What kind of pizza sauce, cheese, etc. did you use when you owned your business? I’m often asked about the products I served at Big Dave’s Pizza. As you might already have guessed, I often had my own way of doing things. I believe you have to stand out. Here’s a look at some of my favorite recipes:

BIG DAVE’S PIZZA SAUCE

2 cans all-purpose ground tomatoes
2 cans heavy tomato purees
1¼ cans water
.6 ounces leaf basil
.6 ounces leaf oregano
2 ounces black pepper
2 ounces granulated garlic
1 ounce granulated onion
4 ounces salt
4 ounces sugar
8 ounces olive oil
3 ounces Parmesan-Romano cheese

Open the ground tomatoes and pour into a 22-quart container. Scrape tomato puree into container. Fill one can with water. Pour back and forth between all cans until all tomato solids are rinsed with from walls.

Pour water into two clean cans and add ¼ more water into one of them.

Add all dry spices into one of the cans of water and stir.

Let spices rehydrate for 5 minutes. Pour all water into container and stir until all ingredients are thoroughly mixed.

Pour in olive oil and stir again. Sprinkle cheese on top and stir again. Date and refrigerate. Good for 7 days.



BIG DAVE’S PAN PIZZA DOUGH RECIPE (IN BAKER’S PERCENT)

2½ pounds vegetable oil
16 ounces sugar
12 ounces salt
8 ounces PZ-44 dough conditioner
25½ pounds water at 70-75 F

Stir all ingredients with a wire whip.

45 pounds white flour 1 pound of whole wheat flour 14 ounces instant dry yeast

Pour water in mixing bowl. Add sugar and salt in bowl. Stir with a wire whip for 10 seconds.

Let rest for 2 minutes. Stir again. Add 2½ pounds vegetable oil, stir again.

Pour in both flours.
Sprinkle yeast and PZ-44 on top.
Start mixer on low speed and raise bowl. Mix for 9 minutes, low speed.

Bench work:
1. Dump the batch on a floured bench.
2. Core temperature should be 85 – 90 F.
3. Slice mass into 5-6 logs.
4. Sprinkle flour on all surfaces.
5. Cut and weigh dough balls. 10 ounces for small and 20 ounces for large size pizza.
6. Roll loose-floured dough balls, flatten and run through the sheeter.
7. Place the flattened dough balls into greased Crisco (butter flavor) pans.
8. Cover and place pans in a warm spot to proof until dough doubles in size.
Refrigerate and use within 24 to 36 hours.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

I have a large group meet here on Thursdays, and they spend a lot of money. My staff gets bummed when they come because it’s frantic for a few hours. What gives?

One of my customer service counter people turned to the kitchen and announced that four carloads and a tour bus just pulled into my parking lot. The heads up was appropriate but the choice of nouns was shocking to me. I like a good laugh as well as the next person and love a practical joke. But there is one thing we cannot joke about: our customers.

They are the reason we go to work. They pay all of our bills, send our kids to school, put food on our tables and a roof over our heads. It was obvious that I hadn’t been reinforcing this message with my staff. At least one of them and probably a few more were mentally whining that they would have to bust their tails for a while.
It was obvious to me that I had the beginnings of a fatal disease creeping into my staff’s thinking. I was going to have to give them all a check up from the neck up.

Loving customers isn’t culturally hip. A lot of attitudes learned by our employees are absorbed from what they see and hear from their peers, television, radio and video games. The real world is not the real business world. Reality restaurant is not a joke du jour.

Your staff cannot deliver excellent service to your customers if they have never personally experienced it themselves. Many of your crew might think that great customer service sounds like, “Would you like ketchup with your fries?” It’s our job to educate them on what the standards of great customer service are in our restaurants.

Often, my staff would go above and beyond in numerous ways. For example, my delivery drivers would sometimes replaced burned-out light bulbs on front porches. This mindset of true, sincere customer service is exactly what is missing today. The nextopportunity you or your staff get to blow the customer away by fixing a problem, do it. Then smile and say, “It’s my pleasure.”

For more on customer service and a look at how Pizza Today encountered its own disappointing follow-up service recently, flip to the letters to the editor section on page 12 of this issue.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

My brother and I own a pizzeria and deli. We have been open almost two years and business has been OK, but not terrible. We are paying bills, payroll is covered and my brother and I are making money. I don’t think we are making profit; I feel we are making salary for the amount of work we are putting in (which is still good considering we are still open). The concern I have is we should be making more! We have a proven product that is far beyond the competition. I know there is always room for improvement (i.e. our delivery times, consistency with product and overall atmosphere of our location).



This is where I need some help. I’m torn between expanding my current location or opening a second location. We are a small location and not very appealing for a sit down location. So, should I stick to what we have or put my focus into another location, or possibly move and expand our current location?

Christopher L.
Florida
via e-mail

Whenever I get a question like yours, I feel I need to read between the lines and make some assumptions. My first assumption is that detailed financial statements are not being done every month. If you were doing your own or having them prepared by an accountant, you would know for sure if you were running in the black or red. In addition to the bottom line amount, good financials would show you your exact amounts as well as percentages for each and every expense category. If you don’t understand, or haven’t been mentored in basic profit & loss statement, balance sheet, cash flows, current ratios and what EBITDA means, you are not ready to open a second location. You have bought you and your brother a job. Unfortunately you two are the last ones getting paid.

One of my must read business books is titled The E Myth Revisited. The author, Michael E. Gerber, states a truism I absolutely agree with. He says: “The problem with most failing businesses I’ve encountered is not that their owners don’t know enough about finance, marketing, management and operations — they don’t, but those things are easy enough to learn — but they spend their time and energy defending what they think they know. The greatest business people I’ve met are determined to get it right no matter the cost.”

Start by getting yourself more up to speed on accounting. When you have a handle on that you are ready to take your next step. u

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

Depending on how you look at it, this is either a horrible or a fantastic time in the pizza industry — the entire restaurant industry, really.

Just like our nation has divided into political polar opposites, the pizza segment has separated into two basic categories: cheap pizza and fantastic pizza. No-limit $5 medium pies or $15 personal-size artisan pies. Gut fillers and “Wow!” experiences.

Where does your pizza fit in?

Every day I hear of new pizzerias opening all over America with the simple mission of making great pizza the Old World way: with wood, coal or standard gas-fired deck ovens. The foundation starts with delicious dough, simple, fresh ingredients and real skill.
Despite the largest portion of the pizza segment dedicating itself to selling the least expensive product, newcomers to pizza are pursuing their passion to create the perfect pie and backing it with blood, sweat and bank notes.

What once was old is new again, and customers are catching on. Not only do they “get it” when they taste a well-made pizza, they understand the passion put into it by dedicated pizza makers. They appreciate seeing someone put so much time, energy and effort into their meal, and they don’t mind paying a steep price for it.

And yet, amid what seems to be a never-ending recovery from the recession, I see more operators than ever giving into the temptation of catering to bargain hunters. I call it the “creep toward cheap.” Despite getting into this business because they wanted to make pizza, they’re focused more on making dollars than dough. Truly great pizza is a matter of the heart and hands. Making money is a byproduct — albeit a very good one if you’ve done the first part correctly.

Trust me, I understand what drives operators to switch from quality to cheap in hopes of raising sales. I’ve got six kids — two out of the house, four coming and going depending on where they are in their education and what favors they need from me and my wife. I know the stress and strain of putting food on the table, and I know how that consumes your mind when you’re fighting to keep your business in the black.

But what’s inarguable is the opportunity you’re missing if you just “go cheap” in an effort to survive. The restaurant segment is finally waking up to the fact that customers love not only really good food, they love the experience that should come with it. If they get both, not only are they willing to pay a little more for it — sometimes substantially more — they’ll even wait for it without fussing.

An example: Anybody notice how many “better burger” places have popped up over the last 10 years? The epitome of this explosion is Five Guys Burgers and Fries, which has more than 700 units and is adding another 100 every year. Working from a minimalist menu and selling the most ubiquitous sandwich in America, this simple concept posts annual per-store sales averages of $1.2 million.

The story of the company’s founders is similar to many others who have figured out that our business should be about really good food first. They knew customers were tired of generic, tasteless, dollar-menu burgers that spent more time in a microwave than on a grill that actually caramelizes meat. They knew customers wanted burgers cooked to order and served with fresh toppings and that they’d not mind waiting a few minutes to get it. They knew they didn’t have to reinvent the wheel to do it — they only had to go back and look at the original wheel (any of a thousand mom-and-pop diners that have always made good burgers) and build on that.

Of course, the same thing is happening in pizza. Nearly daily I hear of a new wood- or coal-fired pizzeria opening up somewhere in America. Maybe it’s a call from a friend who knows the guy or gal starting out, and they usually say about the same thing: “She’d gone to Italy, had that kind of pizza and wanted to do it here,” or “He spent a week in New York, wondered where such good pizza had been all his life, and now he wants to do it himself.”

Notice those two statements contain nothing about money. You don’t hear, “He saw this guy in Dallas selling pizzas for $16 apiece and thought, ‘Hell, I can do that and make some cash!’” What’s motivating these people to open pizzerias is the pursuit of great pizza.

The best example of this I’ve encountered is Tony’s Pizza Napoletana in San Francisco. Two of its three owners are pizza makers: Tony Gemignani and Bruno Di Fabio. Both got their start in the business making high-quality pizzas, but after traveling to Italy for various competitions, both got hooked on Old World pies and set out to open a spot in 2009 that uses four completely different ovens to make five different crust types.

When I first heard they were planning this, I thought it so audacious I wondered if it were ego translating into overkill. But after enrolling as a student at their place last year, I recognized it as pure genius. Both men not only understand their customers’ desire for a pizza experience centered on handmade food, but they also very wisely meet modern desires for variety by creating pizzas for wood-fired ovens and American and Italian stone deck ovens. (By the way, last I checked, Tony’s weekly average sales were in the $80,000 range … and the shop is open just five days a week!)

After returning from that visit to Tony’s last year, I had a bit of an epiphany: many pizza makers could do something similar in their own shops. In the months since, I’ve helped some clients add a deck oven to their conveyor oven configuration — just stacked it right on top like you would another conveyor — to allow them to add more traditional deck-baked crust(s) to their menu. With that simple change, as well as a reformulated dough recipe for the deck, you can change an ordinary shop from a pizza production facility to a place where pizza is baked by humans.

Mind you, I have no objections to using conveyor ovens. I love them. They’re fantastic, consistent and arguably the key to why pizza chains exploded throughout the U.S. in the first place. But the difference between a crust baked directly on a screaming hot hearth and a crust browned on a screen over forced hot air is profound, not to mention delectable.

The simple addition of a deck oven to an operation presents incredible opportunities for menu expansion, not to mention the furthering of a pizza maker’s skill. Except for wood- or coal-fired styles, a deck oven presents multiple opportunities to bake and sell several different crust styles that add that crucial variety customers want.

Is it more labor intensive to do this? Yes. It will require new dough and new skills. (Not only do Gemignani and Di Fabio operate the International School of Pizza at their San Francisco shop, Gemignani teaches special dough making sessions every year at International Pizza Expo.) But let’s be honest, good pizza takes work; cheap pizza … not so much. And that’s why it’s hardly worth the $5.99 customers are paying for it.

A change like this means raising the bar on your pizza and pushing yourself to do something new by reaching back to the pizza traditions of old. It likely means getting out of your shop and finding out what good pizza really is and relying on your pizza peers for information on how to do it.

It also could require you to stop merely making a living in order to revisit the joy of making pizza for a living. In the past two decades, too many people got into the business looking solely for ROI. But in the past several years, a new group has joined the ranks out of a passion to make great food and create an experience for their patrons. If you can create both in your shop, you’ll forever lose the temptation to “compete cheap” — because your sales will show you it’s not necessary.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today and leads seminars on operational topics for International Pizza Expo.

Dave, I just opened my first pizzeria a couple of months ago. Labor has consistently been running
between 20-22 percent. At times, I feel short-staffed, but I really can’t afford to hire new help right now until I get sales higher. Do you have any suggestions for me? Is my labor where it should be?

Dave Perez
Davie P’s Pizza
Florida

The industry average pushes 30 percent of gross sales. If you are computing wages, salaries and benefits correctly, you are running a phenomenal operation. Since new operations generally are not well-oiled machines, they will often run labor in the high 30s. By the way, to clear up a common misconception, labor cost is not what the computer says in its on-the-fly report. Most POS systems are fantastic time clocks that can keep a running total of clocked-in employees to the minute. Divide that amount into the sales (less sales tax) and you get a labor report.

Most accountants worth their fees will describe labor costs as the sum of:

1. Hourly wages

2. Salaried managers

3. Workers’ comp insurance premiums

4. Unemployment contributions

5. Medicare and Social Security matching fees

6. Any paid vacation or medical insurance charges

7. Bonuses

8. Basically, any cost associated with providing a job for someone

You are to be congratulated on your 20 to 22 percent labor. Please ask your financial person to compute in accordance with Generally Accepted Accounting Principles (GAAP) and get back to me. I believe you are working your guts out with a fair amount of in-training crew.

If you feel like your customers aren’t receiving extraordinary guest service at every step of the hospitality process, you are doomed.

My drivers are complaining about doing extra work during non-peak times, such as cleaning and answering phones. But I don’t have enough delivery orders for them to do nothing but deliver. What should I cross-train them to do?

Kyle Vanser
A&K’s Pizza Pub
Houston, TX

Your problem started at the time of hire. As the owner, you have failed to make job descriptions crystal clear. I developed an employee handbook as well as a power point presentation that new hires had to watch. Afterwards, they were tested to make sure they understood the material.

I’ll assume that you accidently hired a couple of ‘prima donnas’ and they are resisting doing the dirty work. If you think you can turn them around, take them back to square one. If you know they are not going to adapt, help them with a career change. And get to work on that employee handbook! u

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

Hey Dave, I currently own a counter service joint and am looking to open my second location. This location I’m looking to do more sit-down. So my question is, is 30- to 35- percent labor cost reasonable for this type of restaurant?

Ryan Olson
Montana

I think in a full service operation, 30- to 35-percent labor is about right. After the new crew gets in the swing of things, I would like to see the labor percentage around 30 percent.

I focus on the sum of food cost + labor cost. Adding food and labor together yields prime cost. This number, measured in percentage of sales, less sales tax, factors in soft hidden labor costs like unemployment and workers comp expenses (plus employer matching social security taxes). I like to see my clients running their prime cost at
60 to 65 percent. Depending on your fixed occupancy costs and recurring monthly expenses, this should put you in the black.

In today’s economy, how long should it take to be in the black? We have been in operation just over a year and need to double our sales to be at that point. With people having less discretionary income, can we expect an increase in sales?

Christine Puetz
Missouri

Your question is complicated because there are so many variables that affect net profit. The answer a bean-counter may propose is: “The minute your sales are sufficient to pay all expenses.” It seems that you have already heard that pearl of wisdom and are searching for solutions to attaining profitability on a regular basis. Since you know that your sales are only paying half of the bills, I’m sure you are in near panic mode.

Doubling sales is a pretty aggressive goal. I can only recall two or three times in my career that we were able to reach that goal. I used to challenge myself to raise sales $100 a day. This is a very doable goal. It boils down to one more pizza sale an hour. From a simplistic view, my weekly paycheck was the last hour of the day. The first 11 hours of sales went towards paying all expenses, and the last hour of the day was mine.

In order to prescribe a fix for your problem I’d need to know some accounting basics from your financials. Then I would look at and scrutinize your competition. I would want to know how much sales my competition is doing weekly. This study will give you a ‘market share’ percentage. Next would be analyzing the quality of your pizzas. When times get tough, most people quit marketing. When all of the data has been collected I’d know if your shop is savable. Lack of profit goes hand in hand with weak sales.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. monthly contributor to Pizza Today.

Imagine this: never asking your sales representative the cost of cheese or the price of any other ingredient ever again. You quit the weekly dance we call placing the order. In fact, you personally delegate that task to an employee. You stop writing a check for deliveries. And finally your food cost drops 3 to 5 percent and your checkbook is always in the black. Your relationship with your rep is a deep and trusting friendship and you cover each other’s backs.

This model is absolutely attainable. In my 30-year career of owning Big Dave’s Pizza & Subs, I evolved from being a purchasing bully to a profit partner with my food distributors. When I was young and full of myself, I pitted all my salespeople against each other. It was a weekly way that got my macho on and flexed my purchasing muscles for the sake of power and ego. I had the power and I wasn’t afraid to make you sweat for the order or wait until the last minute before I paid you. What a major waste of time and energy.

Food service distributors have myriad responsibilities that range from furnishing, automating and equipping a huge big box building to providing a fleet of refrigerated delivery trucks and company vehicles for sales reps to maintaining, insuring and replacing all hard assets. All the while, they provide service and appropriate price levels to keep your business.

Contrary to outward appearances and perceptions, the majority of food service distributors run on very thin margins. They all have one thing in common: they seek to do business and build long-term relationships with top-shelf restaurants.

The fastest way I know to reduce your food cost and get the best pricing is to allow a distributor to make more profit or margin on your account. If you do your part, your overall invoiced pricing will go down. The more food, the bigger the drops, the higher the margin for your supplier. If you are a cherry picker, like I was for 10 years, you will constantly have a distrustful relationship with your distributor. You will be forced to have your guard up at all times.

There are new rules of the road for buying food from a distributor. In fact, there are rules for them and rules for you. Buyers and sellers have a very co-dependant relationship. One is just as important as the other, even though you may have been taught otherwise.

Rule No. 1 — Choose your supplier carefully. What do other restaurateurs have to say about them? Do you share common goals? Do you like and totally trust your route rep? This is a biggie. If the chemistry isn’t there, the relationship starts off on the wrong foot.

Rule No. 2 — Don’t ever lie. A good rep worth his laptop has heard
every lame fabrication in the book. Don’t think you can snowball them. This may be the hardest thing to change. Two-way truths are a wonderful thing. This concept may mean you let go of the “I’m the customer, you’re my servant” mindset.

Rule No. 3 — Respect their time. Be organized and never make them wait for an order or check. Time is money. From time to time schedules get messed up and there is a valid explanation. Don’t make it the rule. The last
10 years I owned Big Dave’s I didn’t write a check to my supplier or call an order in. I trained an employee to inventory and place all of the orders. He was in high school and made extra pay for owning inventory responsibilities. Since I was rarely around when my rep came in looking for a check, I had his signature added to my checking account. He wrote his own check every week. I didn’t make them chase the money.

Rule No. 4 — Treat your delivery drivers with deep respect. They will treat you very special, rotate your stock and be considerate of your time. Buy them lunch (or at least a beverage). If they are great, let the company know. If they are weak, let the company know that, too.

Rule No. 5 — Enter into a written Prime Vendor Agreement. Every major restaurant chain has one thing in common: they buy all of their food from one distributor. That gives you one point of contact and cost-plus pricing. You write one check. In return, you retain the right of audit to confirm price-plus pricing is being honored. You will get better service if you are loyal.

Rule No. 6 — Get the ground rules right out in the open from the start. No one likes to be surprised with new rules or terms. Right from the get-go talk about terms, delivery days, food specifications, customized boxes and minimum order levels. The sales rep is not your gopher. If his company has an out of stock item, they own fixing the problem. If you forget to order it or blow out of an ingredient, don’t force him or her to run to the warehouse for a take-along. If you created the problem, you fix it.

My parting shot this month is this: through thick and thin, for better and worse, relationships built on trust
endure the test of time. If you want to get the most from a supplier, be their favorite customer. It’s just human
nature and the right thing to do.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

Dave, I need to trim costs considerably in just about every facet of my business. Where do I start? I can’t afford to cut quality of my product, I know, but I can’t afford not to make cuts everywhere else.

Peter White

San Diego, California

Peter, I feel your pain. And I’m glad you know right off the top that the one area you can’t touch is your quality. Substitute a lesser quality cheese or meat topping, and you will suffer for it immensely.

I have an outline I call “Death by a Thousand Cuts.” Sometimes, there are areas where the fat needs to be trimmed. But I see plenty of operations get a little too happy with the knife and do permanent damage (or worse).

Run down this checklist and see what improvements can be made off of it before you start slashing everything in the building.

1. Plug all holes in cash handling procedures. Intentional and unintentional cash shortages are avoidable. Institute a zero tolerance on cash shortage policy.

2. Portion control your cheese.

3. Become a menu-engineering
expert. You must know which menu items are producing the most and least profitability. Promote the stars.

4. Know your exact entrée costs.

5. Examine a profit and loss statement (P&L) weekly.

6. Re-price and re-print your menus and flyers at least twice a year. Quarterly is even better.

7. Get an energy audit performed by your utility provider.

8. Shop your insurance policies. You are most likely underinsured. In fact, it’s quite possible that you are one incident away from financial ruin.

9. Set up a forced savings plan. Put what you can each week from checking into savings.

10. Explore catering as an additional revenue source.

11. Get yourself out of the “employee owner” routine and understand your position as CEO of your pizza company. In other words, work on your business, not in it.

12. Think in percentages: food cost; labor cost; prime cost; occupancy cost; income before taxes depreciation and amortization.

13. Develop a marketing strategy and a marketing budget.

14. Decide, right now, once and for all, whether you’re going to be the lowest price guy in your town or the highest priced, highest quality producer in your town. Get off the fence.

15. Try to negotiate a prime vendor agreement with your distributors. In this type of agreement, you are put on a cost-plus pricing model and you get the right to audit prices from time to time. Just make sure you’re purchasing at least 85 percent of your food and supplies — if not a higher percentage — from the supplier with which you are going to enter into this agreement.

16. Lastly, over-train and cross-train your staff in order to maximize their contributions to your company. u

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. monthlycontributor to Pizza Today.

Amir F.
Detroit, Michigan

A few years ago I would have said that it was a novelty that we wouldn’t be talking about by now. I didn’t understand it. Boy, was I wrong. Once I started to get requests to assist new and old locations that wanted to get into the Neapolitan game, I knew that this was the real deal and was here to stay. But I was under-qualified to help. Though I’d eaten and enjoyed Neapolitan pizza in the U.S. and Italy, I didn’t have the basics down.

So I went to Tony Gemignani’s International School of Pizza in San Francisco and went through a very hands-on course. Since then I have helped open several wood-burning operations and have two more slated to open by the end of this year.

The beauty of Neapolitan pizza? It’s likely that no one is doing it well in your area yet. It raises the bar so high that competition is discouraged. I truly think that in the right demographic area, hand-crafted, artisan, Neapolitan pizza is indeed the next big thing.

I’m getting tired of working more and more and making less and less. I’ve watched my sales steadily drop since the major chains in my town started offering $5 to $10 pizza deals. How did you compete against them?

Luke Bailey
Davison, Michigan

Hey, Luke. Many years ago I was taught to make great pizza. I was (and still am) quality driven. Right after Pizza Today did the first nationwide survey, Big Dave’s Pizza was ranked the 25th busiest independent operation in the country. Within a month, company came to town in the form of a major chain! They were offering the world’s fastest delivery as well as a low price.

After they opened, I was absolutely sure my long-standing customers would not forsake me after one taste of my new competitors. I was dead wrong! I watched as my sales started going south. I knew that if I didn’t change my ways (I was the slowest and most expensive in town), I would suffer both financially and emotionally. So I decided to go for broke and became a guerrilla marketing maniac.

I hired in as a driver at 40 years old and worked long enough to understand my competition’s operations. I gave my notice and within a week or so I reconfigured my kitchen layout. I then instituted a high sense of urgency in every aspect of my operation.

My next step was to standardize sizes and get an iron grip on portioning. Once I started weighing cheese and implementing portion control scales on the make line, I was ready to rumble.

Lastly, I decided to use my competitor’s unique selling propositions (USPs) against them. After I got a grip on my portioning, I decided I was in a position to match all published pricing by accepting anyone’s coupons or offers. I got the word out with a big splash in all the local media outlets, then I sat back and waited.

Four years later, the fast delivery operation gave up and closed down. It seemed they couldn’t deal with a competitor who guaranteed 20-29 minute delivery. Three independents also threw in the towel. I had increased my market share substantially.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. monthlycontributor to Pizza Today.

BY BIG DAVE OSTRANDER
PHOTOS BY RICK DAUGHERTY

So, I have a great breakfast pizza that I make for people who are having breakfast meetings but don’t want the same old muffins and donuts. It’s not something I have on my regular menu and I am not open for breakfast. I only do this for groups that ask, but I am thinking maybe I should open for breakfast. Do I need more than just an assortment of breakfast pizzas, coffee and juice to satisfy a breakfast crowd?

Wayne Rempel
JP’s
Lacombe, Alberta, Canada

Wayne, it makes sense to give breakfast a shot. You’re already in your shop prepping each morning anyway. Your ovens are on and getting hot. You already have many breakfast ingredients on hand such as bell peppers, sausage and bacon. You could keep it simple with muffins, breakfast pizza, coffee and juice and satisfy a lot of people. There’s no need to start performing as short-order cooks by making scrambled eggs, toast, biscuits and gravy, etc. Give it a trial run, seeing what you can make easily with ingredients already on hand and let me know how it goes.

I’m having difficulty getting my employees to grasp the concept of good customer service. When I’m not there, service sucks. Do I clean house or can I train them better in some way? What do I do?

Kevin Hodges
Boston, Massachusetts

This is a situation you need to get under control immediately. Without recognizing and taking care of your customers, you might as well just hand money out and close up shop for good. When I owned my pizzeria, I was very subtle in the messages I sent my crew. One of the messages they received was stamped across every paycheck they ever got at Big Dave’s. The seven magic words in big red letters were: ‘A LOYAL CUSTOMER MADE THIS PAYCHECK POSSIBLE.’ A large banner at the customer order area shouted ‘YOU’RE THE BOSS AT BIG DAVE’S.’ I coined little acronyms like SIN (Solve it Now) and TLC (Think Like a Customer). I told my staff never to say anything to a customer that they wouldn’t say to their grandmother. Sit down with your staff and explain to them that they are in the hospitality industry. Taking care of customers should be priority number one.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

They will want to know: 

• How many deliveries will you require a week? 


• What sort of credit terms do you desire –– COD, 7-days or 14-days, electronic payment, credit card, etc.? 


• How will you place your order and how much lead time will you want? Internet, phone, in person to DSR, etc. 


• Will you allow automatic substitutions if they are out of stock on specific items? 


• What time do you want the delivery? 


• Is your business seasonal? 

Tim Ridout, via Facebook
Big Rounds
Ravenna, Michigan

Hey, Tim. Without exception, I can’t think of any ingredient that has gone down in price. Since cheese is the costliest ingredient on our pizzas, and we buy so much of it every week, it comes to mind first. The wholesale price of mozzarella is fixed every Friday afternoon at the Chicago Mercantile Exchange (CME). A weekly average for trading on the exchange based on supply and demand is posted under the weekly block average. Your distributor uses this price when they purchase. Since the block price is a starting point, costs must be added on before you receive it and pay for it.

Typically these costs to your distributor are not cheap. They pay for transportation from the dairy to the warehouse, transportation to your restaurant, warehouse and refrigeration fees, administration, the distributor’s profit and the salesman’s commission. You can see what they see every week by visiting PizzaToday.com and clicking on the “Cheese Market News” tab on the left side of the page.

After the distributor has all of the hidden costs added up, they pay the dairy, or broker, Block + xyz cents over. The price of cheese is very fluid. Surprisingly, every distributor I know doesn’t make very much profit selling cheese. After all is said and done, a nickel or dime a pound may be the entire margin they earn on a refrigerated, clock ticking, expiring commodity.

I bought all of my cheese from one distributor. I never asked him the price of mozzarella for the last 15 years of my business. We agreed with a handshake that I would pay him Block + so many pennies over. This is confidential information and his buyer will probably have to sign off on it. The question that begs to be answered is this: what’s a fair markup? The answer depends on several factors.

1. What kind of cheese do you desire? They are all not created equally. Budget cheeses will be less expensive than premium cheeses.

2. What is your weekly volume? Do you pay your invoices promptly? Do you play one distributor against the other for the cheapest price? Are you a loyal buyer?

3. Every step up the convenience ladder will affect the cost per pound. Diced and shredded costs about 20 cents a pound more than loaf. Also, blends increase the cost.

Generally speaking, you get what you pay for. Cheap cheese is just that. Premium cheese is not. Ask for samples from several manufacturers and conduct a blind, side-by-side bake off. Only then will you know the right cheese for you. That said, ask the distributor if they would quote you on a weekly locked cost based on how many cents over CME you can both live with.

Finally, if you don’t portion control cheese on every pizza, why would you even care what it costs? After I implemented using cheese cups for every pizza every time, my weekly purchases went from 1,000 pounds a week to 800. I have turned on hundreds of operators to my method, and the majority of them report a 20-percent reduction in cheese purchases afterward.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer.

If your sales are increasing, give yourself a big pat on the back. If your sales are flat, and you are barely breaking even, welcome to the new normal. If you are afraid of what the future has in stock for your store, the clock is ticking. The longer the restaurant runs unprofitably, the less time you have for a turnaround.

Pizzeria interventions or turnarounds are never the same. I believe that several factors are present when a once-profitable store gets in trouble. Since 1990, I’ve been called in to turn around a hundred or more teetering operations. Next to grand openings, this is the hardest type of assignment I perform. No wonder people are fascinated with Chef Gordon Ramsey’s “Kitchen Nightmares”or Food Network’s “Restaurant: Impossible.” The process can get very emotional and ugly.

I have adopted a model to evaluate existing operations. I grade operations subjectively on the following criteria, with A being the best and F miserably failing.

I call it the SLOPPIE system –– but there’s nothing sloppy about it. In no particular order I look at these areas:

Sales — Is the operation grossing enough to generate a respectable bottom line? How many dollars per square foot of space per year?

Location — Is the location an A, B or C? Is it easy to get in and out? Is it relative to the core market (business, residential, schools)? Does it have busy neighbors that compliment sales? Does it have high visibility and great signage?

Operations — Is it a well-oiled machine or a nightmare when busy? How well is staff trained? Are standardized recipes, portion control, ordering, cash management, scheduling and written job descriptions in place? Are waste, theft and scheduling lean and mean? Are the financials complete, or are huge flags present?

Product — What’s the quality of all entrées? Is the food coming from the kitchen consistent? Is one cook significantly better than the rest? What procedures are in place to guarantee that every pizza, every time, is great?

Profitability — Is the restaurant making money? Are expenses too high?

Image and Identity — How effective is the advertising and marketing? Does the client have a unique selling proposition (USP)? Does the client have raving fans? What is the word on street about your place?

Effectiveness — Do the dollars spent have an effect on sales? Do they deliver on their promise –– or is it a same-old/same-old place?

Every operation is unique and report cards can’t be graded until I ask many questions. When I’m satisfied that I have the unvarnished information, I give each one of the above criteria a letter grade and a corresponding number grade. A’s = 4.00, B’s = 3.00 and so on. Then I add up all of the scores and divide them by the seven criteria and get the grade. When the report card is finished, we are able to address each area and develop a plan to get the place on the honor roll.

The absolute No. 1 area that I see in the field is the lack of accurate financial statements. Financial statements are similar to a medical chart that follows a patient who is under the care of a doctor. The doc needs to be sure that the vital signs are within norms. If the reporting system you use is easy to read, follows generally accepted accounting procedures (GAAP) for the restaurant/pizzeria industry, you are in the top 10 percent. Without a real, accurate financial starting point, all interventions are simply trial and error. Businesses make profit by design. Hobbies make money by accident. If you have never run your restaurant by the numbers you are drifting without a rudder.

The action plan almost always involves doing a food cost analysis. After a day of inputting current grocery pricing, menu pricing and portion sizes we’ll have, sometimes for the first time ever, an accurate dollar amount that each entrée on your menu contributes to your annual profitability. For me personally, this is drudge work. I’d much rather be on the line with my apron on running the crew than entering in a hundred weights and costs. I get very little joy in balancing a ledger by underlining the bottom line with two lines. If you get your jollies by working with P&L programs, good for you. If you are like me, you must have someone, an enlisted bookkeeper, certified public accountant or a like type who understands your business. Accountants either specialize in one or two disciplines or are general practitioners. I love them both, if and only if they can advise me and hold me accountable for profit and loss statements. If you don’t have to answer to someone every month you have no accountability.

This starts the slippery slope of failure.One constant in every profitable restaurant, be it either a single unit or a mega chain, is they have an iron grasp on expenses: food cost; labor cost; occupancy costs; sales per square foot ratios and prime costs. These terms flow naturally from an accountant who understands your business. If you are ever subjected to a scrutinizing audit, you’ll want an accountant in your corner.

Once I have a grasp on where the money comes from and where it goes, I look at vendor pricing. If those expenses are in the national norm I move on.

The next really big issue is the quality aspect of your pizza and other menu items. Is this one of the very best, unforgettable, delicious pizzas I’ve ever eaten? If not, why not? I truly believe that our industry will be divided soon. Customers will choose between inexpensive cheap pies or choose to spend their budget on their perception of the best.

Once I’m satisfied that my client is making praiseworthy pizza we move on to staff service. This is an overlooked area. We are not in the pizza business — we’re in the hospitality business. Right after the quality of the food comes service. It is your fault if any of your staff offends a guest.

Marketing is the first thing to go during economic downturns. I know it is hard to spend money on programs that have lame results. So you must get creative. I’m a huge believer in boomerang marketing. I advocate offering free samples with the understanding that customers will return once they taste a great product. I also believe you must have a memorable USP and tell your personal story. This is the glue that keeps customers returning.

If you are struggling, it likely took years to get to your current state of affairs.

As such, it will take some time to turn the ship around. If you still have the burning desire to succeed, then get to fine-tuning your store and get yourself back on the right track.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

Louis Phelps
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.

I haven’t updated my menu in a couple of years except for price adjustments. Is it worth it to pay a professional company to do this for me?

Austin Rodigero
Phoenix, Arizona

I’m rarely stopped dead in my tracks. A few years ago, however, I did a double-take as I passed an exhibitor’s booth at International Pizza Expo. It was setup day, and I was getting a sneak-peak at what attendees would see on the show floor. This particular booth showcased menus and flyers that were stunning in layout, design, photography and professionalism. It was eye candy for me.

Too often, restaurant menus are uninspired price lists. That’s a shame, because your menu is a powerful marketing and sales tool. Analyzing and costing out your menu is part of the equation; designing it smartly brings it all full circle.

A well-thought-out menu design will bring about sales increases, sometimes in the double-digits. The key is to produce classy, eye-catching pieces that convey your quality, brand and image.

Remember, your menu is a marketing piece. Its performance should be scrutinized the same way you critique the results generated by your flyers, newspaper ads, door hangers, etc.

Perception is reality in your customers’ eyes. If your menu looks amateurish and boring, your guests will unconscientiously think your operation is amateurish and boring. If it sizzles with color, photos, stories and mouth-watering descriptions of your entrées … Well, you get the picture.

Many of my single-unit clients have been asked if they were part of a larger franchise company because of how refined their image happens to be. Trust me, putting a pretty face on your current menu will do good things to your top line sales. Menus are like pizzeria managers — they are either moneymakers or money losers. Pretty menus coupled with current and updated data, and backed up with period reports, are guaranteed to generate gobs of new cash you may be leaving on the table today. Get started!

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.

I want to stop living in my business, but I don’t have a manager I can count on. I go on vacation for a few days, and I have hell to pay when I get back. I know I’m not the only one in this boat. How do I get out of it?

Dominic Maggiore
Sarasota, Florida
via Facebook

You are right, Dominic: You aren’t alone. But it’s time to get out from behind the apron and work ON your business, not IN it. That’s a big step towards freedom. You know, the reason you went into business for yourself in the first place. I wanted to make sure my managers were fully committed. I did so with various incentives. One winning idea is to give them a piece of the pie. Regardless of how you do it, I recommend you make your managers read and sign a written “Manager Commitment Agreement.” Below is a copy of the one I used in my pizzeria.u

Your Pizzeria Manager Commitment Agreement

The first thing that I will ask of all managers is to take some time to consider if this is the job for them. Do you like being a manager? Will you be able to do what is necessary? Do you have what it takes to get the job done? If you answer no to any of these questions, I ask that you do not sign this form and pursue employment elsewhere. There will be no hard feelings, I completely understand that some jobs are not for some people.

• I understand that being a manager is something that I feel that I am cut out for. I feel that I have what it takes to keep Your Pizzeria going strong and smooth.

• I understand that a portion of my pay is tied to store performance (such as labor cost, food cost, and delivery times) in the form of a monthly bonus. I feel that this is fair method to ensure that I and my fellow managers will do our jobs.

• I promise to give 110% at all times I am on the clock.

• I will hustle at all times.

• I will demand nothing less than 110% from all the employees that work for me.

• I will have one goal while working.

• I make the absolute best pizza, as fast, profitably, safely, and fun as possible.

• I will leave all of my personal problems at the door.

• I will come to work with a positive attitude everyday.

• I will come to work on time everyday.

• I will treat all employees with respect and fairness, but I will also demand their respect.

• I will not engage in petty arguing, gossiping, or back biting.

• I will not turn a blind eye to any unacceptable behavior or performance.

• I will report any theft, abuse of power, slacking, or the like immediately.

• I will spend all my time productively while on the clock.

• I will answer my phone when on call.

• I will cover shifts as needed.

• I will conserve utilities, conserve labor, and use food wisely.

• I will do everything within my power to keep Your Pizzeria a profitable, lean, efficient, fun, and fast paced company.

In This Issue

We make our dough fresh every day and get a fairly consistent result. However, every once in a while our dough will have a smooth/firm bottom crust instead of a “soft/dimpled” bottom crust — and I like the smooth result better. The smooth result happens very infrequently so it is hard to understand what causes it. Do you have any ideas or thoughts as to what might be causing this?

Craig LeCrone
Bestway Pizza
Hollidaysburg, Pennsylvania

I’m at a little disadvantage here because I don’t know the steps you take when you put together a batch of dough. Pizza dough is a living organism. As such, it has a birth, maturity and death. These stages of life are controlled by time, temperature and fermentation rate. I believe the only way to control the many variables is to develop a process that will ensure consistency from batch to batch. I strive to remove all of the human variables possible.

Step 1. Weigh out your flour. 50-pound bags of flour rarely contain 50 pounds of flour. They have a tolerance that will allow the bags to be slightly over or underweight. Since they are filled mechanically on a fast moving line, it is not unusual to see 49- or 51-pound bags. The mills have to hit a pallet weight average to pass final weight tolerances. I am a big fan of a digital receiving scale. I like the models that have 150 pound capacity and weigh out in 2/10 of a pound increments.
Also, I only use flour that has been in my storage area at least two days. If I were to use flour right off the delivery truck, it would be 40 F. This cold flour would stunt the fermentation of the batch. I want flour that is around 60-70 F.

Step 2. Weigh the water and take its temperature. Volume metric measurement of liquids is not very accurate. I use the same scale I use for the flour. Then I adjust the faucet to deliver 70-75 F water. The temperature of the water is important because it controls the core temp of the batch. If you use 70 F flour and 75 F water and mix for 9-10 minutes, the core temp will always be 80 F. Friction heat usually imparts 5-10 F of warmth to the batch. I always take the temperature of the whole blob of dough on the prep table before I start to cut and weigh dough balls.

Step 3. Weigh out your dry ingredients. The salt, sugar, yeast and any other dry ingredients need to be weighed out even more precisely. I like to use a 0-32 ounce dial, platform scale with a no bounce feature. The only missing ingredient is vegetable/olive oil. This can be measured in plastic measuring cups or weighed out to the ounce, which leaves no room for error.

Step 4. Set a timer so you mix every batch for the same length of time.

Step 5. When the dough is born (comes from the mixing bowl to the table), take the core temp and don’t tarry in cutting, rounding and refrigerating the dough. As it sits on the table it is rising (fermenting), and hustle is the name of the game. Don’t ruin a batch by ignoring it for half an hour, especially on a hot summer day. I hope I have shed a light on why your dough is not totally consistent.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-aftertrainer. He is a monthly contributor to Pizza Today.

Did you ever get the feeling you were being overcharged for cheese? How does your supplier set the weekly price of cheese? How do the big chains buy their cheese? What does Block Plus stand for? Why does my cheese seem to be soft and wet sometimes and dry and hard at other times? What is the difference between Whole Milk and Part Skim Mozzarella? 

I get calls every month from clients who ask questions like these — particularly the questions center on whether they are being overcharged for cheese. After I get a little info on the brand, specs, weekly volume, supplier and whether it’s purchased in the loaf style or shredded or diced, I do a little detective work.

Most food service distributors set the price of cheese, specifically mozzarella, on a weekly basis. They determine the weekly selling price by adding up the costs of several items:

• Cost of cheese from the factory

• Transportation cost to get the cheese from the factory to their warehouse

• Administration and selling costs

• Delivery and handling costs to get the cheese to your back door

• Profit and commission on the account.



Believe it or not the majority of suppliers, if given the chance, would rather not sell cheese. They make only pennies per pound in profit. In their view of things, they are selling a ticking time bomb because all unfrozen mozzarella has a relatively small window where the product performs at its best before it over ripens. If the dairy buyer overstocks a specific brand in anticipation of volume and the cheese doesn’t move through their system, then they can’t (or shouldn’t) sell it. This is called distressed cheese and may end up in airline Lasagna or at the soup kitchen. It won’t perform well on pizza.

Look at one of your cases of cheese in the refrigerator. The date of manufacture should be printed on the box as well as dairy identification information.

Mozzarella is in a constant stage of ageing (or curing and ripening). Mozzarella ripens from the inside out. Mozzarella receives almost little or no ageing at the dairy. It is usually shipped within one week of manufacture and ageing occurs in the distribution channel and pizzeria. Loaf Mozzarella should be aged 14-32 days and used within that time. Gas flushed, shredded or diced cheese will last a little longer. This is assuming that the cheese has been refrigerated between 36-40 F. The higher the fat and moisture content, the faster the cheese ages. Higher salt levels slows down ageing.

Be an informed buyer. The U.S. Department of Agriculture (USDA) has created federal Standards of Identity for mozzarella based on moisture (water) and milkfat content. Whole milk and part skim mozzarella is allowed to contain moisture contents between 52-60 percent. Cheeses with moisture contents this high are hard to process, age quickly and don’t bake up well. Low moisture, whole milk and part skim mozzarella (LMWM, LMSP) contain moisture contents of 45-52 percent moisture. Pizza cheese can’t be called mozzarella if the moisture content is higher than allowed by the USDA. Cheese with 45 percent moisture is not the same as cheese with 52 percent moisture, even though they carry the same name. The higher moisture cheeses have a lower production cost because water is cheap. Bargain and economy cheese will most likely have these higher moisture contents and sell for a lower price.

Suppliers and manufactures should strive to make you an informed buyer. One of the most educational weeks of my career was spent touring dairy farms, cheese manufacturing facilities and following the milk from the milking barns to the dairies. The educational tour ended at the Center for Dairy Research at the University of Wisconsin-Madison. Yes, there really are cheese scientists. They demonstrated and explained how different mozzarella cheeses, seemingly labeled the same, performed quite differently in side-by-side bake offs. The hands-on lab tests showed how small tweaks in ingredients made all the difference in melting, browning, stretch, texture, color, flavor, coverage and oiling out.

Choosing the right cheese for your operation starts with comparing the baking and eating characteristics of equal portions of competing brands. Sometimes a higher cost per pound premium cheese will yield a pizza that is better tasting and better looking using 10-15 percent less cheese per pie. Instead of comparing price per pound or ounce from competing brands, you may want to compare cost per pizza using fewer ounces.

Quality cheese is not accidental. Quality manufacturers have set rigid specifications and make consistent cheese, batch after batch. The specifications are lab analyzed. The ideal target percentages of moisture, milkfat, salt, pH and shipping age are replicated with little deviation. This attention to detail will eliminate many of your headaches on inconsistent product. Premium cheese costs more to make than bargain cheese, so expect to pay more per pound. Often the most expensive cheese coming in your backdoor may be the least expensive cheese as it leaves with your customers out your front door. You should demand and expect consistency from your cheese company from week to week.

Once you have chosen which cheese makes the best pizza, in your oven, for your operation, you’ll want to negotiate price with your distributor.

The price of cheese is determined by many outside influences completely out of the control of the manufacturers and distributors. Since it takes 10 pounds of milk to make one pound of cheese, the cooking, evaporation and refrigeration energy costs to cheese manufactures is a big deal. The worldwide demand for non fat dry milk (NFDM) and the declining value of the U.S. Dollar on the international market influences selling costs. When the cost of feed exceeds the cost of maintaining a milking cow, farmers are often given no choice but to slaughter milkers and send them to hamburger heaven. The on again, off again Mad Cow disease scares and the opening and closing of the U.S. – Canadian border to cow movement affects pricing as well. In the end, cheese pricing ultimately boils down to this: it’s all about the milk. 

The Chicago Mercantile Exchange (CME) monitors and publishes a weekly price for many commodities, including cheese. Every Friday the weekly average of cheese is recoded at www.cheesereporter.com The Block and Barrel price of cheddar mirrors mozzarella. Many distributors purchase cheese based on the weekly average of cheddar’s block price.

So, what does “Block Plus” mean? It’s the number of cents over the published weekly price that the cheese is sold for. Most large-volume operators and mid-size chains enter into agreements with their suppliers to purchase all of their cheese from one distributor on a Block plus arrangement. A two week calendar lag is used to reflect the cost the supplied paid on date of purchase. When I implemented this system I stopped asking my sales rep the cost of cheese. I knew it would be so many cents over block. This eliminates the adversarial weekly gamesmanship of playing price tag. In order to get this preferential pricing one must be a loyal customer. If you cave in to lowball pricing from another supplier, your actions make the cheese buyer’s life stressful. Realizing that the profit margin on cheese is slim, you must also give your preferred supplier a chance to make a reasonable profit per drop by purchasing much, if not all, of your food from them. 

Final thoughts: It really doesn’t matter how much you pay your distributor for a pound of cheese if you don’t portion control the cheese on every pizza, every time. If you’re not weighing it, you’re winging it. Great pizza isn’t cheap and cheap pizza isn’t great.

Independent operators get a failing grade on a huge issue: they do not have readable financial statements. For the moment, I won't even consider the problem of getting information too late to be of any real help. Some operators just rely on their accountants to work up the figures and accept what they are given. Now CPAs are good people, but they are into numbers, not operations.
As long as the numbers balance and are kept in accordance with standard accounting principles, their work is done. They are not entrepreneurs and (bless their hearts) seldom consider whether the numbers they provide are helpful.

Case in point: A P&L statement should list percentages as well as dollar amounts, but too many of these documents use gross receipts (sales plus sales tax) as the divisor when computing their expense percentages. This skews the percentages and gives a 6 to 8 percent false sense of security.
The next most common error is that food cost percentages should be food used divided by food sales, not divided by total sales. Similarly, if you operate a bar, bar cost ratio should be to bar sales, not to total sales. Some accountants just do what is easiest for them. It goes on and on.

If you have never taken a basic accounting course, it is time you did that. Then be sure to use an accountant who understands the restaurant industry, not just accounting practices. Finally, insist that you get numbers in a format that will allow you to quickly understand what is happening in your business.
Sure, it may take a little extra effort to educate yourself enough to grasp how the numbers go together and what they mean. Remember: EO’s make pizza – CEO’s make money.

History tends to repeat itself. Ten years ago, I wrote an article regarding my personal experiences dealing with soaring delivery costs and associated expenses. Big Dave’s Pizza had a sales mix that approximately half dine-in and half delivery. This ratio, now more than ever, is critical.

In the past decade, associated delivery expenses and wages have almost doubled. Those of you who are delivery intensive have seen frightening decreases in bottom line profits. I’ve even spoken to operators who haven’t seen any significant profit since last fall.

Ten years ago I was challenged by my accountant to figure out how much money it cost to provide home and business delivery. At that time everyone was doing it for free. With my accountant’s help, we did the work and found that, on average, my out-of-pocket costs were $2.52 per delivery.

We came to that amount by capturing the last 10,000 deliveries from my POS system. Then we calculated how much direct payroll we paid our drivers and added in the soft costs (employer matching social security, worker’s comp, unemployment, meals, etc.).

I did the same math this weekend with current assumptions: hourly wage at $7. I added another dollar for Social Security, Medicare and Unemployment. Non-Owned auto insurance and meals are subject to regions and generosity, so I factored them in at another .50 cents an hour. On top of this we need to also look at how much we pay our drivers per delivery or mile and then subtract any delivery fees we charge the customer. My rough math has calculated that, on average, it costs between $8.50 and $10 an hour for delivery staffing. During peak times I aimed for my drivers to deliver orders at the rate of 3 times an hour. During slow times it was much less. If we assume that two deliveries an hour is average, then my generic math indicates that it costs between $4-5 to deliver an order.

Who is footing the tab for delivery? You are, unless you’re charging a $4-5 delivery fee. You are also spreading the costs to your dine-in and carryout customers — and your drivers are more than ever extremely dependent on tips to keep gas in their tanks. Since this high of a fee is going to be perceived as gouging and unreasonable by our customers, who are currently cash strapped, we have a problem. 

I believe that pizza delivery, as we know it now, is fading fast. The costs have become so high that we need to rethink and offer other options to our customers so our sales don’t bottom out and we recapture profitability. Here are some options:

• Reward customers who order carryout and dine-in.
• Consider a drive-through window, if possible.
• Create a Grab and Go concept to be available during peak drive times.
• Revisit promoting the proven take-and-bake concept.
• Outsource delivery to a legitimate third party meal delivery company. 
• Raise your delivery fee to cover all of your costs.
• Eliminate delivery altogether like some chains.

It’s time to redo the math and see if you are making money.

Its late afternoon Friday. Within an hour, the phones will be ringing off the wall. Your best crew is checking and double checking stock levels and doing their last minute prepping and fine tuning of their work stations. Then the phone rings and one of you best staff has just called in sick. And then it happens again –– two call offs in ten minutes. It’s going to be pretty hard to call in a pinch hitter employee at the last minute. You, the owner or manager will probably be able to fill one of the empty slots. What about the other one? 

If you have a cross-trained staff, you’ll make it through the rush without making customer service or meal quality suffer. After a little reshuffling, you’ll have your bases covered again. The highly cross trained staff can fill any position that is getting buried. I call it “make it, bake it and take it” training.

During my applicant screening and probationary process, I analyze the new hires chances of being cross trained. Do they have the right stuff to grasp mastering more than one skill set? Do they have a driver’s license and good record? Do they have the basic building blocks of customer service mentality? Do they have a sense of humor and do they smile? I can’t teach people how to be friendly. The higher they score on their ability, attitude and likeness of being cross-trained the higher their chances of being hired. 

I’m not proposing that your entire crew be cross trained nor am I suggesting that your best prep person be your best phone/counter person or driver. I am suggesting that when extenuating circumstances arise your cross trained staff will rise to the occasion and be able to flawlessly complete their shift. In today’s economy, lean and mean beats fat and sluggish every time.

The more your crew can do, the better your operation will run

In baseball, triple threats — players who can hit, field and run brilliantly — are rare gems. Entertainers who can sing, dance and act are called triple threats. In our world, my definition of a triple threat is crew people who can “make it, bake it and take it.” The more of these gems you have, the more successfully your restaurant will run — and with a noticeably lower labor cost.

You can replace two, and sometimes three, average employees with one motivated, hustling, cross-trained triple threat. Where do we get these keepers? Occasionally they find you. Maybe the place they were working for just closed down and they are seeking a new job. Maybe they have heard through the pizza grapevine that you are an awesome person to work for. More often than not, however, you have to mold them by training them from scratch.

I’m not suggesting that every new hire will evolve into a triple threat. This is unrealistic. I do suggest, though, that when you are evaluating job applicants you look down the road a year or two and determine if they have what it takes to become one. I’m also not advocating that you need an entire crew of triple threats. Many times you need to hire one person to do one job for a given period of time.

Triple threats have characteristics that have a common thread. I look for these six key traits:

• Positive, friendly attitude. I can teach job skills, but I can’t make them smile.

• Hustle. Successful pizza shops move at high speeds. Hire people who like to pick up the pace.

• Trainable. How fast do they understand the lesson at hand and how many times does it take to have them master the task?

• Willingness to do the dirty jobs with a smile. I never want to hear the words, “It’s not my job, man” anywhere in my restaurant. I have never asked an employee to do any job I wouldn’t or couldn’t do.

• Passionate about the product. Only our best will do for our customers. We stand for and deliver the very best food we can, every time.

• A service mentality. They understand where the paychecks come from and how the sum of their actions impacts the rest of the crew. They must be customer lovers.



Make a list of all your employees’ names. Refer to the above 6 traits and give each one of them a numeric number based on their probability of achieving triple threat designation. Some may already be a 9 or 10. Some may need a lot of coaching and work.

Your next task is to create a written job description for each area of expertise. If I were to create a description for “Make-It” folks (remember, our triple threat can make it, bake it and take it), it would start like this: “This area is the hidden backbone of the restaurant. People who are stars in this area have mastered all areas of food preparation, ordering, storing, rotation and are certified ServSafe food handlers. The quality of the entire menu starts here. The basic ingredients are transformed from groceries to delicious entrees. This position will understand the how, why and basic chemistry of fresh dough management. They will understand how to make all signature sauces. They will understand that food inventory equals money and institute close prep and ordering levels. They will implement tight portion control levels. They will work and maintain a clean and safe kitchen.

This list would go on to explain every task in detail. I’ve found that prep people get enthusiastic when you let them make the lists. Involvement is the key to an emotional buy in.

Now, let’s move on to the “bake it” and “take it” areas and describe the job duties. Your drivers, servers and order-taking staff comprise the take it area. The cook’s roles are described in the bake it segment. When you take the time to actually write down how you want every important piece of the pie to be accomplished, your systems start to take shape.

Once your menu items and service delivery becomes consistent, your business will grow. Customers want the same meal every time, and hate inconsistency. Future growth stops right here if your recipes and systems are passed down from one employee to the next orally. Shortcuts start to invade the processes and recipes often take a toll on the quality and consistency of your menu items. I encouraged my cooks to improve the systems and recipes — but only after we mutually agreed and changed the manual together.

Your crew will gravitate to their areas of first love and expertise. Drivers will want to be drivers, prep cooks will want to be preppers and pizza makers will want to strut their stuff in front of the ovens. But, when the chips are down and the order rail is full and deliveries are stacking up, these folks can slip in and fill any position. What value does that have?

New hires are very impressionable. We tell them right up front that they will be in charge of getting pay rises. They have ten weeks to master one area of expertise. Generally, the new hire is being mentored and trained by a sponsor who will be rewarded with a crisp $100 bill at the end of the 10 weeks. If the new hire fails or quits, the sponsor agrees to pay me $50. Once the employee passes the 10-week training and probationary period, they get an hourly raise. The next raises are up to them. They are in control of their income. When they want a raise they challenge and prove they have mastered one more leg of the triangle. Once they have demonstrated they are proficient in their new area they get a hefty raise.

Here comes the payback for all of your hard work: Your restaurant will be staffed lean and mean. Cross-trained staffs are much more productive than average employees. Additionally, guests will enjoy consistently great meals and service. This is the first building block for expansion.

And, as importantly, your restaurant will now be able to function without your heavy involvement on a daily basis. If you need a break, your shop will be thriving when you return.

If your thick crust doesn’t have a light texture, you likely are not proofing the dough properly. Proofing is the act of allowing the dough to rise after it has been formed. This is the final processing step before baking.

During proofing, dough is aerated, which leavens it and creates a thicker, more tender and potentially crispier finished crust. Typically, thin crusts are not given any proof time. Instead, they are formed, dressed and taken directly to the oven. Thick crusts, on the other hand. really need to be proofed to give them their desirable characteristics. Under normal conditions proofed dough will double or triple in height during the proofing stage. This expansion will continue during the first few minutes in the oven. With the combination of proofing height and oven spring, a lighter textured crust is produced. This lighter texture also provides for a more tender crust, and the reduced density of the baking dough creates better resistance to heat transfer through the dough (resulting in a more rapid temperature gain and a higher surface temperature at the bottom of the crust, which can result in a more crispy texture).

One of our challenges is to figure out how to produce thick crust pizzas that have been proofed for upwards of 60 minutes in a timely and predictable manner so they are ready for baking when an order is placed. The operative word here is "predictable.” while you can effectively proof pizzas at room temperature, the problem is that when doing so you are left entirely at the mercy of the room temperature. When the room is cold, the dough will proof more slowly; when it is hot it will proof faster. Additionally, we also find that the finished dough temperature has a greater effect upon the rate at which the dough proofs when the proofing is done at room temperature rather than in a controlled environment, such as a proofer.

Another approach that some operators have taken is to stack the pans of dough either near a heat source or right on top of the oven. We see a lot of this when deck ovens are used since the top of these ovens can get rather warm and the large, flat top looks like a good place to stack pans of dough. Sure, you can proof this way, but it has its drawbacks. Since the top of the oven is the heat source, those pans, which are sitting right on top of the oven, will get the most heat while those pans which are stacked above them will get significantly less heat exposure. The result is a vast inconsistency in proofing from the top to the bottom of the stack, and you will soon find yourself digging through the stack of pans looking for that pan with correctly proofed dough to fill the order at hand.

I think the best solution is to invest in a commercial proofer or proofing cabinet. A proofing cabinet is typically about 24-inches wide, 32-inches deep, and about 72-inches high. It will have a number of suitably spaced cleats down both sides to hold 18-inch by 26-inch size pans. A proofer will have both temperature and humidity controls so you won't need to cover the pans to prevent the dough from drying out. The best operating conditions for proofing pizza dough are to set the temperature at 90 F and the humidity at 75 percent relative humidity. No, this won't make the dough proof any faster, but it will allow the dough to proof much more consistently. If you fill the proofer with pans of dough all at one time, it will all come ready to dress and bake at the same time. This may not be such a good idea unless a bus just pulled up outside your store. Here is where we must get a little inventive.

It’s best to simply give the dough partial proof in the pans. If you closely control your finished (mixed) dough temperature, this can be time effective. But if your finished dough temperature varies quite a bit, then you will need to periodically check the height of the dough as it rises in the pan to determine about where half proof is at. Then immediately take the pans of uncovered dough to the cooler. The dough will continue to rise for a period of time in the cooler to reach full proof height at about the time that the dough cools enough to stabilize (significantly slow in proofing rate). This allows it to be held in prime condition, ready to be baked for a longer period of time than it could be held at room temperature or in the proofer. You can build an inventory of dough in the cooler so it will be ready to use at any time within a four-hour period after placing it in the cooler.

To use a pan of this fully proofed dough, place it onto a warming tray set at 150 F for about a minute or so (this sure beats having to wait for the dough to finish proofing). It is then ready to dress and bake for the order.

It was a hot summer night. I was cruising with my friends. We were a carload of young guys, fresh out of high school, approaching a college campus, looking for a good time. The driver pulled into a drive thru burger place. He said “these burgers are great. I bet you can’t eat two and drink a coke.” I’ll take that bet. I could always eat 2 burgers and drink a Coke. The place was called Burger King. It was on Washtenaw Ave., halfway between University of Michigan and Eastern Mich. Univ.

A few weeks ago, I noticed a road sign proclaiming “The Whopper’s 50th Anniversary.” My mind did a flashback to the ’60s and my first encounter with the Whopper. This burger was like no other. For all of you youngsters, it filled up a 5-inch bun, and it literally took two hands to handle a Whopper that was charbroiled, slathered with condiments and just 45 cents. You got two Whoppers and a large Coke for a buck. I could not finish my second Whopper. My gut was too full for one more bite. I was in burger overload. These days, the Whopper is a one-handed sandwich.

Almost every ‘food for immediate consumption’ I buy has been shrunk down in size in my lifetime, from burgers to candy bars and so on. There are only a couple ways to pass along costs. The first is increase price or reduce size. The last way is reduce quality of toppings. Many years ago, all large pizzas were 16 inches in diameter. Many years ago, most of the chains adopted 14 inches as the new large size. The majority of independent pizzerias call 16 inches their large pie and a few go much bigger than that. With the uncertainty of our ingredients increasing in price and the free-falling dollar on the international money market, it’s a given that you need to change something in your operations to make a profit, and it’s a given that our customers are tired of price increases. They will forgo ordering a pizza when gasoline and all other weekly expenses are at an all time high. Many operators I’ve spoken to have already raised prices when cheese and wages went way up. They feel that their customers wouldn’t tolerate another price raise. They would rather go out of business than raise prices. Pride is an emotion that can take you down.

In 1988, Pizza Today published its first Top 25 List. My manager filled out the required info and mailed the card back to the publisher. A couple of months later, my pizzeria was ranked the 25th busiest place in the country. A couple of months later two of the Big 3 scoped out my town, and I had some serious competition. –– the world’s fastest delivery company and the world’s cheapest pizza. They opened with much fanfare and deep advertising pockets. It seemed like they direct mailed every home, every week, and were focused on burying me.

Prior to them coming to town, I was in my financial comfort zone. After losing some market share, I went on a budget. Time were slower around Big Dave’s. I was going to let them have their openings and then hammer them with some great marketing. They had a huge advantage over me. They both served 14-inch pies and called them larges. If you bought a large at Big Dave’s it was a 16-inch diameter. I assumed my astute customers would take notice and pay the extra money for a much bigger pizza. I wrong. Most customers were confused. When they ordered from the chains they got a 14-inch large and when they ordered from me they got a 16-inch large.

Pizza is made, assembled, portioned and should be priced by the square inch. Unfortunately it’s sold and priced by the diameter. A refresher math class: to determine the square inch of a circle, multiply pi (3.14) time radius (half the diameter) times itself. Step by step, let’s determine the square inches of a 16-inch pie. Pi R2 is 3.14 (pi) x 8 x 8 = 200.96, or 201 square inches rounded off. A 14-inch inch pizza has 154 square inches, 3.14 x 7 x 7 = 154. The difference is a whopping 23 percent. It costs 23 percent less to make a 14-inch rather than a 16-inch pizza. The menu price should reflect a 23 percent difference. A 10-inch pizza only has 78.5 sq. inches. This is pretty close to being exactly half of a 14” pizza. Most pricing models are throwbacks to the ’60s and ’70s when a dollar probably covered the difference between the sizes.

Those days are over. A dollar barely covers the cheese needed to cover both larges. If you are offering a 16-inch large and are making a reasonable profit, stay with it for the time being. If you are offering a 16-inch large and are experiencing profit shrink you need to change something. If your market is price sensitive and you have customer migration to the coupons and specials strategies used by the competition, you might want to consider what Kamron Karington and I did. In order to compete on a level playing field and compare apples to apples the larges should be the same diameter. We both downsized from 16 to 14 (the national average size). Kamron did it over a year, dropping to 15 and then 14 inches. I did it overnight. We had very few complaining customers once we explained that we chose to adopt the national average of 14 inches so the like coupons would be less confusing. This strategy allowed me to accept their coupons and not be humiliated by their pricing.

You have to choose to leave menu pricing the same or not. Either way, your food cost percentage will decrease. By offering bundled meals and multiples your contribution margin will be better than it is per transaction now. Maybe we should take a lesson from the Big Guys and downsize. It’s one way to really boost the bottom line without another menu increase. This was one of the biggest decisions of my career. I tossed and turned on it for weeks. I was old school, and proud of it. After the tenth complaint call, I was ready to go back to the old ways. After the second week was over the, 16-inch large was a memory. Kind of like the two-handed Whopper.

One of my first assignments as a consultant was to implement a turnaround for a group of pizzerias. They were hanging on by a thread. They had cashed in all of their CDs, 401ks and charged their credit cards to the max. I had made several visits to the operations. They were buying their food at good pricing and had perfect portion control in place. After putting their financials under a microscope it became clear to me that theft was probably happening. Since the management and crew knew me by sight, I decided to insert my manager, G.I. Joe, undercover for a week. He was to be hired in as a driver / rookie pizza maker and determine who was stealing and how much was being skimmed. He checked in every night and gave me a briefing. It turned out that there was a GM who was dipping heavily and several drivers who were in collusion. They were stealing over a grand a week. We nailed them red-handed and the turnaround began. A year later my client went from losing $40,000 a year to making $75,000. The $2,000-a-week difference saved the operation.

I have been talking to dozens of operators recently, and many of them have stumbled on to some very serious theft taking place right under their noses. It seems when the economy starts heading down, the cash shortages head up. Is it coincidence or desperation?

Last week I was talking to a client and he told me how he caught a veteran employee stealing from the cash drawer. This employee ran the register during lunch and had memorized the total pricing for the lunch specials. When a crowd gathered at the register, he left the drawer open and collected the right amount from every customer — but didn’t ring every transaction into the POS system. Every 4 or 5 customers he’d close the drawer and play it straight for a while — then he’d do it again.

‘till drawer’ owes you, the average scammer uses ‘counters’. When pennies or dimes are in the wrong change slot, or paperclips or anything out of the ordinary is in the drawer, counting could be going on.

This scam is only one of the dozen or so that I have discovered at my shop. Some of the most prevalent scams are:

• Drivers using coupons they cut out and claimed the customer redeemed at the door.
• Taking perfectly good food and beverage out to the dumpster under wraps and retrieving it after closing.
• Assigning deliveries to other drivers.
• Stealing money from the petty cash box.
• Stealing cash from the night deposit and feigning an error in addition when the bank calls the next day.
• Giving freebies to friends and family.
• Theft of company property other than food and cash.

If you suspect that you have a silent partner, develop a few safeguards and traps to catch them. Unannounced cash drawer swaps are very enlightening.

Here is my quick-fix list for slowing the loss:

Drivers will not take coupons at the door that weren’t calculated when the customer called in the order. The exception is a customer can call the store back when the driver is at the door and get the transaction changed on the original order.

All garbage going to the dumpster will be bagged in clear plastic bags. Every bag will have a cup of bleach poured into it before it is tied off. These bags will accumulate at the back door in a plastic wading pool. Every hour or so the manager will walk the trash out to the dumpster.

Fingerprint recognition is a sure-fire way to eliminate accidental or intentional delivery switching at the POS system.

The manager on duty owns the petty cash box. The individual cashiers own their cash register drawers. Overs and shorts will slow down or stop. (While were on it, cash overages scare me more than shortages. This is a positive indicator of theft.)

Two employees count the night deposit and sign the deposit slip. Shortages will stop.

Cashiers can’t ring up family. 

Mark all company property with your name

Never let the bookkeeper / accountant touch the money.


This list is a starter list so you can do an internal audit on your operation. Things that are measured quite often improve.

Big Dave’s delivered a lot of orders. I’m convinced that one of the biggest reasons we dominated the delivery market in my area was that we measured the amount of time that elapsed from the phone call, in the oven, time out the door and time to the customer’s door.

I became very obsessed with delivery times when the world’s fastest pizza delivery company opened a location a block away and across the street. Prior to them coming to town I enjoyed 65 percent market share in my zip code. After they came, I started to lose market share to them because they were fast and I was not. “It will be there within the hour” was the closing line we used at Big Dave’s for 10 years. On a slow day we delivered in about 30-35 minutes, and when we were in the weeds on the weekends you could expect it to take over an hour. I was under the impression that my loyal customers wouldn’t buy an inferior, cookie cutter bland pizza. I was right and wrong at the same time. Some of my customers tried them once or twice (to be expected) and came back to me. Other customers were dazzled by their speed and I lost them. This was not acceptable. I took it personally.

We implemented several new ways to improve our delivery times. I actually learned how to do it by reading my competitors’ training and operation manual. Heck, if they can do it why can’t I, I thought?

Excuse: the other guys only sell pizza and soda with a few other offerings. They hire and have more drivers on staff than we do. The real reason they were eating my lunch was that they had a higher sense of urgency than we did. They were guaranteeing 30 minutes or the meal was either free or reduced.

This is what my team did to beat them at their own game:

We pre-tossed, sauced and cheesed 10 to 30 doughs and racked them on a stacking wire rack shelf during peak rush hours.

The pizza makers were broken into two groups. The first person’s job was to never let the rack run dry. The second person was the pizza dresser — he simply took the proper sized pizza off the rack and topped the pizza.

The toppers used digital scales / cups, and were trained to assemble the pizza and have it in the oven in less than 60 seconds.

Oven tenders baked it to perfection, chopped and boxed them and expedited them to the heated delivery area.

Drivers always took the oldest order first. Cherry picking was not allowed.

Drivers announced to the kitchen their “leaving the building” times, such as “22 minutes out!” We installed a large digital clock by the back door to make it easy. The kitchen responded with a confirming “Thank you!” If they failed to say thank you, the driver re-announced his or her time out.

Whenever the driver-out times started to get close to 25 minutes, my manager was all over it. He would temporarily make a kitchen person a driver and expedite them out the door with a few easy deliveries to take the pressure off the drivers. Most of the crew was cross-trained to make it, bake it and take it.

We tracked the elapsed times through our POS system and added drivers to the schedule when we felt we were going to get slammed. Many times I scheduled employees as both kitchen and driver staff for their shift.

After a few weeks of ironing out the bugs in the system we were ready to pull the trigger and get all of our lost customers back. We advertised “29 Minute Delivery – Guaranteed – Or FREE! Who’s got the fastest pizza in town? Big Dave’s.”

We got so good at it, my competitor closed down the operation and left town after a few years. Better them than me.

Why did this work? It certainly wasn’t easy or pretty. We simply had to do it or suffer declining sales and profitability. We had to leave our comfort zone and do what had to be done. The minute the truck my competitor sent to pick up all of their equipment, lower the sign and strip the building had cleared town, we ended our guaranteed time. Our delivery times didn’t slip after that because everything we did was under a time measurement system.

Bottom line: things that are measured are improved.

My entire crew knew what the expectations were. We were going to be the fastest deliverer in town. No excuses. The numbers were tallied nightly and the daily report card was posted for all to see the following day. When the expectations are crystal clear, and when they are measured, they improve. Things that are not measured get out of control. Does you management team (let alone your hourly crew) know your operational expectations? Have you written them down or do you assume the crew just knows?

Measurable Financial Indicators should not be ignored. These MFIs must be reviewed daily, weekly and monthly. The feedback of the daily/weekly performance should be posted for all to see. The next step is to implement Measurable Service/Product Indicators. Secret shoppers as well as customer feedback via phone or in-person surveys accomplish this. My feedback mechanism was to call back five delivery and interview five dine-in customers every day. The results were quantified and the percentage score was posted at the end of every day on the wall, for all to see.

My observations show that mature operations are less likely to adopt newer, better management approaches, mainly because altering embedded processes, mind-sets and behaviors that might have worked well in the past is an enormous challenge. Don’t fall into this trap.

Right behind food cost is your second most expensive controllable expense: labor. Labor cost, or L/C, is usually referred to as a percentage of gross sales. I stayed on top of hourly labor like a hawk. My point of sale system served as my time clock and provided real time labor amounts in dollars as well as percentage of gross. My manager’s pay was a combination of salary and bonus based on performance. The biggest area he was in charge of was achieving an ideal prime cost. Prime cost, or P/C, is defined as the combination of total food cost (F/C) and labor cost. Every operation varies somewhat because of service style and prevailing wages. At Big Dave’s Pizza, the prime cost was 55 percent. We ran about a 30-percent F/C and a 25 percent L/C. These percentages could move just as long as the P/C stayed at 55 percent. Most operations I work with hover around 60-percent prime.



To accurately state the correct labor percentage one must take into account several areas. The first is salaries and wages, both management and hourly. In addition, one must add in payroll taxes (FICA-Medicare) worker’s comp insurance, any medical insurance and other benefits. These expense categories should be grouped together under payroll on your profit and loss statement.

The snapshot that you get from your POS labor screen usually doesn’t reflect anything but labor that is on the clock. The above soft costs usually will add 5 to 6 percent of additional costs to the real number that will be reflected on your financials.



The steps we implemented to achieve a terrific labor cost were written in stone. Every week my manager and scheduler projected the next week’s sales based on prior weeks’ same-sales. Once that dollar amount was determined we knew how much money we had in the budget to spend on labor. Hypothetically, if a store had weekly gross (less sales tax) sales of $10,000 and their ideal labor cost percentage is 30 percent, you’ll have $2,500 to spend on wages and salary. The soft costs will add another 5 percent, so you’ll hit 30 percent when the week is said and done. The first days we scheduled were Friday and Saturday. I wanted to have those two very busy days covered with my most productive, trained staff. I call it “put your aces in their places.” I slotted my fastest pizza-makers, drivers and counter crew in their most productive slots for the shift. These days were normally two or three times as busy as weekdays. During peak sales shifts my productivity increased. Everyone on staff was working full speed. I often recorded 12 and 13 percent labor hours. These highly productive sales bursts helped shore up high labor days when sales were low. It still takes a minimum amount of staff to deliver great service and food. During slow weekdays, I couldn’t help but run higher than average ideal labor. The trick is to have the week or payroll cycle balance out. 



Consistent numbers are almost impossible to achieve unless your staff is highly trained. One highly trained cook or driver can out-produce two or three under-trained employees. One of my fastest pizza-makers was Mark H. This guy could hand stretch, spin, sauce and cheese a 14-inch pizza and put it in the oven in 19 seconds. His only request: “Don’t let my table run out of ingredients and stay out of my space.” Mark was trained and mentored by Cookin’ Correlle. Sarah F. could take a phone order, repeat it back and suggestively upsell extra cheese or breadsticks in 48 seconds. The customer never felt rushed. Sarah was trained by my manager, G.I. Joe. I was the slowest order taker at 63 seconds. My head prep cook, David J., could mix, weigh out, roll and refrigerate a 75-pound batch of dough singlehandedly in 21 minutes. I trained David J. He was a nut case and required gentle handling. These folks had one thing in common: they shared a fundamental principal of Big Dave’s –– a high sense of urgency. They also had time expectations they shot for. We timed every operation in the store and knew how long it took to complete almost any task. Tasks that are measured improve. If you don’t have the bar set, times will vary.

Every one of my superstar eagles started out on the bottom of the schedule when they were a probationary newbie. Ninety-percent of all new hires were sponsored by an existing eagle. After you worked for me for six months, you could sponsor a new hire. After a deep and through background check and a group interview, the newbie was brought into the family. The newbie’s sponsor took on the responsibility of transforming their friend into an awesome, competent, quick and smiling customer-pleasing crew person. Every sponsor entered into a handshake contract with me at the time we hired in their friend. If their friend was doing well at the end of 10 weeks I gave the sponsor a $100 bill from my wallet. If for any reason the newbie wasn’t with us at 10 weeks, the sponsor gave me $50. I never got any half-hearted endorsements. These folks put their money where their mouth was. If no one would sponsor a potential new hire I assumed there was a good reason … and passed on the hire.


Cross-Training is Key

When the majority of your staff is cross trained so they can perform tasks and duties outside of their normal job, you’ll never fear being understaffed for any rush. Although you are paying more, the pure productivity of this kind of crew will cost much less than staffing with average people. This is how we held our labor percentage very close to 25 percent.

This intensive training costs money. You have to decide if you want to invest the time and money into new hires. You may think, “What if I get them all trained up and they quit?” I say, “What if you don’t and they stay?”

Big Dave’s always closed early on Christmas Eve (6 p.m.) so that my crew could get home and enjoy their family time. The key word here is family. Many families gather together on Christmas Eve. Since the following day will be filled with traditional home-cooked feasts, the cooks in charge (Moms) are looking for an easy-to-prepare, no muss, no fuss family favorite. Pizza is just that. Since pizza is an impulse food purchase, you may want to alert your customers that you will be closing early but will be filling orders until 6 or 7 p.m. on Christmas Eve? The pizza industry already enjoys robust sales the day before Thanksgiving. Why not make the day before Christmas ours as well?

The top of your pizza box is underutilized for advertising and sending messages to your customers. Most of us only think about discount coupon box toppers taped to the box. What is wrong with creating a holiday thank you message along with an invitation to start a family tradition of Christmas Eve pizza? Office Max and Staples sell printer paper that has holiday color borders that would work great for the message. Create a holiday message and weave in the suggestion that you would be delighted to cook a family favorite dinner for them on Christmas Eve. Also, mention that you will only be able to fill orders for 100 families and that it’s first come, first served on that day. Then it is over. This creates a perception of demand and the need for expediency.

Every year, like clockwork, I had dozens of families order pizza for this evening. It became tradition and the same names popped up every year.

Also, I’m sure you’re well aware that, typically, sales slump in January. Why not include a holiday gift for your loyal customers that is included on the holiday box topper? For instance, boost up your slow weekdays with a great offer. Offer freebies with the purchase of any large pie. Whatever it takes to get the customer in the door is fair game to ward off the first of the year sales blues.

To a certain point we are masters of our own destiny. To a certain point. The current economy is in uncharted waters. I hope our elected government officials are up to the task of putting the economic train wreck back on the tracks.

I’ve seen and lived through some similar economic times. I remember when, with absolutely no notice, Richard Nixon imposed an executive order that froze all wages and prices for most of a year. This order made it a crime to raise your prices on anything as well as give an employee a wage hike. The economy needed some time to get itself back on track. A few years later the economy again went into a funk. During Jimmy Carter’s administration we watched interest rates climb to close to 20 percent. Not a good time to be in the real estate or banking business. A few months after the first Desert Storm, the Department of Defense decreed the closing for many air bases. Wurtsmith AFB closed in my town. I lost half of my customer base in less than a year. Bumper stickers were going around town that said, “Last one leaving Oscoda – Turn off the lights” . Nine thousand people were reassigned in less than a year. All I saw were 50 moving vans a day heading out of town. A couple of years later, I was setting all-time sales records in a town that shrunk by half. We got through the mess and so will you.

Through it all, the restaurant and pizza industry survived and grew to thrive. We will again. In the last 30 years food not prepared at home for immediate consumption has almost doubled. America and the world would really rather let someone else cook for them. That would be you and me.

The current economic crunch time we’re in now will pass. Unfortunately, underperforming operations will be driven out of business. Hanging on is not a recommended business strategy. Eventually, your grip will loosen on your lifeline and you may find yourself in a financial freefall.

In the past few months I’ve visited many successful operations. They called me in to see if there was anything they were overlooking that could help bolster their sagging bottom lines. Each one of them has adjusted a certain area that will send lots of newfound money to the bottom line. If our customers are tightening their restaurant spending habits we need to look inside our operations a trim any wasteful spending.

The pizza industry is what we make it. Making the very best pie possible and serving it with a smile is a must. I’m convinced that the industry needs to raise the bar and do a more professional job on portioning, pricing, purchasing and marketing.

If you don’t know what it costs to make your pizza, how do you know your menu prices are where they should be?

In the last month I’ve presented workshops and seminars to several thousand owner-operators in eight cities. The overriding theme of the seminars is getting back to restaurant business basics. In every single seminar I’ve asked the attendees to answer the following question: “How much does it cost you to make a 14-inch cheese, pepperoni, mushroom and ham pizza, including the box?”

In a typical room of 200 people or so, only two or three will raise their hands and announce the answer. This is scary to me. I realize more than a few are shy and may be embarrassed answering the question in a public group setting. At the same time, though, I lost most of the eye contact in the rooms. Folks were praying that I wouldn’t call on them to answer the question. 

Now it is your turn. I’m addressing that identical fundamental question to Pizza Today readers. Write down, right now, how much it costs you to make that pie.

Don’t know the answer? Then you’ve failed the test.

If you are not sure of your exact food cost in percentage, as well as dollars, how can you price your menu? One way is to gather up all of your competitors’ menus and spread them out on your kitchen table and take an average. You don’t want to be the highest or the lowest. But when you do that you are assuming that the other guys have done the math and have a handle on true costs. I wouldn’t bet the shop on it. 

Computing the cost of a pizza is not an easy task. Especially when the cost of the raw ingredients is constantly changing. You know you have to do it. Your entire future is on the line. It is time to stop the guessing. Let me describe how it is done. 

First, you will need to set aside several blocks of uninterrupted time. I recommend three sessions of two hours. Session one will be devoted to assembling your last two months’ food invoices. You’ll also need to weigh out your topping weights for every pizza, salad, appetizer and any other entree on your menu in ounces (grams). I do this task with a digital electronic portion scale that has a tare (zero reset) function. I first write down my doughball weight, then move on to sauce, cheese and other ingredients as I build the actual pizza on the scale. By using a corrugated pizza circle instead of a dough, I can recycle the toppings after every weight and not waste them. I call this information the Weighout Sheet.

From your invoices you’ll need to determine price per ounce on each ingredient. If you purchase your cheese by the pound you’ll need to divide the price per pound by 16 to get price per ounce. If you buy your onions by the fifty-pound bag you’ll need to compute the edible yield ounces (EYO) per bag. You’ll take into account for how many ounces per bag or box of onions or peppers is trim and waste. Do the same on ingredients that are packed in one-gallon jars and number ten cans like ripe olives and banana peppers. Drain off all of the liquid and weigh the EYO of all of these toppings. This should do it for session one.

Once you have done the math on the weights and cost per ounce on your pizza as well as salads, sandwiches and other entrees you’ll need to start doing some addition. Welcome to Session II. For pizza boxes, packaging and other things like sheeted dough and disposables, you’ll need to give the ingredient a unit/each cost. This is right about where I personally dropped the ball. 

So far I got the math right, but finding a place to assemble all of the info is a problem. At first I forced myself to use the huge green accountant’s columnar work sheet paper. Printing tiny and writing all of those numbers in those itty-bitty boxes was almost too much for this ADD pizzaman. After I bought my first computer I transferred all of the data to a spreadsheet program like Excel. This was a giant leap from pencil and paper until I inevitably entered a value in a wrong cell and crashed the sheet. But since I spent hours and hours doing the algebra for the cells I usually could find out where I went wrong and fix it. I used this system for many years. I searched the world over for a better way and found none.

After you’ve created and formatted your worksheets you can now start seeing how much it costs to assemble a pizza. You’ll add the sum of the dough, sauce, cheese, pepperoni, mushroom, ham and pizza box. Divide this total into the menu selling price and you’ll finally know the real ideal foodcost for that pie. This will do it for session two. 

Session III is the OMG session. On paper you should be running, hypothetically, a 30 percent (or less) food cost. In reality, your financials are showing a 37 percent food cost. How can this be? Where is the missing seven percent? That’s a lot of money. It’s quite often the difference between success and failure, real income or living on credit card debt. The key here is replicating each pizza exactly as you did in session one. I’m talking exact portion control by using scales, spoodles or cups to dole out every ingredient, every time. If you are not weighing it, you are winging it. Every ounce counts. Especially in these days of rollercoaster pricing and escalating expenses. 

The difference between ideal and actual foodcost is the sum of the following: non-food items on your weekly invoices like hand towels, garbage bags, soap, etc. These purchases should be classified as supplies and not charged to food cost. Most distributors break out non-food items on invoices. I intentionally added in the cost of a pizza box and recommend it if an operation’s gross sales exceed 50 percent in carryout and delivery.

The next area to be concerned about is employee waste. This can be significant. I allowed my managers 1.5 percent here.

The final dark area is theft or under-ringed/reported sales. Every time I visit a pizzeria client and the food cost is way out of whack, I begin scrutinizing these areas right away. You’d be wise to begin doing the same today. Otherwise, you could be leaving thousands of profit dollars behind.

Now, back to the original question. How much does it take you to make that pizza? If don’t know, get started finding out right now.

We are in a cash business. We have cash everywhere. In the cash drawers, delivery wallets, petty cash box, night deposit and office. I wouldn’t begin to estimate how much cash has been stolen from me. The amount would probably make me ill. I can document close to a hundred thousand dollars. It’s been said that 25 percent of your employees wouldn’t take anything from you. 50 percent will occasionally take something if the chances of getting caught and prosecuted are slim. The remaining 25 percent are constantly figuring out ways to rip you off.

The National Restaurant Association attributes 30 percent of all restaurant failures to employee theft. According to them, restaurants lose more than $9 billion dollars a year to theft.

There are many reasons employees steal: they have a psychological disorder or think you’re rich or need money urgently, etc. They don’t just take cash, but will steal food, inventory, trade secrets, personal possessions, equipment and supplies and database information.

Their methods are diverse as well. They’ll under-ring orders and pocket cash or under report delivery sales. Petty cash is an easy target. They’ll give away unauthorized comps to their friends or intentionally mess up an order. They’ll leave you and take your recipes or mailing lists to competitors.

By far, cash is the primary target. In today’s tough economy even saints can be tempted. Technology has again helped by developing an online behavior trait test for all new applicants. In 30 seconds after a quick quiz a manager can get a numeric score on an applicant and see what their ethic / honesty number is. Here are some successful tactics I used to minimize cash theft.

If I suspect that a cash drawer is being pilfered, I’ll do two things. First I’ll over load the starting cash by $20 or so. When we reconcile the drawer to the register reading, it had better be twenty bucks over. Then I’ll do surprise drawer swaps in mid-rush. The under-ringers keep counters in the drawer. They ring up $10 and charge the customer $20. They quite often keep track of how much the till is over by placing coins in an unused slot in the drawer. Before the shift is over they pick the time to pull the under ringed cash and pocket it. A surprise random drawer switch and count will often show the overages. Overages are more troublesome to me than shortages.

For many years anyone could ring up sales at my pizzeria. Since we didn’t assign and hold responsible one person on a drawer, shortages were quite common. If you assign a drawer to one person, they become solely responsible for the drawer balancing. Things that are measured always improve. If the cashier can’t make the drawer balance within one percent of perfect on three occasions, then they won’t be allowed to touch any more money. I know this will slow down your system. If your bank and every major retail operation in the country can do it, tell me again why you can’t. You may need to bring in one more person for 10 hours a week to accomplish this. Whenever you allow a free-for-all in the cash drawers you might as well put up a sign that says “Take all you need. Just leave me a little bit to pay the bills with.”

Petty cash and night deposits are tempting targets for the criminal element. Again, accountability is key. Only the manager has the key for petty cash and two people count the deposit and sign the deposit slip at closing. I’m a much stronger believer in using technology as a deterrent. CCTV (closed circuit television) has been the difference between success and failure in many operations. New technologies will allow owners and managers to watch the operations remotely on their computers from anywhere in the world. I like a camera over the cash register, one over the make line and one at the front and back doors. At one time I resisted CCTV because of privacy issues, but I made a new decision after helping catch thieves that had come close to bankrupting several of my clients. When a cash drawer or driver is being balanced you never tell them how much they owe. They count it and you see how close to perfect they are. If you tell them in advance they will force the number every time.
Even more valuable than your cash is your mailing list.

This data is the lifeblood of your restaurant. It usually contains every customer’s name, address, phone numbers; email addresses, lifetime and period purchases. How much would you be willing to pay for this data from your most hated competitor? If you could put your hands on this info you could target market to these families over and over until they tried your pizza. I have legally obtained this info from my competitors because they were sloppy. It cost them dearly. Password protect your lifeblood — otherwise disgruntled or low ethical employees could download your info and sell it.

Employee theft with delivery drivers has almost taken down several chains. Before POS systems were customized for pizzerias it was relatively easy to steal big money every week. POS systems made this challenge a lot more difficult but certainly not impossible.

Coupons are generally deducted at the time the drivers settle up. They can cut and pass off coupons for legitimate discounts and often do. My stance was whatever was quoted to the customer at time of order was collected. Once in a great while a customer produces a coupon they forgot to mention when they ordered. Drivers may not honor them at the door. The customer must call the store manager and get the discount approved on their home phone. The coupon shuffle really drops off after you implement this. Assigning deliveries to another is another way unscrupulous drivers penalize their fellow workers and personally profit. I think the fingerprint recognition at terminals is the only way to go. Passwords are shouted across the store but fingerprints can’t be altered. I made it a practice to call back delivery customers and survey them on meal quality and service. I asked open-ended questions and asked them to give us a number between 1-10 based on their experience and then I asked them why. Great information is gathered this way.

To Catch a Thief – Delivery

• Have a Zero tolerance policy on unpaid deliveries
• Coupon Shuffle
• Call back customers and survey them
• No co-mingling of cash, (drivers must keep personal and company money separate at all times)
• No assigning deliveries to others
• Watch for Un-authorized discounts


Shhh! It’s a Secret.
Equally important as your cash, perhaps more so, are your trade secrets. They should be protected by confidentially and non-compete agreements. In the old days it was a visit from a bone breaker if you forgot. Now you will need to stay above the law and sue in civil court. I’ve been an expert witness 3 times and the court has always found for my clients. Protect all of your sensitive date and lock it up. Employees aren’t managers and seldom need to know all of the details.

It’s time to think strategically about the new year. If you want to achieve growth you need to organize your tasks, set clear goals and implement a plan of attack. Each business has different needs, but there are some things all operators should take into consideration when making their New Year’s Resolutions. Here, then, is a list of 10 things you should vow to get done as soon as possible.

1. Get Your Financial House in order. I can’t count the number of operators I work with that use really sorry financial statements. Most of them are unreadable and give little or no timely, useable information. Most of us aren’t accountants. Most of us despise paperwork. Most of us can’t critique a good or bad balance sheet or P&L. Still, you can and should hire someone who will do the job or enroll in a college level accounting course. One of my many mentors was a CPA. My books were such a mess he refused to take my case until I passed two semesters of Accounting. Don’t let this happen to you.
2. Get a System that organizes you. I’ve been using a Franklin - Covey Planner since 1990. It’s with me, always. Every contact, calendar and promise made is written down. My daily to-do list stares at me several times a day. When you get organized you can get your managers and key people on the same system. Now you’ve created a delegation and measurement tool. My manager knew what I was doing and I knew what he was doing. We were literally on the same page. We set deadlines, goals and objectives and met them — but only because they were written down. Today’s newer technologies almost make the written word a thing of the past. Look into hand held organizers if you are techno savvy. Little floating pieces of paper don’t cut it anymore.
3. Get a Grip on Food and Labor Costs. The importance of portion control and tight scheduling will make or break your operation. The tools are out there to pretty much automate the process. You can only make menu and financial decisions based on timely information. There is no excuse for running a business that leaves the two biggest expense categories to luck. On the low end you’ll receive a $200 a week raise. On the high end I’ve helped clients pocket over a thousand a week. Don’t wait until it’s too late to make pricing decisions. Income has to rise faster than expenses or you’ll go broke.
4. Develop an Annual Marketing Plan. Every one of us has said, “The reason XYZ restaurant is so busy is because they advertise all the time. Take away their marketing and they wouldn’t be able to maintain market share by selling mediocre food.” Marketing is the only expense that creates and increases sales. Develop a 12-month plan and budget it, just like rent and utilities. Your message will eventually get imbedded in the minds of your market and influence new customers to buy from you. The trap here is to figure out what marketing strategies work for you. Every campaign needs to be graded according to its return on investment. The strategies that are lame get tossed aside. The brilliant ones get tweaked and repeated.
5. Over-train your employees to the point they don’t need you around anymore. Remember; EO or CEO. You make the choice. This may take half of your time in the shop. Trust me; the rewards will be worth it in the long run. Hire the best, pay a little more. Expect high productivity and less attitude. Fire the rest. Foodservice is not for everybody.
6. Set achievable personal and business goals for next year. Write them down. I put sticky notes all over my bathroom mirror. Share your business goals with your crew. Reward them when the team achieves them.
7. Review your insurance policies with a professional agent and possibly your attorney. By not doing this I had to cough up over $150,000 after a big loss. You are undoubtedly underinsured for a worst case scenario, just like I was. Spend the extra few hundred bucks a year and sleep easy.
8. Be a Student. Somebody knows something that will change your life. It may come to you in a seminar, book, video or mastermind group. Every three years it seems that my knowledge base increases twofold. I’m always looking to friends and strangers to challenge the way I do or see things. Ask questions of successful people. They are most often happy to share their secrets. If you were arrested and charged with impersonating a professional restaurateur, would there be enough evidence to convict? All professionals religiously attend educational retreats and workshops. This is where the newest information and ideas are found.
9. Plan two or more vacations for next year. At least one should be designed to completely relax you and quiet your mind and body. Make it long enough to get the job done. Plan another working vacation. Fun, friends and excitement folded into a learning environment. I can’t think of a better place to get the job done than Pizza Expo. Budget for it. If you can save 20 pounds of cheese a week and shave an hour a day from your schedule, you’ll have all the money you’ll need to have a life.
10. Be fearless and have fun. Don’t allow anyone to steal your dream.

Chances are, your employees think you strike it rich with each sale. They don’t realize you have to keep your lights on, buy more cheese and market to keep customers. If you make a $10 sale, they think you’re putting $10 in your pocket. Boy, wouldn’t a 100 percent profit margin be nice?

If you haven’t taken the time to show your employees how things really work, now’s the time. The economy has tightened. Cheese prices are high. Gas prices are high. The minimum wage has increased. You don’t have much to show for every dollar you bring in. If your employees are careless about waste — or if their thieving — you are not making any money. Take a good look at the graphic that accompanies this article. Cut it out and hang it up for your employees to see just how little is left over for you at the end of the day.

Roughly, before taxes, the average pizzeria operator has a 7 percent net profit.

Here’s a breakdown of the average operator’s expenses:

• Food and Beverage, 30 percent

• Labor & Benefits, 35 percent

• Occupancy (rent, taxes, insurance, phone, supplies, common area maintenance, etc.), 20 percent

• Administrative, 8 percent

• Net profit before taxes, 7 percent

Gone are the days of the 10- or 15-percent profit margins. You aren’t getting rich off of each sale, so let your employees know that. It will make a difference.

If you sales are increasing, give yourself a big pat on the back. If your sales are flat, and you are barely breaking even, welcome to the new normal. If you are afraid of what the future has in stock for your store, the clock is ticking. The longer the restaurant runs unprofitably, the less time you have for a turnaround.

Pizzeria interventions or turnarounds are never the same. I believe that several factors are present when a once-profitable store gets in trouble. Since 1990, I’ve been called in to turn around a hundred or more teetering operations. Next to grand openings this is the hardest type of assignment I perform. No wonder people are fascinated with Chef Gordon Ramsey. The process can get very emotional and ugly.

I have adopted this model to evaluate existing operations. I grade operations subjectively on the following criteria, with A being the best and F miserably failing.

I call it the SLOPPIE system … but there’s nothing sloppy about it. In no particular order I look at these areas:

Sales — Is the operation grossing enough to generate a respectable bottom line? How many dollars per square foot of space per year?

Location — Is the location an A, B or C? Is it easy to get in and out? Is it relative to the core market, (business, residential, schools)? Does it have busy neighbors that compliment sales? Does it have high visibility and great signage?

Operations — Is it a well-oiled machine or a nightmare when busy? How well is staff trained? Are standardized recipes, portion control, ordering, cash management, scheduling and written job descriptions in place? Is waste, theft and scheduling lean and mean? Are the financials complete, or are huge flags present?

Product — What’s the quality of all entrees? Is the food coming from the kitchen consistent? Is one cook significantly better than the rest? What procedures are in place to guarantee that every pizza, every time, is great?

Profitability — Is the restaurant making money? Are expenses too high?

Image and Identity — How effective is the advertising and marketing? Does the client have a Unique Selling Proposition? Does the client have raving fans? What is the word on street about your place?

Effectiveness — Do the dollars spent have an effect on sales? Do they deliver on their promise … or is it a same-old/same-old place?



Every operation is unique and report cards can’t be graded until I ask many questions. When I’m satisfied that I have the unvarnished information I give each one of the above criteria a letter grade and a corresponding number grade. A’s = 4.00, B’s = 3.00 and so on. Then I add up all of the scores and divide them by the 7 criteria and get the grade.

When the report card comes out we are able to address each area and develop a plan to get the place on the honor roll.

The absolute number one area that I see in the field is the lack of accurate financial statements. Financial statements are similar to a medical chart that follows a patient who is under the care of a doctor. The Doc needs to be sure that the vital signs are within norms. If the reporting system you use is easy to read, follows GAAP (generally accepted accounting procedures) for the restaurant / pizzeria industry, you are in the top 10 percent. Without a real, accurate financial starting point, all interventions are simply trial and error. Businesses make profit by design. Hobbies make money by accident. If you have never run your restaurant by the numbers you are drifting without a rudder.

The action plan almost always involves doing a food cost analysis. After a day of inputting current grocery pricing, menu pricing and portion sizes we’ll have, sometimes for the first time ever, an accurate dollar amount that each entrée on your menu contributes to your annual profitability. For me personally, this is drudge work. I’d much rather be on the line with my apron on running the crew than entering in a hundred weights and costs. I get very little joy in balancing a ledger by underlining the bottom line with two lines. If you get your jollies by working with P&L programs, good for you. If you are like me, you must have someone, an enlisted bookkeeper, Certified Public Accountant or a like type who understands your business. Accountants either specialize in one or two disciplines or are general practitioners. I love them both, if and only if they can advise me and hold me accountable for profit and loss statements. If you don’t have to answer to someone every month you have no accountability. This starts the slippery slope of failure. One constant in every profitable restaurant, be it either a single unit or a mega chain, is they have an iron grasp on expenses. FoodCost, Labor Cost, Occupancy Costs, Sales per square foot ratios, Prime costs. These terms flow naturally from an accountant who understands your business. If you are ever subjected to a scrutinizing audit you’ll want an accountant in your corner.

Once I have a grasp on where the money comes from and where it goes I look at vendor pricing. If those expenses are in the national norm I move on.

The next really big issue is the quality aspect of your pizza and other menu items. Is this one of the very best, unforgettable, delicious pizzas I’ve ever eaten? If not, why not? I truly believe that our industry will be divided soon. Customers will choose between inexpensive cheap pies or choose to spend their budget on their perception of best.

Once I’m satisfied that my client is making praiseworthy pizza we move on to staff service. This is an overlooked area. We are not in the pizza business — we’re in the hospitality business. Right after the quality of the food comes service. It is your fault if any of your staff offends a guest.

Marketing is the first thing to go during economic downturns. I know it is hard to spend money on programs that have lame results. So you must get creative. I’m a huge believer in Boomerang Marketing. I advocate offering free samples with the understanding that customers will return once they taste a great product. I also believe you must have a memorable USP and tell your personal story. This is the glue that keeps customers returning.

If you are struggling, it likely took years to get to your current state of affairs. As such, it will take some time to turn the ship around. If you still have the burning desire to succeed, then get to fine-tuning your store and get yourself back on the right track.

What is the first question you ask your sales rep every week? I’ll bet it isn’t weather or family related. I’d bet it goes like this: “How much is cheese this week?” I stopped asking the big question in 1989, after I was educated on a term that changed the entire way I bought all of my food from that day forward.

Your sales rep has very little control over the prices that show up on your invoice. DSR’s (Direct Sales Reps) have to sell their food and supplies under high scrutiny. They answer to their district managers, then to the sales manager, then all the way up the to the corner office. Food distribution companies must cover four areas of expense before the final lowest cost price is set and reflects on your invoices. They are:

• Product costs: What it costs the supplier to buy the products from their manufacturers. The higher their volume, the lower their costs are.

• Delivery and handling costs: This is much the same as how we charge for home delivery. What is the cost per drop to your restaurant? This cost has skyrocketed for your distributor in the last year because of diesel fuel, insurance, wages and depreciation of tractor-trailers.

• Selling costs: The cost of servicing your account and processing orders. The more you order determines how far these fixed costs can be spread over your total sales dollars. Special orders, delivery frequency and credit terms are factored in here.

• Profit on account: This is the percentage of mark-up or gross profit (sometimes referred to as margin) that needs to be made to consider your account profitable, after considering the above factors and potential volume of your account.



Did you ever wonder why publicly held chain restaurants are two to three time more profitable than independents? One of the big reasons is they don’t buy their food like we do. Every single one of them uses one primary supplier to buy 80 to 100 percent of all of their food and supplies. I’m convinced that this issue alone accounts for a huge reduction in their annual food cost percentages.

I was taught to be an adversarial buyer. I was very good at it. I used guilt trips, lies, and threats to get the lowest cost possible from my DSR. I spread my orders over three to four distributors (not including the produce guy and soft drink distributor) to keep them honest. I made them sweat for my order. I must have said, “How much is it for XYZ?” a million times.” They shot me a price and I started the adversarial dance of, “Sorry, you’re 10 cents too high.” Little did I know I wasn’t getting their lowest prices. It was a very time consuming power trip. They still had to factor in the four equations described above. My monthly food purchases were about $25,000. I was spreading my orders between 3 distributors. Each one of them was getting around $100,000 a year. They were paying around $80,000 for the food they sold to me. Their gross margin was close to 20 percent. That wasn’t profit. They still had to subtract selling and administration costs, delivery, handling costs and profit.

Then I met Ty Troy, DSR extraordinaire. After cold calling me for six months I gave him his first mercy order, just to get him out of my hair. He showed up every week, sometimes twice. He was like cancer and just wouldn’t go away. He kept on telling me all of the ways his company was the only choice and how he would blow me away with service and price. He was so genuine and his references checked out, so I decided to give him a try. After a rough start (I was disorganized and accidentally bounced a few checks to him) we settled in and got down to business. After the honeymoon period we started to trust each other. I told him what my worries were and he shared his. Then we did something very extraordinary. We made a solemn vow to never lie to one another. He told me what he was looking for in a customer. He was a four million dollar man (eventually grew his route of 100 miles of lonely Lake Huron shoreline to 6 million) and didn’t have time for customers who weren’t:

• Going to pay their bills on time

• Totally honest

• High dollar accounts

• Loyal, even with low ball offers from competition

• Going to refrain from guilt trips and adversarial buying games

• Organized and have the order ready. (time is money)

• Going to regard the relationship as win-win

• Reasonable in their expectations



I shared my thoughts too. I was looking for a supplier who:

• Stocks the right ingredients in their product mix

• Can deliver food on time, at agreed pricing amounts

• Will work out agreeable credit terms

• Is totally honest

• Knows their product line inside and out

• Suggests money saving ideas without compromising the food quality

• Will suggest, track, and monitor manufacturer rebates and special pricing

• Is comfortable on a cost plus arrangement

• Will cover me if I screw up and forget to order a product.



He suggested that we might want to try a non-binding Prime Vendor Agreement for six months. He knew my potential volume was appealing to him and his company. I would buy all of my food from him and he would set me up on a cost-plus program. He would much rather cut his margin almost in half to get all of my business. After all, 12 percent of $300,000 is better than 20 percent of $100,000. From that day on I never asked him the price of cheese or anything else for that matter. My cheese price was directly tied to the Chicago Mercantile Exchange (CME) Block Cheddar price, and all of my other categories were indexed off of cost-plus percent over their invoices. He organized my purchasing and created customized order forms, par levels and was always informing me when my food ingredients were on sale or when they expected costs to go up.

This type of arrangement is based on trust and goes both ways. Other suppliers tempted me with better prices on specific items, but in the long run it’s not wise to cherry pick. I was finally able to spend the three to four hours a week of newly found extra time on more productive areas (like training, guest service, finances, and marketing), and eventually delegated the entire ordering process to one of my high school employees.

Bottom Line: my annual food costs went down 8 percent. I gained over 200 hours a year for more productive management. My invoice paper clutter was slashed. My DSR was my advocate and was always watching my back.

Does this make sense for your pizzeria? Give it a shot.