Jeff Vaughn thought he had a great idea. He ran a modestly successful Chicago pizza and sub shop for two years and then decided to move to Texas to be closer to his family. He sold his business and headed south. Sadly, he was not prepared for what came next.
He decided to buy a shuttered pizzeria because it came with plenty of space and some decent equipment and a small seating area with tables and the like. His new pizzeria tanked in just under a year.
Looking back, Jeff thinks that he did not spend enough time figuring out what caused the previous owner’s failure. His bargain turned bust because he did not take the time to evaluate the reason the earlier pizzeria failed. Was it due to poor management? A bad location? Inferior menu items or simply a bad concept?
It did not help that his moving expenses and other unexpected costs overextended his credit either. In the end, Jeff felt that he learned a few lessons, but is not quite sure he wants to go back into the pizza business again.
In the Restaurant Biz, Failing is Not That Hard to Do
In reality, failing spectacularly with your independent pizzeria has never been simpler. With pizzeria competition on just about every corner, all it takes is a few misplaced steps and some careless planning and Voilà! You have just flushed wads of cash down the drain. That may explain why over 60% of all restaurants go belly up within three years of their startup, per a research study by Ohio State University. Another 80% will go out of business within five years.
That is not to say that independent pizzerias cannot be profitable or are doomed to fail. Far from it! With planning, hard work, a good location, and a great menu, small pizzerias can be quite successful, providing an excellent ROI.
If you want to totally tank your restaurant though, here are some unbeatable ways to shoot yourself in the foot.
Pick a Poor Location
If you are really intent on throwing away your investment, be sure to pick a location that is really hard to get to such as areas where there is almost constant road or bridge construction, that have horrible parking, or in areas where it is not going to fit, such as areas that have high crime rates or poor overall visibility.
Don’t Bother to do Your Homework
Next, make sure to push ahead without bothering to research the local demographics fit your concept, price-points, store hours, and traffic potentials. By treating it like a hobby instead of a professional pizzeria, you can probably look forward to an unwanted early retirement from the restaurant business in no time.
While running a restaurant of any kind can look easy, it is far from simple and it has to be treated like any other business investment. Everything from the size of your portions to the service model and concept have to be thoughtfully considered and executed.
Price Your Items Based on Your Gut Instead of the Numbers
One of the fastest ways to really fail miserably is to set your price points based on hazy gut-based estimations instead of real world costs. Your price structure must reflect the actual cost of ingredients, and overhead. Each ingredient should be standardized, weighed and/or measured. You should know exactly how much you are spending and how much the local market is willing to pay for each and every pie you make.
Use an Outdated and Inefficient Point of Sale System
Technology is constantly changing and evolving. From smartphones to advanced apps, technology impacts pretty much every form of business, including the pizza business. Customers have come to expect mobile friendly ads, and access to special deals via their phones. If your store system does not play well with high tech devices, it is probably going to cost you in the long run.
Instead of relying on outdated technology, consider using a robust Point of Sale system (POS) that is flexible, scalable, easy to use, and most of all, affordable. If your POS does not allow for fully integrated online and mobile ordering, include sophisticated reporting features such as delivery status and payroll capabilities, give us a call at 800-750-3947 or click here for a free demo.