When the economy collapsed back in 2008, every business was affected, including the pizza industry. Some pizzerias continue to feel the effects of that catastrophe today. The question is, what can we do if it happens again?
Precinct Pizza, the pizzeria I founded with my wife in Tampa, Florida, was two years old in 2008. We had registered huge sales from nearly the day we opened, but we also built up a lot of debt from our build-out. When the economy tanked, we were receiving job applications by the dozens on a daily basis. Then our landlord defaulted on the loan for the building, so the court took over ownership of the mall in which Precinct Pizza is located. It was a scary time for everyone. My wife and I had to make some tough decisions about the future and figure out a way to keep our sales from slipping. In this article, I’m going to share with you some of the important things we learned from that experience and from our 10-plus years running one of the busiest pizzerias in the United States.
Rick Drury, owner of Precinct Pizza, teaches local students to make their own pies. Drury believes that encouraging loyalty is the key to longevity in the pizza business, especially during challenging economic times.
Say Yes to Special Requests
In an earlier article in this series (“Seizing the Upside of a Downturn, Part 2,” January- February 2017), Jeff Mease, owner of Pizza X in Bloomington, Indiana, noted there are two types of customers: “deal customers” and “real customers.” Independently, after many long discussions, my wife and I reached a similar conclusion.
“Deal customers” do not care about the quality of the food; they care more about the price, and they will order from the pizza place that offers the cheapest deal that week. These customers are not loyal to any one pizzeria. Then there are the “real customers,” those who do not care so much about the price and want the highest quality pizza they can get. These customers are often picky, and they’re especially particular about how they want their food prepared and served. Special requests—such as light sauce, extra sauce, well-done, lightly done, extra sides of ranch—must be honored and fulfilled for them. If a customer orders 10 wings, for example, and he wants five of one flavor and five of another flavor, do you honor his request, even though it causes your kitchen staff some inconvenience? If a customer orders a pizza and asks for sausage on just ¼ of it, do you give her what she wants? At Precinct Pizza, we say yes to every special request. These customers will prove to be very loyal to a pizzeria that takes their unique needs and desires to heart. And they are the customers that Precinct Pizza covets and has always coveted.
In short, during an economic downturn, the pizzeria that goes out of its way to take care of its customers will enjoy a distinct advantage over those that simply ring up the order and grab the cash. It really is the little things that keep a customer coming back.
Quality Isn’t Always King
Of course, we are proud of the quality of our food at Precinct Pizza, but we have learned that you don’t have to serve the best pies in town to survive, even in a down market. You just need to take better care of your guests. I recommend visiting as many pizzerias in your town as possible, so you’ll know which ones are doing things right and which ones do a poor job of serving their customers. In your opinion, which pizzeria in your town serves the worst food? Most likely, if you visit that store, you’ll find that many people think it’s actually the best pizzeria in town. Otherwise, it would have no customers and would have already gone out of business!
Clearly, there’s more involved here than just the quality of the pizza. Simply serving the best pies will not save you in an economic downturn. Listening to your customers, paying close attention to their special requests and following through on those requests are just as important as offering quality pizza. Whether it’s remembering that extra side of marinara or double-cutting a pizza, whether it’s happily fetching extra plates or napkins or utensils, or anything else the customer requests, keep this in mind: Your customer is offering to let you make his experience awesome when he makes those special requests. If you honor those requests, you will build loyalty. If you do not honor those requests, they will find another pizzeria that will. Do everything you can to keep these “real customers” happy—they will be loyal to you long after those “deal customers” have left you high and dry.
Negotiating With Vendors
Precinct Pizza staffers take to the streets of Tampa to offer free samples to passersby.
Keeping costs down is important to every pizzeria’s bottom line. You can do several things to increase the bottom line, but it all starts with negotiating better pricing from your food vendor.
At Precinct Pizza, we have a solid relationship with our food vendor. For many years, we purchased about 80% of our food from that one vendor, while still going to other vendors to get a better deal on this or that item. We thought that approach saved us money, and it did, but placing orders with all of these different vendors also created more work; some of them didn’t offer delivery, so we had to go out and pick up those items ourselves. Although we were saving money, it was time-consuming.
About a year ago, I decided this was not the way to run a pizzeria, especially with my goals for expansion. I went to my main food vendor with a list of all the items I was getting elsewhere and said, “If you want to continue to receive my business, you must get these items for me at nearly the same price I’m paying your competitors.” Because we were ordering about $15,000 to $20,000 a week from that vendor at the time, the company was willing to come to the table and work with me. It agreed to carry almost all of the items I needed, although some had to be specially ordered, and the vendor had to cultivate new relationships with suppliers to get other items. Currently, my vendor carries about three dozen items that are proprietary to Precinct Pizza.
Once these items were in place, I made sure the pricing was reasonable for all parties. Remember that your food vendor is entitled to make a profit, and also keep in mind that smaller vendors will feel the pinch of a recession more than the larger food purveyors. Whatever you do, never go into negotiations and demand to be offered all items at cost.
Finally, I also negotiated a rebate on all purchases we made. So, even if I had to pay a little more for some items, the rebate percentage would more than cover it, essentially reducing the overall costs of my orders and saving me money in the end. Now, if there is another economic downturn, I know my relationship with my food vendor is stronger than ever and, hopefully, I’ve got the plans in place to keep my costs down!