pay for fingers to be put back on.

To get an edge and a good reputation, have blokely style options. Mexican, hot chilli, yiros/kebab pizza, garlic sauce. If you find a good option, you will get repeat customers just on the basis of a good menu option. Lasagne's, calzone, canneloni are good options too, easy to pre-prepare and just keep warm. All keeps staffing numbers low if they can be mass-produced earlier on or during quiet periods.

Just what I can think of off the top of my head.

Oh and BTW, pizza shops are well known for money laundering....

 

[westminster]

I'm the same as Corey - Pizza Sprinkler extraodinnaire from 18-24yo.

Your main employees will be students who want to work casual jobs and you will be surprised how many people you will need in the shop during peak times if you want to make money.

During peak times we had 1-2 person taking orders/till/phones; 1 person on the oven taking out and cutting, 2 people making the pizzas.

Depending on the size of your operation you will need at least 3-4 people to operate. One of them will be senoir and you will entrust them with dough (it will make or break you), opening the shop, going to bank, handling the staff.

Better to have quite a few staff as casuals and 1-2 permanents in the senoir roles. That way you can cover people on holidays and sick.

My best piece of advice is to find good people who make the pizzas. There is an art to putting stuff on that makes it look good and not throw toppings around so that more ends up on the bench. I worked with a number of numpties who wasted a lot of food by throwing it around and not on the pizza and that is $$$. They don't have to be experienced but they do need some care.

Get one of the conveyor belt gas pizza ovens - much safer and less burnt pizzas.

I think a number of your figures are out - staffing, electricity and insurance.

Personally I wouldn't be going into the business without first working in a pizza place for awhile to get an idea of how one is actually run. I suspect there isn't that much money to be made in them these days.

 

[MsAli]

Same, power for my office with 4 staff is $300pq, and thats without cool rooms and make tables and dishwashers and so on.

Wow. That sounds cheap compared to what we pay at home

 

[westminster]

I don't see a walk in cool room, dough mixer, dough roller (if you don't have anyone who can throw), cutting machines (forgotten it's name but it slices pepperoni, onion, capsicum, mushrooms etc) on the list of equipment