How to manage the three Ps of 2022
When Lombardi’s opened in New York City in 1905, America began its love affair with pizza. Each generation of pizzeria operator has had challenges unique to their time. Now, roughly five generations later, what are the challenges we face? What will be the three major pain points this year?
Holy Moly, that’s more Ps than Punxsy Pizza Pennsylvania.
Yes, each of these Ps will bring you pain as a pizzeria operator. However, with some planning and preparation, they can also bring you pleasure. OK, I’ll stop playing with Ps. It is time to get serious. Let us look at our challenges and what we can do to mitigate them.
We’re close to the end, right? Not necessarily. The pandemic has fundamentally changed our business and we must adapt or die. Look at the results of the pandemic. Some pizzerias closed their doors. Others thrived. Why? Adaptation. Necessity is the Mother of Invention. Those who thrived saw the need for change and acted. And their customers responded. These changes are not temporary. They represent the new pizzeria business model. Outdoor dining, indoor distancing, employee masks, curbside service, no-contact delivery, mobile app ordering, touchless pay systems, carry-out incentives and improved to-go packaging are all successful adaptations made as a direct result of the pandemic by pizzerias that thrived.
The pandemic pain point can be mitigated by selecting three changes you made during the pandemic and making them a permanent part of your pizzeria. And by doing so, improve each of them. Let us use curbside service as an example. Do what it takes to ensure a place for your curbside customers to park. This may take communication with your landlord or the city. How do you know when they arrive? Perhaps a hotline, or a camera system or a triggered alarm. Consider the packaging. Will their pizza be cold by the time they get home? It might be time to consider re-usable hot bags with your logo. How about a curbside condiment package that includes paper plates, napkins, and other frequently asked for condiments? Curbside service came about because of the pandemic, but we’ve discovered that customers love the service even without the fear of the virus. The ideas are endless. The point is, select three changes to make permanent and make them yours. Make them part of your unique selling proposition.
What happens when you pay people to stay home? What happens when you pay them $300-$500 per week more than they were making while working as an incentive to stay home? You know what happens. Essential businesses are unable to field a team and cannot keep their doors open. We have all heard the accusation, “They would if you paid them more.” No, they wouldn’t. No business can compete with free government money. The good news is that most people want to work. Most people want to contribute to society. Most people want to be part of something bigger, funner (yeah, I know, but it should be a word), and more challenging. Most people get true satisfaction from work. And the minute it makes financial sense, they will return to work. So as the government reduces the financial incentives not to work, the lives of the pizzeria operator will improve.
The people pain point can be mitigated by beginning with those who got you here. Now is the time to recognize those employees who stayed and worked. Now is the time to ensure they participate in the results of your success. Can you increase their wages? Can you send them and their family on a weekend vacation? The key is to demonstrate your appreciation with both words and actions. You will also need to build a strong team moving forward. Understand that there will be two different types of employees. There are those who want stability, growth potential and opportunity. And there are employees who are passing through. The pizzeria industry needs both. For those who want to be part of your company long-term, work to provide training and guidance so they grow to their full potential. For those part-timers, students, minors, second-jobbers, you must provide flexibility in their schedule. Honor all time-off requests. Give them shifts that fit their other commitments and availability. The combination will build a strong team.
Inflation. This is not a new word; we just haven’t been hammered by it lately. To quote Elton John, the b***h is back. Costs are rising faster than pizza dough left to proof too long. But unlike over-proofed pizza dough, they will not fall. Shipping costs, manufacturing costs, raw material costs, and labor costs are clearly rising out of control. We are not talking about costs that are under your control. Pizzeria operators need to keep up with measuring the cost of doing business and adjusting their menu prices accordingly.
The price pain point can be mitigated by charging the right price for your menu items. The pizza industry lost a great resource for this when Big Dave passed on to the big pie in the sky. But if you need guidance in this, others have followed in his footsteps. Menu analysis is critical, and pricing should always be based on costs. If your target is 30-percent food cost, understand that any menu item that is over 30 percent is driving up your costs. Do not be hesitant to raise prices as costs increase. Traditionally, price changes for your pizzeria can be done annually. With rampant inflation, food cost analysis should be a weekly measurement, with menu price change quarterly.
To those of you who worked and provided food as an essential service through this challenging era, I salute you. You have proved to yourself, your people and your community that you can adapt and have emerged a stronger pizzeria operator and businessperson. Facing these three pain points this year will require you to continue to apply these skills. You got this.
Dan Collier is the founder of Pizza Man Dan’s in California and a speaker at International Pizza Expo.