There are two deep-seeded myths most pizzeria owners hold true that are holding them back from being as successful as they can be. I want to bust those two myths now so you can make the money you deserve and have freedom from your business, too.
Myth #1: Food Distributors Are the Reason Your Food Cost Is So High
Yes, the cost of the food you must buy to run your pizzeria has been rising. For every delivery that shows up at your door, it seems like the price keeps getting higher. When I look back at the industry and what we’ve dealt with as an industry, the sharpest increase in food cost came after the worst day in modern American history, 9/11. The next day prices went through the roof. And remember the fuel surcharges? None of that ever really went away. Plus, there are all the commodities you rely on, such as cheese for a pizzeria. It’s been just about two decades with prices consistently climbing. There certainly hasn’t been a decrease, right?
Why is it a myth to blame your high food cost percentage on the food distributors? It’s not your distributor that’s crushing you. Yes, their prices are going to have some effect, but it’s what you’re doing with your product that is the problem. It’s you, your management team and your cooks.
You see, a typical pizzeria runs seven to nine points above ideal food cost. That’s not your distributor. You must put systems in place to control your portions, reduce theft and control waste to ensure the guest gets the same product every single time.
Do not get me wrong. Twenty years ago, I would have backed you up because some of the big guys were screwing independent pizzerias. Chain restaurants changed the world and brought margins way down. You can’t blame the distributors anymore.
Myth #2: The Food Cost for Your Pizzeria Should Be 34 Percent
Where do any of us go for information? The Internet! When you’re trying to work out how to calculate your pricing and your costs, you’re searching the Internet. The National Restaurant Association – and other experts quoting the National Restaurant Association – says the average food cost for a full-service restaurant is 34 percent. (Or my other favorite, an across-the-board three-times markup.) The echo chamber of the Internet is feeding you bad information.
Here’s the deal: in the case of a 34 percent national average, are you average? Do you have the same similarities as every other pizzeria out there? Do you share the same street corner? Same price point? Same city? All the same menu items? What about your products? Do you use the same quality of products as every other pizzeria (hello fast-delivery-chain-pizzerias)? No! Tell me what an average is good for when it comes to your business. You’re not average.
Your food cost is based on what your customers order.
Busting the Myths in Your Pizzeria
Starting with the two most important systems every pizzeria business should be using, you can bust these myths in your pizzeria. You need a budget and recipe costing cards. Both systems require a lot of hours to create and it’s ongoing meaning it’s work that’s never done. Most independent pizzeria owners just fly by the seat of their pants and guess what their numbers should be instead of basing their operations off the real numbers. This is why it’s so easy to blame the distributor.
The first step is to create a budget. Then, using the numbers in your budget, determine what solutions/procedures/systems you are going to put in place, how quickly you will put them in place and how quickly you will see the results. A great place to start is with checklists, portion controls, Key Item Tracker, Waste Tracker and the Restaurant Checkbook Guardian, a purchase allotment system (I offer a complete breakdown of these systems on my YouTube channel or on my blog).
After a month or two of training and implementing your chosen systems, then you get to measure the plan. Every time you get that profit and loss statement, you get your budget and put them side by side. Look where you hit and where you missed. If you missed your number, the next step is to inspect the systems you have in place and see if your managers are using them or not. Hold them accountable if they’re not using them or put more systems in place if the systems you’re using aren’t doing enough.
Remember I told you the two most important systems are budgets and recipe costing cards? That’s the next step. Start working on recipe costing cards in month one of your new budget. But because you’re busy, and we know it takes 40, 60, 100-man hours to get done, you’re going to say it’s going to take you three months. In month one you start the process. Months two and three you’re working on them, and you finish in month four. Then you can do something called the Menu Profitability Monitor where you find out where your ideal food cost is. And then you’re going to menu engineer for profit and bring your food costs down.
You go through all this rigamarole such as raising prices on certain items, changing products, etc. until you can create a menu through menu engineering that produces your targeted food cost numbers. This means you have line checklists and portion controls, and you’re using the Key Item Tracker to reduce theft, the Waste Tracker to stop mistakes and the Restaurant Checkbook Guardian to order on budget. You’re doing lots and lots of things to make sure you can bring that gap from seven to nine points down to about two.
Then in month five, you put the new menu on the table and bring that food cost down closer to your target food cost. You can’t just snap your fingers and say, “We’ve got to lower our food costs,” and then it happens. You have to create a plan for success.
Your budget is your proactive plan for success. You decide what systems you’re going to put in place, how quickly you can put them in place and what your expected results are. And ultimately, you create your plan so that at the end of 12 months, you know how much money you’re going to make or lose. Stop believing the myths that are hamstringing your success and recovery. Your pizzeria is not average, and you should not be using averages to determine your pizzeria’s success. You are in control of your pizzeria’s present and future.
David Scott Peters is an author, restaurant coach and speaker who teaches restaurant operators how to take control of their businesses and finally realize their full potential. His first book, Restaurant Prosperity Formula: What Successful Restaurateurs Do, teaches the systems and traits to develop to run a profitable restaurant. Thousands of restaurants have worked with Peters to transform their businesses. Get his three principles to restaurant success at https://dsp.coach/three-key-principles.