Well, surprisingly it didn’t take much. It simply started by deciding that “if Domino’s could do it – so could we.”

Floor plan. Go ahead and look this over. Then look at the photos of the actual store.

A customer’s eye view. Front counter with decorated pass-through window. And handicap counter (lower on right). Drivers station just past the door on the left (delivery map on the wall). By the way – I like having drivers come and go through the front door – it makes the place look busier than if they’re slipping out the back (and you want to appear busy).

POS. 3-station POS at counter (driver dispatch station in back makes 4). This is the old RapidFire NT system. For a new POS or to upgrade – I strongly suggest you take a look at Revention. It’s a killer system with strong marketing credentials.

Prep Area. Pretty simple… Robo Coupe2, can opener, Kitchenaide mixer, digital scale, seasonings, and canned goods. Makes for easy prep and easy clean up.

Walk-in. Prepped items in 6-pans on the left, dough in the back (where it’s the coldest) and don’t forget to put any raw meats (and even eggs) on the very bottom shelf. We always prepped some salads, and garlic breads so we could handle a good rush without having to assemble side items on the fly.

3 compartment sink. Great idea to put a metro shelf above the sink for either storage, or for letting dishes dry.

Dough room. If you’re starting from scratch – I highly recommend that you build in a special dough room (you’d be amazed at how far flour will travel). It’ll be in your POS, your walk-in condenser unit, your office. Putting your dough prep in its own little room will save you lots of aggravation later. Also, if you’re in a small town away from parts, you may want to consider a back-up mixer.

Dough station. Sheeter on the right (makes heavy volume a breeze). And notice the screen racks hanging on the wall. For dinner rush – prep a bunch of skins and cover them with plastic bags to keep them from drying out. Keep a water spray bottle handy too in case they get a little dry.

Makeline. Very important: Some places have all their meats grouped together, cheeses, etc. Here’s what you want to do… put your toppings on the line in the “order” in which they go on the pizzas. This will prevent cooks from having to backtrack on the line to grab toppings. This really speeds things up for you. Notice the “cheat sheets” above the makeline. Every pizza – with the toppings listed in the order they go on the pizza. This keeps all cooks – on the same page.

Cut & box table. Boxes below – ready to go. Heat rack to the right by the driver station makes it easy for drivers to “grab & go.” Upper left corner – notice “cheat sheet?” If some pizzas get things added after they come out of the oven – this will help make sure they’re not forgotten. Keep a couple of cutters handy.

Long shot… looking from the back towards the front.

It was a smallish place. A picture of Elvis. An American flag. And a soda fountain that dated back to the ‘40s. Fans whirred over a mustard yellow counter. And, the wooden back-bar had seen better days.

A friendly face offered me a newspaper. The lady next to me said “Hi.” And, the coffee was goooood.

I pondered this “throwback” as I sat there (at that mustard-yellow counter). Employees were buzzing about like bees. The persistent crackling of eggs and bacon echoed from the grill.

I found myself feeling at home here. Very comfortable. Almost like family.

Why? I asked myself …

What was so special about this place? No uniforms. No corporate logo. No “slick” McFranchise look. Nope. Just “mom and pop”. And, it emanated from every corner. Floor to ceiling. Front to back.

The place had been here since dinosaurs ruled the Earth. Then it hit me. Its wonderful story was oozing from this old place. The owners hadn’t tried to “keep up” with the times (except maybe for the mustard-yellow counter top dating back to the ‘60s).

Nah – this place was just being itself. The neighborhood place — where everyone knows your name. Yep, it even had Polaroids of customers tacked to a wall. This place was as comfortable as a pair of old sneakers.
Come to find out — the Blue Plate Diner has been around since the turn of the century. And, I’m not talking about the last one.

So, have I taken leave of my sanity? Is there a funny farm in my future? How does the Blue Plate Diner relate to pizza marketing?

Here’s the connection.
If you have one store, maybe two. If you’re running a mom-and-pop shop. If you have mustard-yellow counter tops. Then step outside, look up at the sky and smile. You have something no corporation will ever have.

You have the essential ingredients to become an integral part of your neighborhood. That favorite place down the street. That familiar old friend. A link to humanity. Embrace it. Be proud of it…

Run with it.

So, instead of sending “ads” to your customers telling them of the latest “special,” mail your “neighbors” a letter and “tell” them about it. Send them a “Thank You” card every now and then. Ask them about their kids, their dog, their vacation.

Shake their hands. Often.

Don’t hide your “mom and popness”. Flaunt it.

Well, I’ve got to go now. I’m finishing my fourth cup of coffee here at the Blue Plate (I usually have three). And, I’m reluctantly getting up to leave this “Norman Rockwell” slice of Americana behind. It’s time to step back into the hustle and bustle. But, I’ll be back. And… You can take that to the bank!

So, what can you do to be that favorite little place down the street?

1. Hang pictures of your customers in the lobby.
2. Meet and greet as many neighbors as you can.
3. Call people and do nothing, but tell them you appreciate their business. Don’t ask how the last order was. And don’t tell them about a special you have. Just say, “Thank you.”
4. Mail letters and “tell” them about a particular special. Sign your name to it and put your name in the return address field — not the name of the store.
5. Have drivers hand out “Thank You” cards with deliveries. Use these in lieu of box-toppers. Put the customer’s name on the envelope — and the card. Offer free cheese bread or something on the next delivery (I’ve seen 82 percent returns on these).
6. Have elementary school tours where the kids can make their own pizza (one pizza shop owner told me about a wildly successful “mommy & me” day where moms and kids come to the store in the morning and the kids get to make their own little pizza).
7. Don’t try to look too “slick”.

Norman Rockwell’s paintings graced the covers of the Saturday Evening Post 318 times, starting in 1916. They captured the innocence of a long lost time. A time many people long for. I always say, “Sell people what they want to buy.”

More than ever, people want a connection to humanity. To share a meal with their kids. A friend to talk to. Something “familiar” and unchanging.

A weathered back-bar. A mustard yellow counter. A picture of Elvis …

The most effective method to explode lunch sales is to actually go out  yourself, shake hands and give out free pizzas.

Want to attract a lot of applicants? Then talk to them in “their language. You see, they really don’t care that YOU need a driver. They only care about what THEY get.

Hot buttons…

$10/Hour Guaranteed!

The guaranteed hourly pay is an eye catcher (explain that this includes “per run fees” (if any), tips, and their hourly pay. Also explain that ALL of your drivers are making at least $10 (or whatever) per hour. And that if they are not making at least that much… you’ll want to know why… are they too slow? Can’t find their way around? Rude at the door? I only reached into my pocket twice to hand a driver a couple of bucks – and each time it was a legitimate payout.

Cash In Your Pocket Daily!

What kid doesn’t need cash everyday? Point this out to them in the ad. They’ll actually have a little picture in their mind of holding a wad of cash in their hand.

Easy hours…

Again, paint a picture for them.

Now here’s the funny thing about this ad… it pulled so many applications that some of the kids will ask if you have any other openings – if you’ve already hired all the drivers you need. Plus, they always seem to have a friend or two looking for a job at the same time. In fact, I never again ran an ad looking for cooks or counter help. This ad – kept me staffed up. Try this ad. It’s worked like magic for years.

What’s Your Pizzeria Worth? Hard to Say – But These Guidlines Will Put You in the Ballpark…

Here’s how it works…

SPECIAL REPORT
What is Your Pizzeria Worth? And Why You Should Care

By David Scott Peters
Smile Button Enterprises, LLC
Have you ever wondered what your Pizzeria is worth? I mean really, have you ever thought about the day when someone wants to buy your Pizzeria? What if that day was today? What would you tell them it is worth?

I want you to think back with me for a second… Do you remember what was going through your mind when you first decided to follow your dream and open your own Pizzeria? I bet it was a really exciting time.

Soon excitement was translated into solid planning and then action. The next thing you knew you were knee-deep in paperwork before you could actually start doing much of anything. Among the many stacks of papers you needed to complete, from loan applications to business licenses, you had to form your business entity.

Before you researched S Corporation, C Corporation, Limited Liability Corporation, and so on, you hopefully met with your Certified Public Accountant and possibly your attorney as well to learn what entity was right for you. During this meeting your CPA asked you a lot of questions. And most peculiarly, he or she focused on one major issue before guiding you: “What is your exit strategy?”

Your exit strategy had a major impact on what form of business entity you chose because of the potentially large tax ramifications when it came time to actually sell or transfer the business to someone else.

Without going into the advantages of using each entity (mainly, because I’m not a CPA), your exit strategy should guide almost every major business decision you make in your Pizzeria on a daily basis. Why? Because your job in operating your Pizzeria is to maximize the value of your business—not only for immediate gain, but for future gain as well. Now let’s look into why it is so critical.

How Much Can I Get for My Pizzeria?

The easy answer is whatever a buyer is willing to give and a seller is willing to take! While there are a number of ways to find that magic number, the method you use doesn’t matter. It still always comes down to two parties agreeing to agree.

As I mentioned, there are a number of options many Pizzeria owners, bankers and business brokers use to determine the value of your Pizzeria for sale. With my experience, both as an independent operator and franchisor, I find that there are two calculations that seem to be used most often, a multiple of cash flow and replacement value.

The Cash Flow Method

The Cash Flow Method of determining the value of your Pizzeria is exactly as it sounds. You are going to determine what kind of cash flow your Pizzeria produces over a 12-month period. Then the cash value of your Pizzeria is determined as a multiple of that projected cash flow. Sounds difficult? It’s not. It’s actually very easy.

The calculation we’re going to use is EBITDA (Earnings Before Interest Expense, Tax Expense, Depreciation Expense and Amortization Expense). All of these numbers are easily found on your Profit & Loss statement.

Open your accounting software and print a P&L statement for the last running 12 months. So if it were December 15th today, you would run the report for December the year before through this past November (the last 12 months). The reason the last 12 months are used is because this time frame more accurately takes into consideration sales and profit trends your business is experiencing.

From this 12-month P&L, gather the following 12-month totals: Profit/(Loss), Interest Expense, Income Tax Expense (this does not include any sales taxes collected and paid), Depreciation Expense and Amortization Expense. Add these numbers. This total represents your actual cash flow for the past 12 months, without any debt service from business loans.

For example: Earning Before – Profit / (Loss)

$135,454
Interest Expense

27,031
Tax Expense

33,863
Depreciation Expense

33,500
Amortization Expense

8,984
Total Cash Flow

$238,832

The next step in the process is to multiply the Total Cash Flow by what the market trends are today. For instance, in the early 1990s, Pizzerias were selling for a multiple of as high as eight. Then, soon after there were a lot of Pizzerias going out of business and the banks were left taking over a large number of them. This ultimately reduced the multiple.

In today’s marketplace, buyers are finding that depending on a number of factors, they are seeing multiples of three to six. Most likely, a Pizzeria with good cash flow and positive sales trends will be in the four to five multiple range. Let me show you what exactly I mean by a multiple:

Total Cash Flow

$238,832

Value of the Pizzeria
Multiple of 3

716,496
Multiple of 4

955,328
Multiple of 5

1,194,160
Multiple of 6

1,432,992

Based on this example, this Pizzeria is most likely going to be able to sell for approximately $1,000,000.

The Replacement Value Method

As a franchisor of 30 sports bars in Arizona for many years, I have seen the highs and lows when it came to what franchisees were able to resell their Pizzerias for. But all too often I would see a Pizzeria trying to get top dollars for their business when it actually had a negative cash flow or the cash flow projection method showed a value of less than what the real estate the building was sitting on was worth.

In these instances, consider the Replacement Value Method to determine what your Pizzeria is worth. In a nutshell, what would it cost someone to open your Pizzeria today on the same piece of dirt you built it on originally (assuming you own the land and building)?

For example, if the land you built your Pizzeria on is now worth $500,000 and it would cost someone $750,000 to build the building and add furniture, fixtures and equipment, then the value of the Pizzeria would be $1,250,000 minus the cost of replacing any old equipment and basic renovations that need to be done, such as painting, replacing surfaces, etc.

Why these Methods are Most Commonly Used

You have probably already asked yourself, why are these two methods most commonly used? You might have even found yourself saying, “Well my business broker said you determine the value of your Pizzeria using tea leaves, or the equivalent.”

The truth is that these methods are most commonly used by lending institutions, banks and investors. And unless the buyer is going to self-fund their purchase, the banks are going to dictate what you’re going to ultimately get for your Pizzeria.

Plus, it’s no secret that Pizzerias already have a tough time getting funding due to the fact that 61 percent of all Pizzerias fail within their first three years of business (which is frightening to a bank that is going to lend you money on a 10-year term or longer). And the fact that the average Pizzeria only makes a nickel on every dollar they bring in.

What the lender is trying to determine is whether or not you can pay back the loan.

Why Skimming Your Business is Very Short Sighted!

If you want to get the maximum dollar value out of your business when you sell, then the practice of skimming is very short sighted.

What is skimming? It’s the practice of skimming cash from the top of the pile from your daily receipts. I know many Pizzeria owners who have vending in their Pizzerias, video games, pool tables, crane games, etc., and they are skimming regularly.

They know that it is next to impossible for any government taxing agency to come into their Pizzeria and audit the revenue their video games generate. There is no real way to verify just how many quarters have been put into each machine.

So what they do is empty out the quarters, dump them into the change machine, take out the bills, put some in the bank as reportable income and a lot in their favorite bank, Left Hip Pocket Savings & Loan.

While this is only one example of skimming, there are many others, all of which are very short sighted. Sure it’s always nice to have tax-free income, especially when no one would ever know about it. But this short term gain in unreported cash will cost you three, five, even eight times that amount when you sell.

Think about it. For every single dollar you skim from your receipts (using the Cash Flow example above), it represents approximately five dollars in real money you won’t get when you sell your Pizzeria.

I find it very hard to talk with a Pizzeria owner who is complaining that they can’t get top dollar for their business after I find out that they have been skimming for years. You just can’t have your cake and eat it too!

You never want to find yourself saying to a potential buyer, “We’ll even though the P&Ls show the business made this much, it’s really this much more because we skim this much off the top.” Remember your buyer can’t take a wink, wink, nudge, nudge to the bank and get funding. Banks want real reported numbers.

Small Change Equals Big Gain!

What does it take to increase the value of your Pizzeria? Really small victories!

Over the years, I’ve found myself engaged in a similar conversation to one that I have had dozens of times with other Pizzeria operators who are all looking for the home run change in their operations that will net big cash. While in some Pizzerias the home run is possible, the reality is you make huge financial gains one small victory at a time.

Most often we don’t find that gaping hole in our operation that when corrected saves or makes us $80,000 a year. Most of the time we find a way to reduce our food cost by one percent, reduce our paper costs by $500 a month, reduce our utilities by $200 a month, etc., and the next thing you know you are hitting that proverbial home run.

So the next time you hear yourself saying you’re not willing to change the cheese you are using with a brand that is of like quality or better just to save two cents an ounce, you’re missing the picture. All of those little victories are what will win you the battle.

Maximizing the Value of Your Pizzeria

Now that you know how to calculate what your business is worth, what do you do next? Look for all the small victories you can in your Pizzeria and take action today!

You are now armed with the knowledge that for every dollar you increase your bottom line profitability, you increase the value of your business by approximately five. How many investments do you know of with that kind of return?

And better yet, as you increase your operations efficiencies one dollar at a time, you’re putting that cash in your pocket right now.

So start identifying some of the things you could be doing to increase the value of your Pizzeria. For starters, you need to implement systems and controls for every aspect of your business. Doing so ensures that everyone is doing the same processes, shooting for the same goals and has a chance to achieve them.

Implementing systems for everything you do in your Pizzeria not only increases your profits, but makes it so that you’re not the one actually doing the work. Rather, you are working on your business, not in your business.

Just remember, everything you do in your business ultimately affects its worth.

David Scott Peters is the founder of Smile Button Enterprises, LLC an Independent Restaurant Coaching and Training Company and is known as the SMART Systems guy who can walk in to any Restaurant in the U.S. and find you $10,000 in undiscovered cash before he hits the backdoor…Guaranteed! www.smilebutton.com