Is There Profit in the Pizza Business?

Pizza is popular, but is it profitable? If you’re a pizza lover looking to get into the business, you’ll need to know what a pizza business profit margin ought to be. What can you do to make sure the money you invest in your business earns a strong return?

Market research, brand-building, investing in tech, and choosing ingredients: there’s a lot to take care of and many questions that need answering.

Topping the numbers

For pizza sellers, there is a considerable list of expenses involved before they can expect to start making money. Constructing your commercial kitchen is no small task and is only one small part of preparing your premises. But once you’re up and running, you’ll need to factor in staffing costs, rent, electricity and gas bills. There’s also the purchasing of ingredients and the acquisition and maintenance of your pizza business equipment list from slicers to dough trays to a wood-fired pizza oven and your EPOS.

You’ll soon find that the ingredients themselves only cost a fraction of what you charge for your pizza and that these other expenses eat more into your profit margin. Nevertheless, the average profit margin in the pizza business comfortably outstrips what most restauranteurs can expect to make.

Sage estimates the average profit margin for restaurants globally to be between 2-6%^[1]. 

While more successful businesses can expect to make a lot more, and the overall range of that figure generally falls between 0-15%, pizza businesses sit very much at the comfortable end of that figure.

A moderately successful pizza restaurant should expect to make a 15% profit, which is very strong in comparison with other restaurants. There are many factors that can influence this, and the range of profitability is even higher than for the restaurant industry as a whole, with the best performers returning 25% and many struggling to profit at all^[2].

The catering industry is a tough game and researching and making good decisions is crucial. So what can you do to ensure you fall on the right end of the profits scale?

A brand to build your base

When choosing anything from the name for a pizza business to a logo or floor plan, you need to consider who you’re selling to. How you’re going to sell isn’t an easy decision either. A pizza restaurant business plan will look different to that for a pizza van business.

Nevertheless, in most cases one thing will remain true: you’ll usually be selling to young people.

Pizza consumption is far higher in the 6-11 and 12-19 demographics than in any other^[3]. This means you’ll want to brand your business to appeal to children, teenagers, and families. 

In some cases, this can be as simple as choosing a playful character for a logo and providing drawing and game materials for younger diners. If you’re marketing to teenagers, it may mean trying to build a fashionable setting and providing sugary drinks and deserts on the other side of your menu.

Either way, your branding will need to be strong to compete in the pizza and fast food industries for your slice of that (pizza) pie.

A pizza business plan for a piece of the profit

So what are the options for building your business? 

Pizza is sold in restaurants, takeaways, food vans, and stalls. Your orders can be taken online, over the phone, or in-house with a waiting team. You can sell pizza by the slice, in different sizes, or with standard orders. Build-your-own-pizza style businesses are more popular than ever and some places are mostly known for having one very popular pizza.

It all seems a bit overwhelming.  Which should you choose and what are the benefits? Food vans on the whole can have world-beating profit margins in excess of 50%^[3]. However, finding a reliable vehicle and building up a series of stops providing a steady income can be difficult. Takeaway pizza is extremely popular and, with the continued growth of online ordering, can be very lucrative but there will be competition everywhere. 

Whichever form of business you plan to go for, it will be crucial to scope out the local area to determine where pizza and similar products are already available. If there is a big brand near you but few takeaway options or no food vans, you may quickly find ways of dominating the local market in one form or another. Once you start providing something no one else has, your profit margins will hit the roof.

Cutting the crust

A business can boost profits equally well by cutting wastage as well as increasing profit margins. But as we enter an age of environmentalism, consumers are also looking to cut down on their wastage, too. Selling by the slice is a way of giving each pizza a higher profit margin while helping your customer purchase only what they plan to eat. A pizza slice business would suit vans, takeaways, and restaurants equally well.

While electricity and gas will always cost restaurants, the big variable with wastage is ingredients. A pizza business that uses all its ingredients will be a money-making machine. Zero waste may not be achievable, but there are steps you can take to reduce wastage.

Despite most pizza places having dozens of different kinds of pizza on the menu, most have very similar ingredients with one or two different toppings being the difference between each one. However, this might mean stocking a topping just for a single pizza, which could lead to higher wastage if that pizza doesn’t sell enough. Build-your-own-pizza, discount offers, or selling toppings as sides may help with these issues, but be sure to consider what options are available to you to keep wastage as low as possible.

The bread of any business is a powerful EPOS

Lowering wastage can be made easy if your business is founded on a POS system with accurate, easy-to-manage stock control. A pizza business equipped with a computerised till, receipt and order printers and mobile order tablets for the floor can consider itself automated. Managing your business will take much less time which can then be used to concentrate on cultivating bigger profit margins.

Epos Now’s software for a pizza business is well adapted for use in any catering environment not only because stock information is easy to keep up to date, but because controlling every aspect of your business becomes easy.

With cloud technology, you can manage from anywhere provided you have internet access. This means running your payroll at the post office, looking at profit reports while reclining on your sofa, and updating prices from up in your attic if you need to.

Your reports can be adjusted to show non-selling and best-selling products for any day. You can colour-coordinate your hotkeys to show vegetarian products or discounted products and keep your staff informed with product images and additional information.

The Epos Now point of sale system is as flexible as you need it to be, with both hardware and software ready to suit your needs. Contact our team of experts or find out more about our world-class products.