Everyone does business a different way. In this department, PMQ poses two to three questions each issue to a group of owners/operators from across the country so you can see what others think about certain topics. In this department, you get the word straight from the horse's mouth. If you have a question you would like to have asked or would like to volunteer and voice your opinions, email Tom Boyles at firstname.lastname@example.org.
Do you have a web site? How much did it cost to set-up and how much does it bring in sales?
Greg Kissell -We do have a website, it was established about two years ago (www.guyspizzaco.com). The total cost was around $1,200, which included the web design and a logo design. The main function of our site was to allow customers to look up our phone number, menu and coupons. The best thing about the site is that we are able to get feedback from customers through e-mail, and our web designer can track who is looking at our site and what pages they are going to.
John Anspach – We don't have a website yet. Our business has always been just a small community restaurant, but recently, we are getting more notoriety, so we have been considering that. I've looked at getting one, but we don't have a computer in the store, so a website that could accept online orders is a little down the road for us. We're increasing our menu and growing in the community, so eventually we'd like to add something like that.
Wanda Romano – We do not have a website set up, but we have purchased our domain name through Yahoo! We pay $4.95 a year for the name www.romanositalianrestaurant.com. We eventually want to develop the site, but we just haven't had the time, so I may have someone do it. I could do it, but haven't been able to find the time. I haven't yet looked into the actual cost to have someone else build the site for me. To be completely honest, I bought the site because I wanted to get on the bandwagon; everyone else has a website, why not us?
What are your percentage breakdowns on labor, food costs and profit margins?
Greg Kissell – Labor: currently 18 percent of sales, this number is low simply because owners work 50+ hours/week in the stores.
Food cost: averages to 34 percent of sales (some weeks it is higher and vice versa)
Profit margins: These are based strictly on the cost to make the entire product, not taking into consideration labor, rent, utilities, insurance, etc.
Pizza: 80 percent profit/sale
Wings: 69 percent profit/sale
Subs: 76 percent profit/sale
Salads: 70 percent profit/sale
Calzones: 80 percent profit/sale
For each dollar in sales we typically profit/net about 20 cents. Although, the more sales we do the higher the profit percentage gets.
John Anspach – Labor is about 18 percent, minus myself. Food costs are between 33.5 – 34.5 percent while our profit margins are between 26 – 26.5 percent.
Wanda Romano – Our overall labor cost runs right about 26 percent of sales. Our food cost runs anywhere from 25-35 percent. We do a lot of pasta on our menu and there's quite a lot of profit with it. I recommend that everyone add pasta to their menu. We like to aim for a 70 to 75 percent profit, and then pay everything out of that.
Do you accept credit cards? If so, what rate do you pay? If not, why?
Greg Kissell – We do accept credit cards. It is a mistake not to. We accept about $6,000 a month in credit/debit purchases for each store. There are two fees when accepting credit purchases: the terminal and the transaction costs. Terminals cost us $40 a month per store. The transaction cost is 5 cents per transaction and .02 percent of the total cost of transaction. I know we lose money on each transaction; however, the general consumer carries less cash than they did five years ago, and we do get a higher average ticket when purchased with credit/debit, especially American Express. By using the credit machine, it allows us to reduce the number of checks we accept. There was a time when we were getting killed by NSF checks and checks from closed accounts.
John Anspach – I don't accept credit cards because the costs are horrendous. The rates right now through my bank are somewhere between 2.25 and 2.5 percent, which is just too high. I am planning on joining the National Pizza Operators Association (NAPO) in a month or so, so I will be accepting cards here within the next few months, hopefully. Not accepting credit cards doesn't help our business, but it really doesn't hurt it much. Almost everyone who asks if we take cards still orders anyway. Very few do not go ahead and order.
Wanda Romano – We do accept credit cards. Our rate is anywhere from 1.6 to 1.9 percent. If you take in the statement fees, the inquiry fees and the percentage that they get, it works out to be more like 2.8 percent. Even with all the extra fees, the credit cards are worth it. You wouldn't believe the number of customers that don't carry cash and I'd rather take a credit card or a debit card with the Visa/MasterCard logo any day over a check.