Even before the pandemic of COVID-19, pizza delivery businesses have been booming, with reports showing that in 2019, over USD $11 billion was spent on pizza deliveries, and that number has only gone up during the pandemic. The business model is also appealing- limited materials and a systemically perfected system of workflow from preparation to delivery. However like any commercial business venture, there are risks associated, and potential pitfalls that stem beyond the expected “I might not be profitable from this right away”. Aside from having a positive mindset that all will be well, these risks must be assessed objectively. Below, let’s take a look at a few important tips for buying (or buying into) a pizza restaurant franchise, that can set you on the path to success.
1. Is this really what you want?
I don’t mean to make this point so negative, but like any business venture, there has to be long term commitment. If your impression is that a pizzeria business would be a quick pump and dump, your time might be better served in the stock market. Pizza restaurants tend to have a lot of staffing turnover, not to mention the complications of putting drivers on the road (unless your outsource to services like Ubereats, of course). At the end of the day, you’ve got to have passion not just in the business model, but in pizza itself. Don’t be fooled to think that you’re the only one who’s considering the profitability of a pizza franchise- there are typically dozens of competing restaurants in high sales areas, which means you will have to compete for your localities attention. That mom and pop shop down the street who have perfected their own secret pizza formula might be a bigger (competitive) problem than you originally forecasted- you’ve gotta have grit.
2. Are you interested in a franchise or an independent business?
There are pros and cons to both. By franchise of course I’m referring to the Dominos, Papa Johns, etc that may be for sale on a percentage of ownership basis. These typically have a great amount of resources for you to refer to, as its essentially a joint venture. The downside is that you typically won’t have majority control, and there could be strict regulations that you are required to adhere to. Independent businesses are much less formal- these are typically your locally owned locations that have survived and earned the trust of local consumers. The local love could be a blessing from a marketing perspective, but there are likely less systems in place, which means more time-intensive labor is required, as well as all outsourcing (material orders, etc). Assess your 1-5 year goals and decide which pizza business type is best for you.
3. Build a solid team of experts who know a thing or two about pizza
This goes for any business venture, you want to have a team that is familiar with the industry you’re getting into. Pizza is one of those things that seems simple on the outside, but has a lot of particulates on the inside. An ideal team would consist of previous pizzeria owners, accountants who understand pizza (and the local areas) buying behaviours, staffing experts who have staffed in the area before, and of course a solid real estate broker or team.
I’m not saying that you can’t be successful without a team, but when considering the profit/loss scenarios of your pizza business in the long term, you owe it to yourself to be equipped with all the tools for success. At BizPappa, you can find commercial real estate experts who have tenured experience in restaurant sales and purchases. Whatever slice of the pie you choose, I wish you the best!