Kansas City, Missouri
In the current economic freefall we’ve been destined to play out due to very bad decisions made by ‘too big to fail institutions,’ you are suffering. When all else failed, I borrowed from friends, family, my distributors and even secret fraternal organizations. The groveling is painful, and if you are late on a payment you risk a relationship. I have not heard any positive outcomes from getting credit card advances. The writing is on the wall. There is very little to no investment money available currently. I’m not sure if we’ll ever return to the days when your bank just automatically issued big lines of credit to their best business customers.
If you are currently profitable and can prove it, it may be time to consider franchising. That’s how the last wave of foodservice giants was born. If you are marginally profitable, I would advise you to stand pat, do nothing but save for the future. Live lean and mean. When this financial fiasco finally breaks loose, you will be a survivor. You will have your own saved money to finance your growth. No more humble pie trips to loan officers. I truly believe that you need to, in the words of Harvey Mackay, “Dig your well before it runs dry.” This means that between today and the future get to really know a lender. Purchase bank stock, get invited to meetings. People lend to people they trust, period. If they don’t know your character, ability to repay and creditworthiness, they won’t get excited about standing up for you to the loan committee. If they believe in you, they will go to bat for you. You haven’t cultivated those deep trusting relationships yet. Use this time to ‘get to know your banker’ investor. Good luck.Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. monthly contributor to Pizza Today.
Though banks continue guarding their money, accessing capital remains a challenging — though viable — endeavor for prepared operators
BY Daniel P. Smith PHOTO BY RICK DAUGHERTY
Now the owner of four Tutta Bella Neapolitan Pizzeria locations in Seattle, Fugere notched his first loan in 2003 to fund his original store’s opening. In the subsequent four years, he applied for and received two more loans to expand Tutta Bella’s presence.
“It was almost programmatic,” Fugere says.
In 2009, a growth-focused Fugere looked to launch his fourth Tutta Bella location. Business as usual, he thought.
Only it wasn’t.
The bank Fugere had worked with for six years declined his loan.
“I thought it was a fluke,” Fugere says.
He met rejection at a second bank; then, a third and a fourth.
“I went into each meeting fully confident,” says Fugere, Pizza Today’s 2010 Independent Pizzeria of the Year honoree. “I had a performing concept, money in the bank, and a history of making payments.”
Finally, Fugere turned to a community bank. He made his pitch a fifth time.
“Almost overnight,” Fugere says, the bank approved a Small Business Administration (SBA) loan, the government-backed program favored by so many small business owners.
“I couldn’t understand the hold ups, but I saw just how reluctant the banks were to put their money into a restaurant regardless of the balance sheet, the business plan, or the owner,” says Fugere, who has since refinanced all of his loans into the SBA program.
Whether looking to improve an existing location or open another unit, operators often need an infusion of capital to transition idea into reality. Though an increasingly prickly subject in recession-era America, money is available for the diligent, persistent and prepared.
As the economy collapsed in 2008, banks — so many overextended into loans — tightened their grip on capital. Even loan candidates with seemingly sterling credentials — 700-plus credit scores, industry experience, and liquidity — found negative responses and dreadful terms.
“It became a lot easier to say no to all the loans rather than yes to some,” says Ken Paton, a Portland, Oregon-based financial advisor to small businesses.
Slowly throughout 2011, with more cash on hand and profits to be had, banks loosened their grip on capital. Even so, the lending world remains a rigid, stubborn space as 2012 opens.
“Banks may be more open to making loans, but they’re still scared of making bad loans,” Paton says, noting that restaurants are often categorically termed “high risk.”
As today’s capital-needing operators routinely turn to banks, the most common loan partners given the expense and historical ease in granting loans, they encounter a world in flux.
In early 2011, Myron Allen sought $400,000 to open a Toppers Pizza franchise in Rochester, Minnesota. Like Fugere, he first approached a banker he had known for years. He was promptly dismissed.
“I was flabbergasted (the banker) wasn’t as excited as I was,” Allen says.
After great efforts with his local Small Business Development Center, an important ally for any owner navigating the lending waters, and a stop at BoeFly, an Internet loan exchange that connects operators with lenders, Allen landed a SBA loan at a regional bank. He hopes to open his Toppers location this summer.
Both Fugere and Allen share common stories in today’s climate, one littered with frustrations and, more importantly, critical lessons for others seeking bank loans.
Rather than simply having a hunch, operators must remove emotion and study the metrics through the banker’s eyes. In addition to understanding what makes their pizzeria work financially, operators must also know how the operation compares to national and local averages, numbers that can be obtained from the National Restaurant Association or state organizations.
“Go in ready to say, ‘Here’s my financial business performance, my concept and niche, and here’s how I compare to the average restaurant in America,” Fugere says.
Many operators will find themselves directed to an SBA loan and its two household options: the CDC/504 program, which concerns fixed assets, and the general-purpose 7(a) program. Both feature the government’s backing and kind rates.
Kevin Ellis, vice president of small business lending at Atlantic Coast Bank in Jacksonville, Florida, advises operators to adhere to the Boy Scout’s legendary motto: “Be Prepared.”
“First impressions matter,” says Ellis, who expresses a kinship with restaurateurs given that his own grandfather ran a Florida eatery for 50 years. “I walk hand-in-hand with that borrower, so I want us putting our best foot forward.”
Show a positive track record with quantifiable numbers, including three years of tax returns, a personal financial statement, and year-to-date financials. Then, attach projections and a comprehensive business plan, detailing everything from the concept’s marketing approach to its pricing strategy as well as the ever-important debt coverage ratio, which is when (and how) the loan will be repaid.
Then, sell the business and yourself with conviction and confidence, energy and enthusiasm.
“Getting a loan isn’t for the weak of heart,” Allen says. “You need to convince these bankers that you want to make money, which helps them make money. The money won’t simply fall into your hands.”
Chicago-based writer Daniel P. Smith has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.
Pick-up windows add appeal for on-the-go customers
BY Annemarie Mannion Photo By Rick Daugherty
That’s the belief of operators of pizzeria drive-thrus who are making it as convenient, comfortable and as quick as possible for customers to get their pizzas.
Operators who have embraced the idea of drive-thrus say opening one, and equipping it, is not as daunting as one might expect.
The drive-thru at Mr. Scrib’s Pizza in Muskegon, Michigan, proves that theory. It opened 28 years ago and operates with a simple system that includes an intercom and a metal box with lights.
The intercom enables workers, even if they are not standing at the window, to hear that a driver is there and wants to place an order. The metal box has numbers that light up and allows customers to go and park and then see when their orders are ready.
“We tell them their number and they go and wait until they see it light up,” says Manager Lisa Crabtree, “or sometimes (they) go and get gas or run to the store and come back for their pizza.”
Other operators have developed their own approaches for how to handle drive-thru sales. Home Run Inn, which operates in the Chicago area, only sells pizza by the slice through it’s drive-thru, which opened in Melrose Park, Illinois, about a year ago because a fast food business had left the space.
“The Arby’s that had been there already had the drive-thru, so we
decided we’d make a go of it,” says Dan Costello, president of the restaurant group.
Costello says customers can choose slices, priced at $4 a piece, from four different pies that are prepared and waiting in cabinet warmers.
“It’s not so different than staging and storing pizzas like you would for a buffet,” Costello says.
He says customers like the convenience of it. “We see a lot of moms who’ve done their grocery shopping and want to pick up a slice before they take their kids to soccer practice,” Costello says. “They don’t want to get their kids out of the car to do it.”
One of the largest considerations when adding a drive-thru boils down to space requirements. Though Home Run Inn wants to have drive-thrus at new locations, Costello says it is not that easy to find a site that can accommodate one.
“You have to have a large enough site for a drive-thru lane and an escape lane,” Costello says. “It’s a lot of land that you need to allocate to it.”
Pizza Patron, which has locations in the Southwest, West and Southeast, opened its first drive-thru in 2006 and has given the green light to adding more.
“It’s become the primary objective in our real estate search to look for places where we can put in a drive-thru lane,” says Andy Gamm, brand director for Pizza Patron.
While finding an appropriately sized site can be an issue, Gamm says building a drive-thru is not cost-prohibitive, even for smaller operators.
“It can be relatively inexpensive —maybe $5,000 or $10,000 — if all you have to do is put a hole in wall (for the window),” Gamm says.
Equipment will add to the cost and can include cabinet warmers, special ovens, menu boards, and communications systems.
At Pizza Patron, the company worked with a company to develop a quick bake oven that enabled the company to reduce its baking speed from 5½ to 3½ minutes.
Pizza Patron also prepares some extra-large pepperoni pizzas that are held in warming cabinets for customers who want a pizza immediately. If those pizzas are not sold in 20 minutes “they either get sampled or thrown away,” Gamm says.
While drive-thrus may seem the province of larger operations, Gamm says it can work for smaller venues and will pay off over time.
“If you’ve got the space that’s
conducive for it, then I think it would work for anyone,” he says. “The more convenient you can make it for people, the more they like it. They really like not having to get out of their cars. And the return on investment is pretty significant.”
That has been the case at Mr. Scrib’s, where half of the restaurant’s sales come from the drive-thru. Some days it’s where most of the small pizzeria’s sales are rung up.
It also helps the business, which is located on a busy street, compete with the fast food joints that line the strip. Thanks to its drive-thru window, Mr. Scrib’s can cater to the needs of many of its customers who work at nearby businesses and who want their pizzas quick. It also keeps the interior of the restaurant less crowded.
“Our restaurant isn’t that big, so it helps us with crowding,” says Crabtree. “It’s more convenient for our customers, particularly in bad weather.”
Annemarie Mannion is a freelance writer living in the Chicago area. She specializes in business and health stories.
Is there such a thing as good debt?
BY Pamela Mills-Senn PHOTOS BY JOSH KEOWN
“Debt isn’t inherently bad or good,” explains Chris Alberta, senior managing director of Conway MacKenzie, Inc., a Detroit-based consulting firm providing turnaround/crisis management services. “It depends on the intent of its use. Debt used to mask deficiencies in the operations is bad, but debt taken on as growth capital to expand a profitable concept can be a very good thing.”
Fred Wolfe, who drives the operations and executive leadership team for Orange County, California-based Synergy Restaurant Consultants, says good debt doesn’t exceed low income expectations. Debt turns dangerous when paying it back depends on maximum cash flow and everything going right.
“This raises the risk level substantially and
increases the likelihood of a default,” he
explains. “Bad debt also carries a high interest rate because of risk or lack of a financial history. Leveraged debt always carries an inherent risk and can be exemplified by the high number of restaurant company bankruptcies.”
When undertaken sensibly to move the business forward in a planned way, and there’s a sustainable way to pay it back, taking on debt can work in your favor, says restaurant consultant John T. Self, a professor at the Collins College of Hospitality Management at Cal Poly Pomona. Bad debt is unplanned and unsustainable. Depending on the circumstances it can be a mere annoyance or it can become catastrophic, he adds.
Nick Sarillo, owner of two Nick’s Pizza & Pub restaurants located in Illinois (one in Crystal Lake and one in Elgin), knows firsthand how quickly debt can turn surly. Sales at both sites were strong, so good that he began the process of opening a third location. However, around 2007/2008, business started to roller coaster, especially at the Elgin location (where the dips hit the double-digits). At times, Sarillo says he couldn’t cover the mortgage or overhead.
To keep the business going he tapped into a line of credit. His predicament worsened. The third restaurant didn’t pan out, thanks to a change of lenders, and he lost over $300,000. The opening of a Super Wal-Mart across the street from the Elgin site was delayed, depriving Sarillo of an anticipated boost in traffic. He began offering steep discounts on Monday and Tuesday nights, running this program for almost two years. This initially helped profitability, but when it began eroding the weekend business he ended it.
By 2011, thanks to severe winter storms and disruptive road construction at both locations, things were dire. Barely hanging on, this September Sarillo emailed a letter to the frequent diners in his database explaining his situation, asking for their support. It posted on Facebook within minutes. His phone began ringing and customers poured in. Now, says Sarillo, they’re about 75 percent out of the woods.
But Sarillo isn’t banking on this alone to keep him going; he started taking a different approach to running his business. He began monitoring operating costs. He reduced overhead by streamlining his management staff, which he had kept too high in anticipation of opening more locations. And he hired a consultant, who pointed out a major error — Sarillo hadn’t been looking at the balance sheet as a whole, looking instead at each restaurant’s individual performance. Consequently, he hadn’t realized how negatively the Elgin site was impacting the entire business.
By not analyzing the contribution each store was making to the corporate overhead, Sarillo made a common error. Alberta says restaurant owners/operators often fail to look at every aspect of each site’s performance — what he calls doing a “four-wall” analysis. With this data it’s possible to compare one location to another and identify problems before more debt is incurred and profitability is further eroded.
“If on a store-level basis, the operations are cash-flow negative, new debt would be unlikely to improve the overall cash flow and could compound the cash-flow problem,” Alberta says. And “if they’re not generating a positive cash flow on a four-wall basis, adding new stores could actually lead to decreased profitability.”
The biggest mistake Self sees owners make is not having a budget income statement. “They don’t do inventory, they don’t do cost of sales or food costs, they don’t do P&Ls. They just sense they’re losing money but they don’t know how much or where.”
They also fail to plan — and save — for debt, maintaining sufficient cash reserves to handle equipment breakdowns or replacements, Self says. Instead of being proactive, they react — never a good strategy.
“Another error is failing to do a cost/benefit analysis when they need to purchase something, asking why they’re taking on the debt and how they’re
going to pay for it,” he says.
Perhaps the biggest downfall is being overly optimistic in their sales forecasts and/or cost management, says Wolfe. Sarillo says he did this, but no longer.
“Now I’ve started operating as the two-restaurant business we are rather than as the five-restaurant business I wanted to be,” he says. “I got real.”
Pamela Mills-Senn is a freelancer specializing in writing on topics of interest to all manner of businesses. She is based in Long Beach, California.
The first Pizza Hut opened in 1958 in Wichita, Kansas.
The average pizzeria reports roughly $557,000 in annual sales.
America’s 5 most popular pizza toppings, in order, are: pepperoni, sausage, mushrooms, ham and green peppers.
Park Street Pizza // Bostone Pizza // Nalivka’s Pizza Kitchen
215 R Dover Rd.
NW Sugarcreek, Ohio 44681
This small town pizzeria in northern Ohio scores big when it comes to technology with its smart phone app for not only the iPhone, but also the Android and Blackberry. Park Street uses its Web site and Facebook page to promote a “Pizza of the Month.” November’s pie was the Magical Mystery Mushroom, featuring creamy Alfredo sauce, fresh chopped portabella, cremini and shitake mushrooms, smoked provolone, bacon, tomatoes and fresh basil. Signature pies include the Colossal Italian with spicy sausage, Italian sausage, old world pepperoni, red sauce, fresh garlic and mozzarella at $13.99 for a 12-inch and the Primo Pepperoni with both traditional and old world pepperoni, mozzarella, provolone, Parmesan and oregano at $12.49 for a 12-inch. Park Street takes a sweet approach to ravioli with the Campfire Fun Smores Ravioli, a graham cracker ravioli filled with chocolate and marshmallow for $3.99.
225 Newbury St.
Boston, MA 02116
Residing just below street level, this pizzeria offers a modern cozy vibe. Bostone serves traditional thin and Sicilian styles by the slice or whole. It has become a go-to lunch spot for business district neighbors. It also offers a broad catering menu and delivers to area businesses. Fan favorites include the Potato, Chicken and Bacon Ranch (traditional 12-inch at $12.99 or nine-slice Sicilian at $23.99), Tomato & Basil white pizza (traditional 12-inch at $11.99 or nine-slice Sicilian at $21.99) and Bostone Special with pepperoni, sausage, ham onions, peppers and mushrooms (traditional 12-inch at $17.99 or nine-slice Sicilian at $29.99). Bostone has an assortment of subs, including the Bostone Bomb. This one includes steak, pepperoni, sausage, peppers, onions and mushrooms. The eight-inch sells for $8.99.
1032 First St.
A 50-year pizza making tradition in Havre, Montana, Nalivka’s is family owned and operated, with some pretty interesting brick-oven style pizza offerings. There’s the Polish with spicy Polish sausage and sauerkraut ($16.50 for a medium) and the German with country sausage and sauerkraut ($16.50 for a medium). Its gourmet pizza selection includes pies like Pat’s Gourmet with homemade meatballs, green peppers, onions and double Parmesan ($19 for a medium) and VeeAnn’s Gourmet, a white pizza with olive oil, butter, garlic, oregano, basil, black pepper and cheeses. Nalivka’s features a pasta and dessert of the week, like the buttered linguini with sautéed Italian vegetables for $8.95 or caramel bars for $1.50. It also offers par-baked pizzas and freezer entrees, soups and sauces.
Dollars & Sense
Why it’s important to understand your EBITDA
BY Robert Lillegard
But that’s a mistake, especially when it comes to financial planning. Spending a little time tracking your cash flow now can mean the difference between success and failure later. And while accounting can get extremely complicated, a simple formula called EBITDA can tell you much of what you need to know.
First things first. EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It’s basically your gross revenue minus your food costs, payroll and other expenses, with the four expenses mentioned above added back in. EBITDA is a basic measure of cash flow that would be available to a debt service. According to Brian Murphy, vice president of business banking at the Duluth, Minnesota-based North Shore Bank of Commerce, it’s crucial if you’re interested in getting a loan.
“It’s critical,” Murphy says. “It’s one of the most important calculations that we do as bankers. What we’re trying to do is determine capacity to pay.”
So how can a restaurateur learn their EBITDA? Murphy says the answer is probably already in front of most of them.
“It’s right in the financial statements,” Murphy says. “That’s the first good piece of advice — keep good financial statements.”
Even if you don’t read your financial statements, it’s still good practice to keep them for the bank. Pete Radosevich, who owns Eskomo Pizza Pies in Esko, Minnesota, says that he couldn’t tell you his EBITDA offhand, but he’s able to get it when it counts. He tracks sales and expenses in QuickBooks, which automatically processes the numbers.
“When you write everything down in QuickBooks, once a month you can print out a balance sheet,” Radosevich says. “I don’t even look at the balance sheet. I just send it to the bank once every quarter or so.”
A positive EBITDA is good, and the higher the better. With a higher EBITDA, you’re able to borrow more money at lower interest rates because you’re less of a risk. Conversely, a negative EBITDA means you’re losing money month to month. While you may be able to supplement with savings or income from another business to stay afloat, your business model is unsustainable over the long term. Your minimum EBITDA depends on how much money you need to borrow.
“Say an operator has round payments of $1,000 of principal and interest — EBITDA needs to be greater than $12,000,” Murphy says. “If the EBITDA is less than $12,000, then there isn’t adequate cash to make those payments.”
While these numbers can help you plan for financing, Radosevich says they’re not important for most day-
to-day operations. He sets money aside in a separate account for expenses like maintenance, and he keeps track of more basic metrics in the short term.
“I know every month on the 15th I have a payment of about $8,000 and I need to plan,” Radosevich says. “If you know your sales last week were $20,000, you know you’re going to get a bill from Roma for $5,000. I don’t need to see every day that my building has depreciated another $42.”
When it comes to financial planning, the best advice is to play to your strengths. Radosevich says that there are two ways to run a pizza business. Some operators focus on staying profitable and in the black, and simply make sure their pizza is good enough to keep customers happy. Others, like Radosevich, focus on quality pizza, and do just enough math to stay afloat. This approach can work, as long as you find someone to help with the more complex aspects of financing.
“Most of the time, people who go into small business need to have a rudimentary (financial) understanding,”
Radosevich says. “But the concepts you’re talking about are usually far beyond people who all they want to do is make pizzas. They should find an accountant who can explain these things.”
Robert Lillegard is based in Minnesota.
Knowing Your EBITDA
Finding your EBITDA is actually a fairly simple process if you keep good records. For each quarter, start by finding your operating income (or net revenue before taxes). If interest payments have been subtracted, add those back in. Also, add in depreciation and amortization expenses. Do this for each quarter and add the figures together to find your EBITDA for the year. When you do, exclude one-time expenses and any income/extra expense from operations that you no longer do (for example, if you used to cater but now you don’t). That will give you a realistic idea of your current EBITDA.
So what can you do to change your number? Well, you COULD hit your oven with a sledgehammer to speed depreciation. But realistically, the only way to get a better EBITDA is to add income and cut expenses.
“It’s not always easy to do, but it’s that simple,” says Brian Murphy of North Shore Bank of Commerce. “It’s a good thing to educate your operators about.”
ALL MIXED UP
The Dough Doctor tackles common dough questions
BY TOM LEHMANN PHOTO BY JOSH KEOWN
A: The first thing to know about the VCM is that it has a much higher mixing speed. The two-speed models mix at 1750 RPM at low speed and at 3500 RPM at high speed. Single-speed models mix only at 1750 RPM. In most cases, only the 1750 RPM speed is used for dough mixing. This high speed mixing means that the mixing times will be a lot shorter, typically in the 70- to 90-second range, and due to the high speed mixing, dough heating may be a problem.
To address the dough temperature issue, we suggest that you have a five-gallon bucket of ice water at hand, and between doughs, fill the mixing bowl with the ice water, then pour it back into the bucket when you’re ready to add the ingredients for your next dough. The short mixing time can pose a problem for those using instant dry yeast (IDY) as the mixing time is not sufficiently long enough to fully hydrate the yeast or properly incorporate it into the dough. For this reason, IDY should be hydrated in 95 F water for 10 minutes prior to addition to the dough (I like to add it directly to the dough water after hydration).
If you are using active dry yeast (ADY), you have to hydrate it anyway, so there won’t be any change for your normal handling procedure. If you use fresh, compressed yeast, we suggest adding the yeast to the dough water in the mixing bowl, then running the mixer for a couple seconds to fully suspend the yeast throughout the dough water. The remainder of dough ingredients can then be added.
VCMs come with two different mixing attachments. One is flat, looking something like an airplane propeller, while the other one is curved and sharp on the leading edges. The flat mixing attachment is the correct one to use when mixing dough, while the sharp, curved one is correct for cutting or chopping applications. To assess the correct mixing time when going from a planetary mixer to a VCM, mix the dough just long enough to achieve a smooth appearing skin on the dough. Unlike with other dough mixers, it is very easy to over-mix a pizza dough in a VCM, so proceed cautiously, making adjustments in mixing time in increments of no more than 5 or 10 seconds. By following these basic guidelines, the VCM should work well for you.
A: Some of my favorite ways to “spice-up” old favorites are as follows:
Marinate pieces of skinless chicken breast in lemon, lime or coconut juice. Add one of these along with a few pieces of drained or frozen/thawed peach slices to a pizza. Add a few pieces of pecan nuts to the top of the pizza to increase the “wow” factor. Or, if you used the coconut juice marinated chicken, try adding a little shredded coconut to the top of the pizza instead of the pecans.
Offer a simple shrimp pizza using a white sauce (Alfredo) on the dough skin to replace your regular pizza sauce. Marinate baby shrimp in lemon or lime juice. Begin by brushing a little olive oil over the dough. Add some diced garlic, followed by the white sauce. Sprinkle the top of the pizza with dried dill weed, and add the marinated shrimp. Follow this by adding some red and green pepper slices, and a little red onion. Top with a light application of Mozzarella cheese (about 4 ounces for a 12-inch pie), and finish by adding 1 ounce of shredded Parmesan cheese. Bake the same as your regular pizzas.
Offer a slightly upscale version of your meat pizza using a 50/50 blend of your pizza sauce with a tangy BBQ sauce, garnish with red onion rings, and a sprinkling of smoked Provolone and Parmesan cheese.
These are some of the things that I like to do to add something a little different. Use your imagination to come up with your own special treatment of one or more of your house favorites!
A: I think spiral mixers are the greatest things since sliced pizza. They are highly efficient, mixing the dough very well, and with essentially the same total mixing times as a typical planetary mixer when using second speed. In addition, they will mix doughs from full size (whatever is appropriate for the mixer) to as small as 25 percent of full capacity.
Because of this, I always suggest to potential buyers that they purchase a mixer a little larger than what they think they need; then, the mixer will have the needed capacity to meet future growth demands. Due to the design of spiral mixers, they can mix a relatively large amount of dough with a fairly small power draw, making them highly efficient. They also have a foot print that isn’t much larger than most 80-quart planetary mixers, so they are not difficult to fit into most shops. The larger size mixers will typically have a removeable bowl on wheels, allowing the bowl to be moved around the shop.Most of the smaller size spiral mixers don’t have this feature, so the dough will need to be removed from the mixer and manually transported to the work area for cutting and balling.
Most shops using spiral mixers address this issue by simply installing the mixer as close as possible to the cutting bench, as this allows them to easily cut dough from the bowl and toss it onto the bench for cutting as needed. A handy feature that I would like to see more often on spiral mixers of all sizes is a removeable drain plug in the bowl. To clean a spiral mixer, we typically pour some hot water into the bowl and cover it with a sheet of plastic, allowing the bowl to be steamed, thus softening any dough residue in the bowl. After steaming for about 15 minutes, the bowl can be scrubbed out using a nylon bristle pot brush. The bowl is then rinsed and sanitized. A drain plug makes cleaning the mixer a bit easier by allowing the wash water, rinse water and sanitizer to be simply drained from the bowl by placing a bucket under the drain plug, and removing the plug. Without a drain plug, you will need to bail the water out of the bowl like bailing a sinking boat.
So, why don’t we see more spiral mixers used in pizzerias? It’s probably because they don’t have any provision for changing the agitator. Hence, you can’t mix sauce in them. And they don’t have an attachment hub, so you can’t install an attachment for chopping, grinding or slicing (a.k.a. pelican head) to the mixer. But, if you’re looking to update your dough mixer, and you can keep your old planetary mixer to do the sauce and cutting chores, a spiral mixer might be just the ticket.
Tom Lehmann is a director at the American Institute of Baking in Manhattan, Kansas.
Make Plans NOW to Attend
International Pizza Expo®!
This year we’re expanding our education program to include more than 80 business-boosting seminars and demonstrations. We’ve also added several new industry speakers who will address the hot issues facing pizzeria operators today.
In the current economic environment, it’s more important than ever to discover innovative ways to boost profits and improve efficiencies. What are you doing to increase sales and reduce costs? Do you have cash flow issues? How are you dealing with the effects of increased wages and benefits? At this year’s Pizza Expo, you’ll find solutions to these problems and more.
Designed for pizzeria owners and operators, Pizza Expo delivers something for every industry pro, whether you’re a veteran or opening your first store. Can you imagine a show floor larger than five football fields with nothing but pizza-related goods, equipment and services? International Pizza Expo — the “Show of Shows” for the pizza industry — is THE place to do business, learn, network and deal.
Do you feel the need to compete? I know you think your pizza is the best … and here’s your chance to prove it by competing in the International Pizza Challenge™. This year we’ll again have competitions for both traditional and non-traditional pizzas, as well two new divisions that will rank Italian-style and deep-dish style pizzas. Once again we’ll have a final bake-off between the winners of the four divisions to determine the “Pizzaiolo of the Year.” We’ve also invited back four of our past winners to compete in a blind-box competition to determine the “Master Pizza Maker of the Year.” This year we’ll have over $50,000 in cash and prizes up for grabs. If you’re interested, don’t delay; there are limited entries in each division. And that’s not all: Energy and excitement will abound when the World Pizza Champions™ and the World Pizza Games® take center stage. Contestants will be able to compete in up to five events, including freestyle acrobatics, fastest dough, largest stretch, box folding and longest spin. Each event winner will take home $1,000. We’re also going to add a new contest, which will take place on the show floor to determine who has the best pizza box. If you think yours is one of the best, please make sure to bring a sample with you. You might take home $500 and bragging rights.
Last but not least, at the close of the show on Thursday, March 15, one lucky pizzeria owner will walk away with $20,000 in cold, hard cash by participating in the $20,000 MEGA BUCKS Giveaway™! Remember, you can’t win if you don’t enter, and you won’t win if you’re not present.
If you haven’t already registered to attend, then you should stop reading this now and call (800) 489-8324, or better yet, pre-register online at www.PizzaExpo.com and SAVE $10. For those of you who have already made plans to attend the industry’s premier annual event, it’s a good idea to start planning your show strategy now: Map out a list of education seminars to attend and start thinking about questions to ask at the Beer & Bull™ Idea Exchange.
Please take a few minutes now to review the attendee brochure mailed with this issue of Pizza Today or visit our Web site for a detailed listing of exhibiting companies, seminars and demonstrations. If you’ve seen or read about a product or service you’d like to have for your pizzeria, chances are you’ll find it on our show floor. Did I mention we have more than 50 new exhibiting companies signed up for this year’s show already?
Our combined staff at Pizza Today and Pizza Expo has been working for well over a year to produce the biggest and best show ever! In fact, we’re so sure that attending Expo will be the best business decision you’ll make this year, we’re guaranteeing it. If you’re not satisfied with your experience at Pizza Expo®, simply outline your thoughts in a personal letter to me and I’ll see to it that you receive a prompt refund of your registration fee.
The bottom line is there’s always something new at Pizza Expo® that can improve your pizzeria … a new marketing idea, innovative product, menu item, cost saving or revenue enhancement technique. As always, our commitment to you, our partners, is to produce the biggest and best show ever. In fact, I guarantee attending Expo will be the single best investment of time and money you’ll make in 2012, or we’ll refund your registration fee.
Remember International Pizza Expo® is a tax-deductible working vacation.
See you in Las Vegas!
Executive Vice President
CANE ROSSO - DALLAS, TEXAS
Primed And Ready
Dallas-based Cane Rosso on track for serious success
BY MANDY WOLF DETWILER PHOTOS BY RICK DAUGHERTY
Cane Rosso –– Italian for “red dog” and named after a beloved pet who passed away –– has made headlines on its own since it opened last Valentine’s Day. Jerrier, who had served as a minority investor at Campania, says he wanted his own smaller concept (Campania weighed in at 6,000 square feet over three floors) in which he could create authentic Neapolitan pizza.
“In 2008, I bought my own mobile pizza oven,” he says. “It was a wood-burning oven on a trailer and we started a catering company.” That got off the ground in 2009, and he started doing private events that resulted in “a cult following” in the Dallas area. By the end of that year, Jerrier began actively looking for a space. “That’s when the economy was really tanking and landlords were asking too much. We were confident that we’d eventually find something.”
By the middle of 2010, his current landlord had tracked him down with the first location Jerrier had seen that had character with room to grow –– just what he wanted in a fledgling restaurant location. Deep Ellum had become a hip spot for restaurants and boutiques, and he was able to build the restaurant for a fraction of what it would have cost anywhere else. His tables were created from reclaimed shipping palates, he bought chairs at auction and he found his barstools in storage in the building next door. Pillows flank the booths, many of which were brought by friends and family during the restaurant’s soft opening.
Jerrier expects Cane Rosso to bring in between $1.5 and 1.8 million in sales in 2012. The restaurant was named one of D Magazine’s 10 Best New Restaurants and has already garnered attention in Dallas’ competitive dining scene.
Taking center stage is the wood-burning Stefano Ferrara oven –– burning at 900 degrees –– and mixer, both of which he sourced from Naples. “I had this oven designed probably a year before I actually ordered it,” Jerrier says, adding that it was brought into the restaurant via forklift through the patio doors and he built a bar around those –– essentially creating a stage for his pizzaioli. The restaurant can seat 100 with an additional 40 on the patio, and guests can wait up to two hours during peak times –– an indication of the restaurant’s popularity and reputation. Crucial to maintaining that reputation is the pizzeria’s AVPN certification –– one of a growing number of American pizzerias who have met the rigid standards of the Italian-based Associazione Verace Pizza Napoletana. “It’s the kind of pizza that I like,” says Jerrier, who honeymooned in Italy with his wife in l995 and later built a pizza oven in his own backyard. “I was frustrated with how I couldn’t get it to work right, and then I went and trained with Vera Pizza Napoletana. ... I like other styles of pizza, but this is the style that I prefer to eat all the time.”
Last fall, Cane Rosso brought celebrated master Italian pizzaiolo Dino Santonicola on board to help tweak the authenticity of the pizza (he’s currently looking for other master pizza makers). At Cane Rosso, the pizzaioli are “really passionate about this product,” Jerrier says. “They’re not just clocking in and clocking out –– they’re on the Web, reading the journals. They know who all the big U.S. pizza makers are. We’ve surrounded ourselves with like-minded people. They’re more than just line cooks. They know when the dough’s not right, when the dough needs more water (or) more salt. They know when the
oven’s not right. And they’re all faster and better at making pizza than I am. When we work, I usually man the oven to stay out of their way.”
The oven can fit five to six pizzas at a time, but “if you cook six in an oven, you’re going to burn two or three,” Jerrier says. With just four in at a time, he can keep a better eye on the oven’s temperament and adjust accordingly. Cane Russo puts out 400 to 500 14-inch pizzas a day, which are slightly larger than the typical 11-inch Neopolitan offerings. Pizzas are made with high-end ingredients that the customers appreciate as well, including San Marzano tomatoes, house-made mozzarella (600 to 700 pounds a week) and fresh-grown basil as mandated by the AVPN. “Really, the food cost isn’t that expensive,” he says. Cane Rosso does use a high quality Italian flour, but Jerrier says it is comparable to any high-gluten offering and he keeps his doughballs at about 23 cents each.
“The most expensive thing that we have from a food-cost standpoint are our cured meats,” Jerrier says, “because we don’t do any pepperoni here. We use a hot soppressata ... In terms of keeping food costs down, we don’t have any single-stock items in the restaurant. Everything is reused. If it’s on a pizza, it’s on a sandwich.” They also added a Saturday brunch and spread their ingredients across that offering as well. “Dallas is a very brunch-y town,” Jerrier says. “Part of it, too, is that we’ve been making brunch here for ourselves for a long time.”
Beer and wine are available, but the wine menu “is not very complicated,” Jerrier says. They even offer wine on tap with a portable wine cart, just one more point of differentiation.
Despite opening a brick-and-mortar restaurant, Jerrier has kept his catering oven and added a second to run out of the Forth Worth area last fall. “We bill $20,000 to $25,000 a month in just catering with one mobile oven,” Jerrier says.
The restaurant is closed on Sundays and Mondays and is only open on Tuesdays for lunch. “Really, I wouldn’t even be open (on Tuesdays), but it’s a prep day,” Jerrier says. “We need to make cheese, we make dough. We figure we might as well open for lunch.”
By Wednesday, however, they can have as many as 60 reservations on the books. There’s one table in the front window that is referred to as “Table 20” that is highly reserved and regarded amongst Dallas’ dining scene.
Jerrier handles his advertising himself, and “we don’t pay for any
advertising ourselves,” Jerrier says. “It’s all Facebook and Twitter and me 100 percent reaching out to local media. I think it helps when it’s an owner-
operator reaching out versus a PR person. We don’t do press releases.” He’s also active on local dining message boards and sites like Yelp.
Next up, Jerrier plans to build out a casual sports bar restaurant in the space next to Cane Rosso. Aside from the second mobile oven in Fort Worth, Jerrier is already looking for a new space in that area, but “we’ve got a good brand. I don’t want to over-expand too quickly, but we want to keep the momentum up where I can use that leverage with landlords,” he says. He’s been approached by outside investors but is keeping his cards close at the time. “I’d like to have one, maybe two more in the Dallas area, but I don’t want to over-saturate. ... I’d like to be open more than a year before we get too crazy.”
Mandy Wolf Detwiler is managing editor at Pizza Today.
"When in Rome"
There’s no such thing as Italian pizza. Allow me to clarify: there is no single Italian style of pizza. That would be like saying there’s only one style in the United States. Instead, there’s a patchwork of variations based on different regional histories and ingredient availability. We’re already familiar with Neapolitan pizza, but New York is currently experiencing a surge of Roman-style pizza that may prove to be a perfect complement.
Two distinct Roman pizza styles have gained popularity over the past few years, the first of which is called pizza al metro. As the name describes, pizzas are a full meter long. In Rome, slices are cut to order and priced according to weight. Pizza al metro in NYC is usually cut into even slices at pizzerias like Merilu Pizza Al Metro (located in Hell’s Kitchen), but Pie by the Pound (Greenwich Village) serves the traditional Roman method. The dough is rolled extremely thin and topped delicately with simple ingredients. I always go for combinations like cherry tomatoes and mozzarella di bufala or potato and rosemary, but they also have popular standbys such as Margherita and pepperoni for the less adventurous.
The second version is called pizza al taglio, or “pizza by the cut.” This one is also rectangular with a thickness somewhere between pizza al metro and Sicilian pizza. Like its thinner Roman counterpart, pizza al taglio is usually cut with scissors and reheated to order. The owner of Pizza Roma on Bleecker Street stresses the fact that pizza al taglio utilizes a very wet dough to combat dehydration experienced during the reheat process. The dough at Pizza Roma is allowed to ferment for 96 hours so the base is extremely light and flavorful, with a beautiful crunch on the underside.
Both varieties are traditionally baked in electric ovens because natural gas is far too expensive in Rome. It also allows for an extremely consistent bake over the exaggerated length of the pizzas. Pizza al metro is usually baked directly on the oven floor, whereas the thicker pizza al taglio is baked in shallow pans. Most pizzerias I’ve seen serving Roman pizza are doing so exclusively, with the exception of Tony’s Pizza Napoletana in San Francisco, where you can get Roman-style pizza al metro in a sit-down atmosphere. Tony makes use of the pizza’s length by creating a cohesive three-course meal, including antipasto, entrée and dessert sections. It’s a deliciously ingenious way to adapt the style to a tableside format.
If you like the upscale, artisanal nature of Neapolitan pizza, think of Roman pizza al metro and pizza al taglio as its by-the-slice counterparts. Slices usually sell for $3 to $5 and pair well with wine and beer. There’s also lots of opportunity for topping experimentation because the Roman formats are too new to America to be stuck in stifling traditions like New York slices. We’re only just beginning to see Roman pizza bubble up in the streets of New York, but keep your eyes peeled because it has the potential to become the take-away answer to pizza’s ever-growing profile. u
Scott Wiener owns and operates Scott’s Pizza Tours in New York City.
Employees Learn to Earn
Each year I set aside a day for my employees to earn their yearly bonus — Employee Bonus Day. I put before them the opportunity to divide amongst themselves an entire day’s sales. Am I crazy? Some may think so, but look closer. We plan a promotion on a Friday in December. This is the busiest day of the week during the busiest time of year. I assist them in planning a promotion that is not a deep discount so that we make money and do not just create more work. I show them how to market on a shoestring budget. I turn my pizza makers into moneymakers for life. To help instill awareness of food costs and marketing investment, a percentage of the day’s sales is set aside to cover those expenses.
Robert Long, a 10-year associate at my pizzeria says: “As an employee, the main thing I have learned from having an employee bonus day is the importance of all employees coming together as a team, and then putting forth their best effort to ensure an excellent sales day. I would say the single biggest thing that motivates all the employees to put forth their best effort for employee bonus day is being rewarded with a cash bonus. The more sales, the bigger the bonus for each employee.”
With an eye on the cash prize:
Employees see things from my perspective — the more we sell and upsell, the more we earn.
They see the benefits of skilled marketing and monitoring ROI, as I always have to do.
Teamwork is crucial.
Effort is crucial for a reward.
“In order to have a successful employee bonus day, employees do everything they can to have as many customers as possible want to order food on that particular day,” Long says. “Employees come up with a ‘one-day only’ special that customers can’t resist. I have found that the best ways we have done this have been through marketing in various ways — flyers on pizza boxes, signs on the front window and through creating word-of-mouth by telling friends, family, and area businesses to order on that particular day.”
As the business owner, what’s in it for me? I get a Friday off! My sales have jumped by 50 percent on employee bonus day. Plus, I now have employees who are happy, motivated and have learned to earn. As we continue into the slower winter months, these employees are now team members who keep the enthusiasm going. At the very least I have a break-even day and staff with high
Scott Anthony is a Fox’s Pizza Den franchisee in Punxsutawney, Pennsylvania. He is a monthly contributor to Pizza Today and a frequent guest speaker at Pizza Expo.
Partner & Profit
BY WAYNE REMPELJP’s //Lacombe, Alberta
One of the easiest things I can do is partner with my local charity/nonprofit groups. I have found they are great partners to work with because they want you to succeed and will do whatever it takes to help you raise money so they can receive more. Our last fundraiser with one of these groups was this: for every pizza we sold, they would receive 20 percent of our sales in free pizza. We sold $1,500 in pizzas on the day they picked to do this, so they received $300 worth of large pizzas to use however they pleased. They did all the promotions. Because it was for a nonprofit group, they had free radio advertising and free newspaper ads — all of which mentioned my name. They then took the $300 worth of pizza and sold them at their next event, which got my name out again. And all it cost me was the food cost on $300 worth of pizza.
My other partnership that has worked well over the years is a fundraising coupon for one large pizza and a two-liter of soda that schools sell for $20. For every coupon the school sells, they keep $10. The thing I like about this one is the fact that I have 200-plus kids selling my product door to door. And, again, all it costs me is the cost of the pizza and the two-liter pop. The other good part about this coupon is most people will add another pizza, wings or another menu item when they redeem the coupon — and I make full profit on those items. When is the last time you had 200 kids running around the neighborhood promoting your product? Not only are they promoting my product, it also lets people know that I am giving back to the community. And because the actual value of the coupon reflects what they would pay if they came in and ordered it, many of them will buy three or four coupons. I also have a 30-day expiration on them so that it gives customers a sense of urgency. I make sure I give each school a different month so that it is spread out throughout the school year and it keeps my name out there.
Examining your P&L
Report gives insight into health of business
BY NORA CALEY PHOTOS BY RICK DAUGHERTY
Pam Proto, founder of the six-location company, says she and the managers use the P&L, which summarizes sales and expenses, to see how the Colorado and Idaho restaurants are performing compared to the same period the previous year. “We take first quarter 2011 and we compare it to first quarter 2010, and we say, ‘We did less in sales, but why did we spend more on cheese?’ ” she says. “It’s very transparent. We all talk about it. Everyone has certain things they have to accomplish, and they are rewarded when they accomplish these things.”
The P&L is a financial statement your bookkeeper or accountant sends you, along with other reports such as daily sales figures or weekly snapshots. Some accounting experts refer to the P&L as the income statement, and many recommend examining it monthly. The important thing, they agree, is that as a restaurant owner you examine the P&L, understand what it says about the health of your business, and then do something with the information.
“It really tells a story of your business,” says Alex Coppersmith, chief financial officer of the San Francisco-based Bacchus Management Group, parent company for four Pizza Antica restaurants and several other restaurants. “It gives you a glimpse of not just what’s happening today, but what’s happening over a week, a month, a year.”
That glimpse tells you whether your business really is making any money. “So many people think, ‘If I have money in the bank, I am making money’,” says Barbara Ann Barschak, CPA and restaurant and hospitality partner at the accounting firm Katz Cassidy in Los Angeles. “The P&L will help them manage their business. It will tell them if they are pricing their menu properly, if their portions are right, if they are overstaffed.”
The P&L shows sales, and how much those sales cost your business. Sales encompass food and beverage, merchandise such as t-shirts and gift cards. Costs include food, labor and operating expenses. Each has its own subcategories. For example, Barschak says, labor
includes not only wages, but workers’ compensation insurance, uniforms, payroll processing, payroll taxes and, for some, health insurance. Operating expenses include everything from marketing and utilities to oven repair.
Make sure the P&L is timely. Barschak suggests getting the P&L around the tenth of the month, showing revenues and expenses for the previous month. Compare the figures to how your business did in past months. Also use other restaurants as a benchmark. You can get these industry standards from the National Restaurant Association, friends and peers in other restaurants, or an accountant who specializes in foodservice.
Most restaurants have food costs of about 30 percent of revenues, and for pizzerias that figure is lower. Labor should be no more than
33 percent, and rent should be seven to 10 percent, Barschak estimates. Credit card processing could take up two-and-a-half percent. Marketing might be two percent.
The more information you have on the P&L, the better. “It is very important that business owners are aware of how much money they are actually making, and not just hyper focused on sales figures,” says Kevin Suto, CEO of Zachary’s Chicago Pizza Inc., with three locations in California. “If your sales are consistent, yet your profit is down, the P&L will show you where you have incurred higher expenses.”
Proto says when food costs went up, she renegotiated with vendors. Managers came up with ways to save electricity and to schedule less staff during certain shifts. “The economy helped us be better at what we do. It really made us look at our costs,” she says.
Coppersmith agrees that collaboration is important. “Let the chef know the food costs were 23 percent and the industry norm is 20, and last year you had 19 to 20,” he says. “As an owner you don’t need to worry about it by yourself. Go to the dining room manager and say, ‘We are having issues with labor costs, do we have more waiters than last year?’”
Also speak with your accountant. Theodore D. Derma, CPA, audit manager for the accounting firm R. J. Augustine and Associates in Schaumburg, Illinois, says sometimes restaurant owners panic because one month went badly. An accountant can offer some perspective. “A client will say, ‘I am losing money this month. What’s going on?’ and we say, ‘You just spent 20 grand on a liquor license, it was similar to last year,’” he says. Sometimes he suggests small changes, such as using a scale to weigh cheese before it goes on the pizza.
Don’t look at the P&L as a list of things to cut. The P&L might also suggest you should raise prices,
develop new marketing tactics, or revamp your menu, says Suto. “These decisions are difficult ones,” he says. Or you might need to just stay put. “If sales and profits are strong or up, the P&L is telling you to keep doing what you are doing.”
What’s important is the bottom line, literally the last figure on the chart, the net profit. “If you are doing three percent after taxes,” says Derma, “you are doing a good job.”u
Nora Caley is a freelance writer based in Colorado and is a frequent contributor to Pizza Today.
Should you create your own profit and loss statement or hire a bookkeeper or accountant? Daniel V. Augustine, CPA, director of accounting for R. J. Augustine and Associates in Schaumburg, Illinois, says there is reasonably priced software available that enables business owners to draw up their own charts, including P&L, balance sheets, and cash flow statements.
“The software makes financial information available to owners almost on a daily basis,” he says.
However, he says, the pizzeria owner’s main task is to sell pizzas. “You don’t want to micro-manage the profit and loss detail on a daily basis.” A full or part-time bookkeeper can generate these reports, or you can hire an accounting firm that sends you the reports, and discusses them with you, on a regular basis.
If you do want to create the P&L yourself, you’ll have to pull the sales information from your point of sale system and the expenses information from your invoices, credit card statements, and bank statements. Software such as QuickBooks can help.
The Price Of A Remodel
Investing in updated look can breathe new life into restaurant
BY DEANN OWENS PHOTOS BY JOSH KEOWN
When considering a remodel, operators need to ask that question and others before making a decision. “You don’t need to go for broke. Every situation is different,” says Kevin Goldfein, owner of KBG Dining Group, a hospitality management company in California that owns Rosti Tuscan Kitchen. “The important thing is to ask why you want to remodel and what are your goals. What do you want to accomplish?”
After developing an extensive plan, Goldfein remodeled the Encino and Santa Monica locations of Rosti Tuscan Kitchen.
“We increased seating and improved infrastructure and became current with our competition and our brand and our image, but we kept our identity,” Goldfein says. “We wanted people to come in and say, ‘oh, this is brand-new, but it’s still the same Rosti we love. The remodel has been a big benefit to us.”
According to Goldfein, the remodel was a chance to increase sales as well as update Rosti’s brand.
“I bought the company in 2008, because it had great bones in terms of great service, food and reputation. But it had been in business for over
15 years and needed updating,” Goldfein says. “So, remodeling went hand in hand with re-branding — a chance to rejuvenate itself.”
The right remodel can result in
increased sales. “Yes, renovation will absolutely lead to increased sales if the design (and designer) is simpatico with the brand and target customer. If you don’t have that synergy between design, brand and target customer, then you won’t be maximizing sales. Not at all,” says Christopher Studach, creative director of King Retail Solutions in Oregon.
According to Studach, for a remodel to stand the test of time it must start with a focused plan.
“If you figure that ‘worn’ is likely a sign that the business has been suffering over time — losing customers — then just the mere fact that the business is investing in the customer’s experience will create a jump in business,” Studach says. “But how successful over time is a direct result of an educated and targeted design process.”
So how much does it cost to put a design plan into motion? It depends on the scope of the plan, the size and location of the restaurant and the needs of the business.
“Remodels vary in scope tremendously. A simple face-lift (no kitchen, furniture, etc.) can be very affordable, while a complete change including
updated equipment, finishes, furnishings and exterior upgrade can cost much more. Of course the size and location will affect that number as well,” Studach says.
Lena Gordon, principal interior designer and owner of D2D Studio, Inc., in Littleton, Colorado, offers these examples of renovations in Denver.
Example 1: A 15-table casual pizzeria, young college demographic, simple standard toppings and no alcohol served: New furniture, paint, flooring, some architectural interest, simple restroom. Cost with design service: $25,000-$50,000.
Example 2: A 15-table medium scale pizzeria, young family demographic, semi-upgraded toppings and wine/beer: New furniture, paint, flooring, more architectural interest, impressive light fixtures, medium restroom. Cost with design service: $45,000-$100,000.
Example 3: A 15-table gourmet pizzeria, hip foodie demographic, upgraded toppings, fancy salads and apps, full bar: New furniture, wall treatments, flooring, lots of interior architectural elements, nice restroom. Cost with design service: $75,000-$200,000.
The remodel of the Valencia location of zpizza focused on the kitchen and the customers, according to Amir Sabetian, vice president of operations for zpizza International in Irvine, California.
“In the case of Valencia we spent about $20,000 total. Almost half was in kitchen equipment that needed repair or replacement. Guest view — we
upgraded about $11,000,” Sabetian says. “Complete customer area
remodels, which include changing all furniture, lighting, art, interior signage, paint or wall coverings, flooring and casework, can run from $100,00 to $200,000 depending on location and size. This does not include kitchen and business equipment upgrades.”
A budget will help operators determine where to spend and save.
“The bulk of cost is usually flooring, furniture and then electrical. Details, such as flatware, table linens, etc. can break the budget quickly. Splurging on lighting and restrooms is a good bet,” Gordon says. “Operators can save money by using the creative genius of an interior designer to create inexpensive wow moments without necessarily throwing a ton of money at the space. Strategically using used restaurant furniture and equipment, inexpensive art and wall/ceiling treatments, designing unique items with simple materials.”
Operators should make the most of what they already have. “A professional assessment should be done to determine what the challenges are and to prioritize the opportunities,” Studach says. “ ‘Splurge’ is not something we would even recommend — it implies spending more than was necessary to achieve maximum benefits. It’s more about prioritizing to determine, for your particular business, which investments are going to generate the most sustainable ROI.”
Doing homework will result in a better bid. “Be practical about restaurant remodels; it’s not your house — lots of contractors need work these days,” Sabetian says. “Shop around. We saved $1,200 just on the paint quote in Valencia by calling for three quotes. Also, fortunately franchise stores share the same brand elements, furniture, lighting (and) art work, so these items can be purchased with deep quantity discounts. Paint is one of the quickest, cheapest and most dramatic ways to make a change that will be noticed by your customers.”
According to Sabetian, successful updates are in the eye of the beholder.
“The majority of expense should be done where guests can experience the enhancements. Operational equipment in the kitchen is important, but if the guest can’t see it, it won’t affect their view on the enhancement expense.”
Operators need to make design trends work for their brand now and in the future.
According to Gordon, trends lean toward the raw, natural materials mixed with metals, upgraded metallic vinyls, great design in light fixtures and impressive restrooms.
Studach warns against getting caught up in a trend. “Any trendy design element will quickly date itself and negate much of the benefits of the remodel in the first place. Unless, of course, you can afford to update every three to five years. Besides, do you want to be just like everyone else?” he asks.
When it comes to design ideas, the brand determines the look. “For the zpizza brand, minimalism and pure were the driving forces,” Sabetian says. “These were expressed through light pure colors and materials, bamboo, stainless steel, and accents of the brand red. Packaging materials were recycled and recyclable. (We went for) modern clean lines in furniture and lighting.”
Since any remodel, small or large,
requires time and money, operators need to do their research before any walls come down or high-price equipment is ordered. To put the right remodel in motion, operators need to know what works best with their current establishment, brand, budget and business goals.
DeAnn Owens is a freelance journalist living in Ohio. She specializes in features and human interest stories.
Data theft is a major problem for credit card users
BY PAMELA MILLS-SENN PHOTO BY JOSH KEOWN
Stolen credit cards. Data security breaches. Identity theft and fraud. When customers come to your restaurant or place a phone or Web order, these issues are probably not even on their radar, but they should be on yours. If you’re not careful, your customers, employees, even your business could be at risk of experiencing a ruinous data theft.
Restaurants’ unique characteristics make them particularly vulnerable, says Jon McDowall, president/CEO of the Fraud Resource Group, an international consulting and expert witness firm headquartered in Bettendorf, Iowa. The workforce is generally young and transient, he says. The workload and pace is demanding and the compensation isn’t always commensurate. Orders are coming in over the phone or Web, with payments made remotely (even when dining in, credit cards typically leave the customers sight, sometimes for relatively extended periods).
Also, “the consistent segregation of employees’ duties and managerial oversight found in many other businesses may not feasible,” McDowall adds. “Let’s face it; many pizza establishments have the potential to be a risk-manager’s nightmare.”
Lest you think that there’s nothing you hold of interest to ID thieves, think again, advises Joseph Steinberg, cyber security expert and CEO of Green Armor Solutions, a Hackensack, New Jersey-based provider of information security software. Along with the aforementioned credit card data, there’s sensitive employee information, such as social security numbers and payroll information, he reminds. Don’t forget things related to running the business –– not just processes, but recipes,
e-mails from corporate and so on.
“Then there are those customer loyalty programs that collect information like addresses, birthdates and e-mail addresses,” Steinberg addds. “All this information can be used by a criminal for nefarious purposes.”
Data theft and breaches happen in numerous ways. For restaurants, skimming — the theft of credit card information used in an otherwise legitimate transaction — is a particular concern, says identity-theft prevention expert, Johnny May, owner of Security Resources Unlimited in Bloomfield Hills, Michigan. “It’s huge,” he says. “The restaurant is the one place where you lose sight of your card.”
Skimming can involve an employee writing down a customer’s credit card information, or photocopying the card, or using an electronic device (“skimmer”) to steal the data and make a clone card, says May.
“A large percent of data theft is committed by dishonest insiders,” May says. “Companies are often focused on outside attacks but really, the biggest percent comes from inside.”
Dumpster diving is another way data theft happens, says McDowall. Which is why, under Federal law, every U.S. employer, regardless of the size of the business, must destroy sensitive data
before tossing it—this includes credit card information, customer names,
addresses and so on, he explains.
“The most common means is shredding and employers need to have functional shredders in convenient locations so they’re used every time,” McDowall says.
Credit card processors can pose a risk if not handling information correctly, says Steinberg, mentioning that a recent breach involving a Texas eatery may have occurred at a third-party processor. He advises restaurants to verify their processors follow PCI Standards (Payment Card Industry Data Security Standards) and to also follow them.
Then there are data breaches caused by keyloggers, worms, Trojans and malicious codes, says McDowall. “Links, photos, attachments, website content and many other common online items can be seeded with malicious code, allowing the code’s handlers to steal sensitive identifying data, banking and credit card data, and to convert this into profit.”
The fixes aren’t necessarily complicated. In addition to implementing layered computer security — for example installing software that protects against malware, viruses, spyware, and offers intrusion detection, and so on — Steinberg advises encrypting all sensitive data; easy to do and inexpensive.
He also suggests that digitally connected, multiple-location operations take precautions to ensure a breach at one site won’t lead to breaches at the others (this may require IT assistance). Also, employees logging into the restaurant’s computer system should have their own personal identification and should only be able to log onto those things that concern them, Steinberg says. For example, a chef should not have access to credit card information or to employee personal data.
“This will help protect against breaches and thefts caused by disgruntled employees and will also limit damage in the case of a leak,” he explains.
McDowall suggests having separate computers for order taking that don’t allow for surfing or e-mailing. He also advises that restaurants establish written policies — and train on them — for how credit card information is handled, including compliant disposal of that information.
Offering free wi-fi, increasingly common, exposes you to a “whole new level of risk,” says Steinberg, mentioning that this should never be provided on the same network as the restaurant operates on.
“One of the easiest ways for a criminal to figure out if they can attack the restaurant is to go in and use the wi-fi to nose around,” he says, adding that it’s not difficult to set up a separate network.
The best protection is awareness, says McDowall. “The most important step
involves acknowledging that a number of risks exist and ownership and management committing to being as secure as possible,” he says. u
One of your first lines of defense when it comes to warding off internal theft is the background check, says Johnny May of Security Resources Unlimited. He reminds operators that employees typically pose the biggest threat to data security. He also suggests restaurants:
Consider video monitoring, especially over registers and where orders are taken. Monitors can prove effective deterrents.
Store employee data in locked cabinets and limit access.
Think about using wireless credit card technology that allows customers to pay at the table. “It’s a simple fix but many restaurants don’t use it,” says May.
Keep audit trails to document and determine who has accessed what and when. There are software programs that will allow you to keep audit trails.
Jon McDowall, president/CEO of the Fraud Resource Group, recommends exercising caution when considering new technologies. “Make sure you’ve explored and adequately understand the security implications. You may want to delay rollout to see how others fare.”
Pamela Mills-Senn is a freelancer specializing in writing on topics of interest to all manner of businesses. She is based in Long Beach, California.
PIZZA INDUSTRY REACHES OUT
Slice of Hope raises $100,000 for breast cancer research
BY JEREMY WHITE PHOTOS BY RICK DAUGHERTY
We weren’t exactly sure what to expect. Since October is both National Pizza Month and National Breast Cancer Awareness Month, we wanted to put the two together in a big way. And since we’re cyclists, we wanted to use a bike ride as a hook to draw attention. The birth behind the Slice of Hope idea, which we detailed several times in various issues of Pizza Today last year, really was that simple. But, considering the fragile state of the economy, would pizzerias support a cause that isn’t local, we wondered?
Our initial research indicated that America’s pizzerias would in fact answer the call, so we took the plunge. And, boy, am I ever glad we did.
Slice of Hope meant several things to me personally. It was a test of my physical and mental endurance, for starters. But, beyond that, it was a means — if we could pull it off — to bring the pizza industry together in a philanthropic way that had never before been attempted. Not only could we help fight breast cancer — a formidable foe to society, no doubt — but we could also show America that the pizza category is hands down the most giving, community-minded segment in all of foodservice.
When I worked side by side with Garrett Mullen and Tutta Bella Pizzeria founder Joe Fugere to create and launch the Karen Mullen Breast Cancer Foundation (KMBCF), the goal was, again, simplistic enough: to ensure that money given by pizzerias would go to breast cancer research, not for a large charity’s payroll. KMBCF is volunteer-staffed, which enables it to pass on the money it receives without retaining a large percentage for marketing, payroll, lobbying, etc.
So, heading into Slice of Hope, after the planning was finished, I had two real questions: will I survive this bike ride, and will many pizza companies take the plunge with Pizza Today and donate their time and effort?
Yes, and yes.
Pizza Today Art Director Josh Keown packed his bike and rode along with me from Portland to Seattle, and that made the four-day trip much more manageable. Together we logged between 50 and 60 miles per day, and we were provided world-class support by Pizza Today publisher Pete Lachapelle and Creative Director Rick Daugherty. Pete was supposed to accompany us as well, but an injury kept him on the sidelines and relegated him to mechanical support. As for Rick, he took all the photos you see in this article, as well as lots and lots of video footage that we’re still poring over.
Collectively, the four of us had a blast. Finishing the ride in Seattle on October 7 was encouraging, but the real reward came when we got back home to Louisville, Kentucky, and watched over the next three months as all the letters of support and donations rolled in.
In all, more than 200 pizza companies filled out our pledge form and agreed to donate a percentage of October 7 sales to KMBCF through Slice of Hope. At the time of this writing in early December, roughly 175 of those companies had followed through on their pledge by mailing in checks. As of December 12, the day we went to press with this story, the total amount raised was right at $100,000. If the remaining 25 pizzerias come through with their pledged amounts, that number will grow by another $5,000 to $8,000 by the time this issue is in your hands!
As I reflect back on Slice of Hope, the thing I’m most proud of is that so many small, independent pizzerias found a way to make October 7 a memorable event in their local communities. I heard from shops in Montana and Texas and New Hampshire that found unique ways to make the day theirs. Some rented bouncy houses for kids. Others “auctioned off” pink cupcakes or sports memorabilia. Many created special pizzas. As a result, the majority of Slice of Hope participants that took the time to write me after the fact have talked about getting good press coverage and, more importantly, generating goodwill with their customers.
Several of them reported their best lunch day ever or a 35 to 40 percent sales increase as compared to an average Friday. One place ran out of dough and started selling a Slice of Hope sandwich for $10.
In short, these pizzerias did something remarkable: they made a difference. For that, I am thankful. How can we not do it again in 2012?
Jeremy White is editor-in-chief at Pizza Today.
Menu Trends For 2012
By Pasquale "Pat" BRUNO Jr. Photo by Josh Keown
I am not suggesting that you have to do a 180 on this, but be aware of trends like these (and those listed below) that will affect how well you stack up against the competition.
Here is one example: In one of my pizza cookbooks, I featured a Pizza Insalata, or salad pizza. This is a
no-sauce pizza that is as simple as topping a cheese pizza with tossed salad greens. In other words, prep and bake a cheese pizza, then let it cool a little. Afterwards, top it with a salad (mixed greens, fresh tomatoes, etc., tossed with a balsamic dressing). This pizza dish is colorful, healthy, easy and delicious.
In that same pizza cookbook I devoted an entire chapter to “Vegetarian Pizza.” What goes around comes around, so I am saying that one of the important trends for 2012 will be how you can come up with dishes where less is more. And doing so creates a win-win situation. What’s not to love about lower food costs, lower menu prices and greater customer satisfaction?
Let me dig a little deeper into what I see will be major trends in 2012:
Other healthier pizza trends have to do with these factors: No added sugar in the sauce, going lighter on the cheese(s), thinner pizza crust (thinner by a lot, but not cracker thin; the crust needs some chew and texture).
Think outside the box when it comes to new ideas in pizza dough. For example, you can fashion a pizza dough by using grains — quinoa and quinoa flour, for example. My intent here is not to have you go off the grid; rather I’d like you to think about what your competition will be throwing at you in the year ahead. Remember the Boy Scout motto: “Be Prepared.”
Lighter sauces and smaller portions apply to pasta as well. And in the area of pasta, try whole-wheat and whole grain varieties (there are plenty of brands to choose from). To make any pasta dish more appealing, give the sauce the full flavor treatment by spicing it up with, say, chilies or crushed red pepper flakes. And incorporate more vegetables into your pasta dishes.
Keep those veggie toppings for your pizzas up front and personal. Don’t back off from the idea of using eggplant, zucchini, rapini, broccoli and potatoes as pizza toppings. Yes, I know that sausage and pepperoni are still the most popular, but you need to offer alternatives; don’t get stuck in a rut.
Should you be thinking “organic?” Only if it makes sense (it’s becoming a geographical issue). Keep in mind that organic ingredients carry a higher food cost. Let common sense prevail.
Regional themes will be ripe for the picking in the year ahead. Yes, I know that “Regional Italian” was the buzzword a few years back. But in our business there is a cycle that curves back, so be ready to grab on to it when it comes your way. Try something in the order of regional pizzas to include as part of your menu listings. This is part of “Romancing the Menu,” which will drive your competition crazy, because their reaction time will be slower (which means you get the jump on them). For example, put into play regional names like Sardinian, Sicilian, Neapolitan, Tuscan and Roman in every way — salads, pasta, pizza — you possibly can. A trip up and down the Italian boot can be very, very tasty.
Put some thought into your children’s fare and kids’ menus. Do more, offer more, make it more interesting, a reason for parents to bring the kiddos to your restaurant. The words “family friendly” will never go out of style.
Gluten free pizza. Has the gluten-free trend hit its peak, or is it here to stay? Conflicting reports abound, but it’s important to remember that only a very small percentage of the population — one percent — need to eat gluten-free for medical/health purposes. To that end, if you would like to make a gluten-free pizza, here is my basic recipe.
Gluten-Free Pizza Dough
Yield: about 18 ounces of pizza dough
1 teaspoon active dry yeast
1 teaspoon sugar
1 cup warm water
2 tablespoons cornstarch
1 ½ cups white rice flour
1 tablespoon corn oil
Put the yeast, sugar and water in a mixing bowl and mix thoroughly. Let sit for 10-15 minutes. Meanwhile, combine the cornstarch and rice flour and add it to the water-yeast mixture. Add the corn oil. Mix until the dough comes
together and you can form a ball. Add additional rice flour if needed (the dough should be soft and pliable). Set aside. Cover. Let rise for an hour or more.
Lightly coat a quarter-sheet pan with olive oil (or you can use corn meal). Press the dough into the pan and up the sides, making it as thin as possible without tearing it. For added flavor brush the crust with garlic butter or garlic oil. Top with the usual toppings — sauce, cheese(s), herbs. Bake at 450-475 F for 15-20 minutes (don’t over bake the pizza or the crust will be too tough), until the crust gets crispy and takes on some color.
Remember that this is a crust that is not light and can be rather stiff.
Pat Bruno is Pizza Today’s resident chef and a regular contributor. He is the former owner and operator of a prominent Italian cooking school in Chicago and is a former food critic for the Chicago Sun-Times.
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