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A lot of people may wonder if running your own restaurant is profitable. It takes so much money, time and effort to start a restaurant business. So, how much time do you actually need to see those profits coming in? We have to remind you that each food establishment is different. A popular pizza place is definitely considered to be a prosperous business. Those less crowded places might not be as profitable. Despite all the differences and various aspects, that might have an impact on an annual revenue, have you ever wondered what is the average profit margin for pizza restaurants?
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What is the Average Profit Margin for Pizza?
It is time for some math! Even though it is almost impossible to give you the exact details on pizza restaurant profit margin, we will try our best to present you with an average profit margin at a regular pizza shop. Few years back it was calculated that a profit margin of 8 percent was the average for the pizzeria industry, which means that for every $10 pizza being sold, you could only keep like 80 cents. And if someone ordered a pizza pie for $25, only $2 went back to the bank. The inflation is quite high now. Prices went up, so we might need to pay a bit more for pizza today. It is no secret that most restaurants make their big profits from selling beverage and cocktails. Some pizza places are allowed to sell beer, so this is where they get the most income from. Nowadays, it is said that an average pizzeria profit margin reaches up to 15%, which is considered to be quite reasonable.
Pizza Business and its Profit Margin
The food industry is quite competitive. There are literally hundreds of pizzerias across the country. A pizza profit margin might differ, depending on the region. Some pizza makers claim that is costs about $1.50 to make a small cheese pizza. And that is only when we count the ingredients. Labor and other expenses were not included. And how much does it cost to actually order a small cheese pizza? It depends on the pizzeria. Some places hire experienced chefs, so their labor cost is much bigger. Other pizza shops offer only the finest selection of ingredients, whereas there are those pizza shacks that choose cheaper alternatives.
Can a Pizza Store Have a Profit Margin of 20% and more?
Pizza shop profit margin extremes can go as high as 25%. It really depends on many different aspects. Profit margin is generally defined by food and labor costs. There are places that use only high-quality products. You can order a pizza with just a cheese on it, or ask for more toppings. It is actually said that pizza has the highest profit margin. What is more, pizza is considered to be one of the most popular dishes known to men. It does not take much to make a simple cheese pizza, but somehow not every pizza tastes the same!
How to Improve Your Pizzeria’s Profit Margin?
There is a common misconception stating that a restaurant owner spends the most money on food and ingredients. The truth is that most funds go on rent and paychecks. A successful restaurant will probably take advantage on a restaurant management software and keep their inventory nice and organized. A lot of restaurants are defending themselves from food waste, and thanks to different POS systems you can easily avoid situations where you have to throw away food, because your manager ordered too many steaks. What is more, you can also increase your profit margin by raising your prices. Some people might find this option to be quite risky, but it is inevitable and eventually almost every restaurant will have to do it. Just make sure that once you increase those prices, the food quality and customer service will stay at the same level or even go up a notch.
What is a Good Profit Margin?
Profit margin varies depending on industry. Generally speaking, a profit margin of 20% is considered to be good. An average profit margin will be anywhere between 10%-15%. If a profit margin is no more than 5%, then it is definitely low. If your pizzeria has a profit margin higher than 25% and more – then it is quite satisfactory indeed!
Remember About Good Marketing
Marketing and its tools can definitely help you with the profit margin of your pizza store. Good marketing will help you get those new clients and boost your profits. There are many ways to advertise, so you better check your pizzeria’s online presence, since it is one of the most popular forms of advertising.
Let us Talk About Your Pizza’s Quality
Just like we have mentioned before – different restaurants choose different quality of their ingredients. Remember that a good quality pizza will always be noticed. You might need to bring those prices up a bit, but a true pizza lover will always appreciate the fine selection of ingredients. You should invest in a POS system. It will definitely help your pizzeria run more efficiently. Once again – a good point-of-sale system will improve your inventory situation, so do not worry about ordering too many tomatoes or mushrooms.
Every business owner likes to see those profits go up. We all know that the pizza industry is highly competitive. If you want to stand out with your food establishment, then you need to offer your clients some delicious pizza and an outstanding customer service. You can increase your profit margin, but one of the things you need to do is to calculate your expenses and get rid of any unnecessary expenses. Talk to your staff, hear them out. They might have some suggestions as well. Team work will definitely pay off. Together you can create an amazing work environment and a successful pizza place.