The Fresh Loaf

News & Information for Amateur Bakers and Artisan Bread Enthusiasts

Opening a Pizzeria

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cliffgarz's picture
cliffgarz

Opening a Pizzeria

Hi all I am think ing about opening a wood fired brick oven pizzeria.  The town I wanted to open in is about 2.5 hours away from where I live and has a larger population that i think will support such a pizzeria.  Some have suggested that I start smaller and open in my town and if it goes well then go big with it to the banks for financing.  I do have the capital and investors for the small operation I am just not sure of our town, or have i found a location that I am really excited about.  i have a friend who owns a few places in Atlanta and as he says location location location is key and I agree plus I believe I have a better product than anyone else in the city.


I have done my business plan and put together all the financials, I'm even heading over to Italy to work with some of the pizza people there next month.  Just undecided if I should go BIG and open up in the bigger city or start smaller and stay at home.  


 


The cost to open big about 225,000 cost to start small about 85,000.  I would have to have two homes as my family would not move til we are established plus she has 3 years to go before retirement so she would have to stay behind to finish work.


 


Any thoughts?


 


thanks


Cliff


 

DerekL's picture
DerekL

New businesses are hard enough to get off the ground without saddling yourself with the additional debt of a second home.  Any owner operated business is going to take an incredible number of hours and be stressful on your marriage - even without the strain on both of you of being seperate for weeks on end.


 


How is your existing business worked out?

Lucifer's picture
Lucifer

What makes you think you have "a better product than anyone else"?

LindyD's picture
LindyD

Hi Cliff,


Terrific that you want to start up a small business.  They're the backbone of our country and provide much needed employment.


I'm not sure why you're asking a group of strangers whether you should invest nearly a quarter million bucks or $85,000 into a venture which will deeply impact your family - and your future.  I think this is something you should talk over with your family first. 


You should also consider contacting the Bread Bakers Guild of America to see if they can put you in touch with a consultant in your area, or in the larger town you are considering. Tel: 707.935.1468 Guild E-mail:  info@bbga.org.  Money spent working with a professional who can warn you about potential pitfalls could save you in the long run.


You'll also have to line up a good CPA, attorney, and real estate broker to help you with the tax, licensing, and technical stuff, if you haven't done so already.


It's terrific that you have the energy, desire, and daring to build a new business; I hope it's a rousing success!


 

cliffgarz's picture
cliffgarz

Nothing in my area but chains and two small pizzerias who do not know what they are doing when it comes to pizza.  They have great ovens and what could be a good product but come on you can't get a good pizza cooking on screens cause you don't want to dirty your oven.  They both have a good following and I have had several of their customers tell my pizza is far better, I have been gathering a good following and when I do the weekend bakes usually have good turnouts to point of overwhelming.  (since it is only me doing everything)


I have talked it over with the family and however we go they are supportive because working the 9-5 month to month gets old especially as you get older.


 


I am working on getting in touch with realtors bankers and such I found if I that calling organizations (which you have to leave messages) usually results in no one returning your call I have found on several attempts with no calls returned either they are way too busy or just don't care.  I will give the bbga a call to see if there are any consultants in my area.  I have a good friend who owns a few restaurants in Atlanta guiding me right now.


thanks for the advice


I keep you updated 


 

Alfie's picture
Alfie

If you can do a brick oven style pizza made with reasonable care and ingredients in a good location, it will probably work.  $85K is a large chunk of cash to lose so I would certainly review carefully, as suggested by others, all the possibilities including disaster.  My wife and I were in Hannibal, MO yesterday for lunch and there a was a pizza place that made a reasonable pizza except for the crust - tough.  Since there are many visitors to the quaint shopping area where the shop was located it worked.  They also probably made a high percentage on wine. 


Good luck,


Al


 

JavaGuy's picture
JavaGuy

I'm glad to hear it. I live on the north west side of Atlanta and there are very few places around that have really good pizza. What part of Atlanta are you thinking about? (For anyone not familiar with Atlanta, the actual city of Atlanta is not that large, but the metropolitan area is about 90 miles in diameter.)


Also, if you're from one of the larger towns in Georgia, such as Macon, Augusta, or Savannah, you might want to consider staying put. Small and mid sized towns don't get many new restaraunts and they can draw a big crowd quickly.

aznana's picture
aznana

My personal pizza is maybe not the best, but in my small town in AZ, is noticably better than what we can get from the chains here. Does that mean I should open a pizza business?  NO. I AM a retired accountant, and IMHO, if you had an actual, well researched and costed business plan, you would not be asking for advice here on this forum of "dough people" who will absolutely give you stellar advice on the quality, etc of your  "flour" dough, but most of us are not qualified to advise you on how to spend your monitary "dough". After all, that is the supposed purpose of your business plan in the first place, to give you the answer to the question of "if you should invest $85K or $250K" You certainly have not given anyone here enough information to intelligently evaluate your business plan and give you financial advice.


So, I will stick my neck out this far to advise you on your financial plans.


1. Most small businesses in the USA fail in the first year.


2. NEVER invest more money than you can afford to lose.


The difference between what I could personally feel like I could afford to lose between $85K and $250K is so large that, in my personal financial terms, we are almost not talking about the same business.


JMHO, but my personal recommendation would be to get some good financial advice and let your pizza dough sort itself out later. Last time I checked, Pizza Hut was still alive and well in my town and their pizza is definately NOT 5 star. Free advice is generally worth what you pay for it. ;-)

spacey's picture
spacey

So, in the atlanta area, with Varasano's reportedly doing well (http://www.varasanos.com/), there may be an as-yet unsatisfied appetite for more decent pizza in the metro area.  Since you said that there's no good pizza nearby, and since Varasano's is generally considered good pizza, I'm not sure if you're on top of the possible competition.  If you're going to move into a nearby metro area, make sure you carefully survey the competition so that you don't end up moving next door to someone who already has a name and an anchor location like this.


Also, if you're already stretching your resources to start a new business, you probably want to start with a pied-a-terre, or sleep in the office at the pizzaria.  And, if you haven't been in the restaurant business before you seem to be saying that your current 9-5 is a grind.  You may not be getting relief, as working a restaurant, especially on that also has baker's hours, can be very difficult.  Near where I live, Paulie Gee's has just opened up, and while he's doing well with a great product, even opening at 5:00pm is hard for him because before opening there's still a lot of work to do every day.  Talk to other restaurant owners in the area first, find out what they think of their clients, what they like, who the repeat customers are, how much they're willing to pay for their meals, what their ages are, whose moving in vs. out in the neighborhoods you're looking at, what the taxes, fees, and scams are (e.g. do you have to buy trash hauling from the most expensive contractor because they own the 'hood?) etc.

Alfie's picture
Alfie

Yes, high visibilty players like Varasano's are going to get the lion's share of the market.  It also seems to be the case where one restaurant chain opens a unit it is likely that another one will do the same.  If the traffic, parking and demographics are right for one it is likely that area will work for another.  My family has a bakery/deli located right across the street from stores that do the same...of course not as well as my family's but that goes without saying.  My family's bakery has name recognition since it opened in 1939.


Luck, extraordinary effort and capitalization work well together.

cliffgarz's picture
cliffgarz

i am not in the Atlanta area or even near Atlanta -  i have a friend there who owns a few pizzerias and I do know jeff and have spoke with him on several occasions about going from home to restaurant. 


I have been working on this for almost 20 years so this is not something I thought up last night.  Putting recipes together gathering funds and making sure I can get my hands on quality ingredients.  


I agree location location location, and that is the big difference in the money if you open a place in say a large city like Atlanta you have to compete Locations are expensive and to do those numbers everything is multiplied - ovens, mixers, merchandise, employees - to go to lets say 90 miles out side atlanta you don't have the expensive rents you could get away with one oven instead of three one or two mixers a couple of employees that is the difference in money same concept same product.  


Just posted this to stir a little conversation not for people to get their panties in a wad.  


i know that i am going to do it - it is finding that location that in my mind clicks - this is where I need to be.  


thanks for the info


 

hanseata's picture
hanseata

My husband, a retired business man, is a volunteer counselor for SCORE, a non-profit organization that gives advice to young entrepreneurs. He said that many people come to SCORE with good ideas about the product they want to offer, but no real idea about the business part of it. A business plan is usually something for the banks, to get a loan, not a serious blueprint for a start-up.


As somebody mentioned already, a great many of new restaurants fail in their first year. Since I was wondering how to turn my baking hobby into a small business, we discussed this suject in depth - my husband's family ran a very successful Italian restaurant, and, later, he had a very popular cafe attached to his furniture store.


His advice was: either you start out "lean and mean", and work your butt off, doing whatever you can yourself (construction, renovation, installation, wiring, etc.), sleeping in your store or restaurant during the construction, and manage to keep your overhead costs as low as possible, you will fail - even if you have a good product.


Near where we live, a retired engineer wanted to fulfill his dream of opening up a "comfort food" restaurant. He bought a huge building, had it completely renovated, evening shiny and new, and, of course, a lot of staff to run a large place like that. Though his Hamburgers were the best I ever had, it didn't help, after half a year he couldn't pay his employees' wages anymore, and after one year the place closed down.


I decided not to try to go large - I'm selling my breads to a local store - and I'm very happy with this solution. I can be creative, don't have to work in assembly line - everybody likes my breads and my schedule is compatible with my family life.


Karin


 


 

cliffgarz's picture
cliffgarz

You know I contacted the local office to speak with some one, they have restricted hours so i left my name and number and no one has returned my call that was two weeks ago.  I do know the business part of it and am learning more about it as days go by.  I am heading to italy for a bit to work with family there in their pizzeria and hopefully bring back useful knowledge.  I agree starting out lean and mean and expanding as the need arises.  One fear I have is if it suddenly blows out and you have too much business and can't keep up.  that is the fear I have and you can't expand fast enough to capitalize.   


 

Dillbert's picture
Dillbert

Cliff -

you've obviously thought a lot about this, and you've actually answered most of your own questions.  you've done the basic planning / thinking - about the only thing left is a "sanity check" - essentially "Here's all these assumptions - are they realistic?"

take everything and anything that is not an absolute known concrete fact, toss it in the air, see it if flies.  a pizza oven cost $X.  is the freight figured in?  how about the fork lift need to off-load the delivery truck,,,

spread sheets are the most dangerous things in the world when it comes to sane business projections.  they multiply things completely blind of any consideration.  compounded growth figures/projections are not within the realm of a sanity check - they rarely rarely come true.

regards tired of working 9 to 5 month after month - if you figure running your own business is easier and/or takes less time, toss that idea on the sanity check scrap heap straight-away.
yes, you can "hire" people to off-load a lot a tasks - more tasks seep in like a low fog of your worst nightmare to fill up all available time.  plus, you'll need to be financially successful/funded from Day One to pay all those extras.  you can hire an attorney, a CPA - but when your source calls up and says:  "Sorry, we're out of pepperoni this week, do you want us to substitute bologna?" you're on the hook to solve that problem before you go to bed.

sanity check:  if you are not intensely intimately involved in every detail of a start-up something  fatal will likely blindside you.  unidentified costs to employee theft - there's rather a large assortment of evil things to do the business in.  many people dream of being their own boss - do check out the 'early phases' in great detail.  it's not pretty.

"it's a pizzeria" - if you're looking to do sit down dining, you'll have a large front end load of wages/burden costs and the even worse part is training.  take out only is a different issue.  for either sitaution you'll get the "Lets try the new place" effect - bad service or bad pizza will kill the place daid.  if it's the best pizza within 30 miles, you'll get a chance to provided improved service; otherwise it's a once-and-done customer.

location location location.  yup - and how / where did the location requirements come from and are they real for the target area?

rules of survivor start-up: 
double the cost estimates
triple the time estimates
halve the revenue stream.
if the number is below operating costs at the 8-12 month mark - that raises some serious questions regards 'viability.'

it appears you are not in your thirties.  note the thought - 'don't invest what you can't lose.' 
you can do absolutely everything right, the FDA outlaws pizza because it contains "X", and you're lost.  age wise you may not have the options for a "do over" - your financial situation is none of our cotton picking business - but it is a sanity check point:  if it goes south, what happens to my lifestyle?

the same rationale applies to the "can't expand fast enough to capitalize" - unless you've got a heir-in-waiting that is involved way past their eyebrows, it does not pass the sanity check at 60+.  you'll likely not get a bank loan based on you're first six weeks of sales - a regional / national roll out may take some time - measured in years, not quarters.

grind's picture
grind

Big in a bigger town or small in a smaller town?  We started a cafe bakery in a small place with exceptional products and ambience and let me tell we hit the growth wall pretty fast.  I don't know how small your place is but one thing I noticed here is that after the intial excitement and accolades, a percentage of the folks go back to their old ways and you suddenly realize that there is a culture you can't change quick enough for financial survival.  We sold the biz at a profit so no problem there.  If we did it again, we'd go bigger,  sooner.  Good luck, grind.

cliffgarz's picture
cliffgarz

Thanks for the helpful comments, this has given me some thing to consider that I haven't thought of. This is what makes these discussions so great.

drdobg's picture
drdobg

Cliff,


 


I think if more people who truly had a better product than the competition would take the risk and open a restaraunt, we'd all eat better!  Good luck!  How about offering those of us on TFL a special discount when you open up?

msbreadbaker's picture
msbreadbaker

Cliff,


It was so interesting to read all the comments to your proposal regarding your intended business venture. Especially from "Dillbert". I think a lot of us dream about opening a business, but then the reality check rears its ugly head.


I was a bit disappointed in the tone of some of the responses, as I did not think you were asking the TFLers to "evaluate your plan" or give specific advice. It appeared to me you had done plenty of homework and were just throwing your idea out there as just another avenue of "checking things out".


A lot of what people had to say made great sense, on both sides of the fence. I am sure there are a lot of folks on this site with experience to share. My own would have to lean toward the start small and grow approach, as I did the other and did not make it. Bad when that happens.


In any event, can you keep us informed, I am really interested in your success.


Jean P. (VA)

hankhus's picture
hankhus

I can only add that the best way to go is open small in a big location where the size of the population can support a small business.  Opening a small business in a small location is fraught with danger.  People will support at first but when the novelty has worn off the custom will drop off..  I speak from experience.  Open small in big and then go big if the business warrants.


Hankus

grind's picture
grind

I mean't to say what Hankus said so clearly. 


Open small in big and then go big if the business warrants.

Grimaldi 1's picture
Grimaldi 1

My thoughts on opening a pizzaria without previous experience is to try it on a different scale before you potentially do yourself and others great financial harm. I'm taking my own advice on this subject...I built a Pompeii wood fired oven on a trailer and have been a vendor at our local market days. It has been a very good way to learn fast...nothing like playing in a real game to hone your skills.


Even on this scale, the investment is substantial considering the return. I spent thousands building the oven, thousands on equipment (commercial mixer, refig. prep table, stainless prep table, EZ-up vendors tent, freezer, big ice chests, folding tables, etc).


It is hard work...doing a few hundred pizzas in a weekend gives you a real taste of what you are really up against. It's a lot like construction work...you better be physically strong and can get after it all day long.


If you start out with high rent and overhead...I don't know. Another thing is the economic situation is not good. But, in the final analisis, you pay your money and take your chances. Best to you.


 


 


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1.03.01
koloatree's picture
koloatree

Hi,


Do people care about brick oven pizza in your area? How many people have tasted your pizzas and what are the reactions? Do you have photos online we can view?


Why not start a regular pizzeria with premium fresher quality ingredients compared to the competition using high temp pizza ovens? There are gas and electric ovens that can maintain 750 degree temperatures. I am sure  you can start a small pizza operation for much less than 85k.

Faith in Virginia's picture
Faith in Virginia

Koloatree,


Apparently you have not been introduced to brick oven pizza's cooked with a slow burning fire that adds so much flavor, texture not to mention cooking a pizza in a WFO is a spectacle that makes the whole pizza experience something the brings you back for more.


Take my advice find a local WFO pizza place and watch them make your pizza and you will understand.

cliffgarz's picture
cliffgarz

Progress is being made I have decided to stay in the local area for now with plans on expanding if things go well.  I have friends who own pizzerias in various cities and they have been most helpful allowing me to come and work and learn the various aspects of the business side.  I am looking for location but they seem to be few and far between in the area.  I would like to find one with a kitchen already but am afraid I will have to build out.  Running two ovens.  I have learned a tremendous amount since my first post.  The BP is almost finished then it is on to financing and securing a location.  Menu is done and ironed out equipment list is done, employee handbook is done. Getting all the projections and figures punched in and calculated is the hard part.  thanks for all the input it really has been much help.


Will keep you all posted and you can keep up on Facebook Apizza di Napoli


thanks


Cliff

msbreadbaker's picture
msbreadbaker

Cliff, It is wonderful to hear all that, here's hoping all continues to go well! Jean P. (VA)