18 minute read
Selling Out
Want to sell your pizzeria? Here’s how to position it for maximum value. BY BRYAN VITAGLIANO SELLING OUT
The demand for pizza has never been higher, but that’s not necessarily making life easier for pizzeria owners. The labor crunch and supply chain issues are creating headaches that make some operators want to get out of the business entirely. But selling a pizzeria can be a complicated process because of the emotional attachment the owner feels toward the business. Owners often treat their restaurant like an extension of themselves, so they generally look to sell to a party who can and will operate the business at the same level they did. They also want to take care of the employees and customers by transitioning the business to someone who will care for them in the same way. And some veteran operators have been in the business for so long, they know the ins and outs of running a pizzeria but are just plain clueless about how to sell one.
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I have helped countless entrepreneurs and restaurateurs sell their businesses, so here are a few tips to position your pizzeria to sell at its highest price.
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The process of positioning your restaurant for sale can never start too early. But, regardless of when the process begins, your business will be valued based on the prior year’s financial performance. So, if the goal is to maximize the payout on the sale, then you will want at least two years of financials and, ideally, a positive gross-revenue growth trend. This will make your restaurant more appealing to potential buyers. Simply put, a pizzeria that makes money is easier to sell than one that does not.
Unfortunately, selling your restaurant is a full-time job. Between marketing the business with a level of confidentiality and vetting the financial position of the buyers, there is not much time to spend actively running your pizzeria. As an owner, you can’t let your business suffer because your time has shifted to selling it rather than running it. You may want to ask a professional business broker to provide an opinion of value and offer guidance, so you can focus on the restaurant’s continued success while your agent works to bring in qualified buyers.
Think Like a Buyer
It’s rare to find an owner who can objectively price their business, especially since they are not actively selling different types of pizzerias regularly, and it’s difficult to remove one’s emotions from the valuation. Like all economics, the market sets the price at which the business will sell, and there are a number of variables that either add value to or reduce value from your business. As a helpful exercise, put yourself in the position of a prospective buyer. Ask yourself the tough questions and look objectively at your role as the owner, the number of hours you put into the pizzeria each week, your duties and responsibilities, and the net income. If you have a sale price you believe you “should” get for your business, ask yourself: Would you pay that amount to have to do all the work you currently do to make your level of net income?
For example, if you wanted $250,000 for your pizza shop and you consistently make $80,000 a year working 40-plus hours a week, ask yourself: “Would I pay $250,000 to buy myself a job that pays $80,000 a year?” This is the first question any buyer will ask themselves when presented with the asking price and cash flow amount of a business on the market.
Determining Sale Price
As mentioned above, the value of your pizza shop depends on several variables. These include, but are not limited to:
• Your restaurant’s financials • The owner’s role and number of hours per week spent in the business • Organizational structure • Presence or absence of management or key employees • Quality of the financial bookkeeping • Level of cash flow • How the business is trending year over year
Ideally, financials should consist of the last three years of income statements and balance sheets, along with corresponding tax returns. A profitable pizzeria is valued based on the seller’s discretionary earnings. These earnings are the pretax and pre-interest profits before noncash expenses, one-time investments and any unrelated income expenses. The higher the discretionary earnings amount, the greater the multiple of that number the market will bear, thus allowing you to sell for a higher price.
Maintain Your Equipment
You should maintain high quality standards throughout the period you are actively trying to sell your pizzeria. No one wants to purchase a pizza shop they would not eat in themselves. Keeping a clean restaurant shows that you care about the business, and this attention to detail will also strengthen the buyer’s belief in the accuracy of your financial representations.
A buyer will also be hesitant to spend top dollar to purchase a business that requires immediate repairs to the equipment. Either replace the equipment or be prepared to be asked to adjust the sales price following due diligence. I am not advising that you spend money to upgrade your restaurant with the sole purpose of getting a better price— something that is common in residential real estate. Just maintain your equipment and keep both the front and back of the house clean.
Maintain a Strong Online Presence
Smart buyers will do their due diligence in researching your business. They can easily see the public’s perception of your pizza shop through online reviews. Maintaining a good reputation while getting new five-star reviews is important. Good reviews go a long way in solidifying the goodwill associated with your pizza shop. • Bolster your positive reviews while driving down any old negative reviews. You drive down negative reviews by asking happy customers to post positive reviews.
Pizzerias with negative reviews are often unappealing to buyers, since a majority of what they are purchasing is the goodwill of the business. • Familiarize yourself with common complaints, such as cold food or slow delivery or service, and fix those issues before a potential buyer sees them. Being familiar with the complaints will prepare you to answer questions relating to these complaints from prospective buyers. • Respond politely to negative reviews about your pizza shop. This shows you take an interest in all aspects of the customer experience. Improving these issues today will help your chances of selling your pizzeria for the highest value in the future.
These situations perfectly demonstrate why planning an exit is so important. A two-year gap since your last negative reviews will make it easier to sell your pizza shop.
Selling your pizzeria can be a complex and personal process. You need to develop a plan based on expert advice to position your pizzeria in the best possible light—and you’ll end up with more money in your pocket.
Bryan Vitagliano is the leading restaurant broker at Strategic Business Brokers Group, a brokerage firm in Scottsdale, Arizona. The firm has helped dozens of restaurant owners sell their business.
XROBOTICS: SAVE UP TO $84,000 A YEAR WITH AUTOMATED PIZZA MAKELINE
Between the labor shortage and increasing costs of labor, you need solutions to keep your pizza business going. In 2019, we founded xRobotics to address the most important problem in the restaurant industry.
We’ve created an automated pizza makeline, with a vision to automate an entire restaurant kitchen of any kind in the nearest future. Our team has spent many months analyzing the most labor-intense process in pizza kitchens. It became clear over time that we needed to start with an automation of the sauce, cheese and pepperoni—that’s where people spend most of their time.
The xPizzaCube has been created to help you save hundreds of hours of intense work per month. This light, tiny (20” wide) countertop machine makes up to 100 pizzas per hour with a push of a button. Simply put your crust inside the machine—it supports pizzas between 8” and 16”—and walk away. A Large Double Pepperoni will be ready in 42 seconds. Your best employees will have a chance to focus on what matters most— customer service—while xPizzaCube is making consistent pizzas.
The xPizzaCube has saved our first customers $5,000 to $7,000 a month immediately after installation. That is $60,000 to $84,000 more cash each year! Our machine will boost the productivity of one employee from 25 large pizzas per hour to 70 large pizzas per hour. People are loving this new automated makeline because it is easy to operate with no special training. It takes five minutes to assemble in the morning and 10 minutes to clean at night.
Let’s also talk about food costs here. We all know that cheese is gold these days. The xPizzaCube is equipped with a variety of weight sensors to get a perfect pie out every single time. No more cheese over-portioning. No more variations in the number of pepperoni slices. Our customers report saving 7 to 15 cases of cheese per month after installation of the xPizzaCube. That is roughly $700 to $1,500 of new savings each month on cheese alone!
We are currently taking pre-orders for late 2022 delivery. Unfortunately, both Q1 and Q2 of 2022 are fully booked. To reserve your xPizzaCube, contact xRobotics Sales Director Alena Tikhova. Alena has over eight years of experience in the pizza industry and will be glad to help you book your xPizzaCube. Email Alena at alena@xrobotics.io or fill out a form at xrobotics.io. Let’s start saving big!
Savings up to $7,000 monthly per store Makes 100-300 pizzas per hour Supported pizza sizes: 8”–16” Makes a 16” pepperoni pie in under 50 seconds • 15-minute installation • No-pain training • Quick, easy setup and cleaning • Food-grade materials
DISCOVER THE FUTURE OF PIZZA-MAKING! Watch the video at xROBOTICS.io to see the xPizza Cube in action
Scan the QR Code to Watch a Pizza Robot in Action! In an exclusive PMQ video, you can watch xRobotics’ xPizza Cube bot top a pie with sauce, cheese and pepperoni in under a minute.
PMQ.com/the-cube
Meet your newest pizza maker, The xPizza Cube.
The world’s smallest pizza making robot!
Dimensions: 20”W x 31”H x 28”D
• Savings up to $7,000 monthly per store • Makes 100-300 pizzas per hour • Supported pizza sizes: 8”–16” • Makes a 16” pepperoni pie in under 50 seconds • 15-minute installation • No-pain training • Quick, easy setup and cleaning • Food-grade materials
DISCOVER THE FUTURE OF PIZZA-MAKING!
NYC Pizzeria Strikes Oil!
Joe Calcagno - Capizzi Pizza, NYC, and BelEvo Owner
Arestaurant business veteran, Joe Calcagno grew frustrated with the many different types of cooking oils and variations in their quality and price. After years of experimenting with oils in his restaurants, he finally developed his own product, BelEvo, which balances taste, price and performance in the kitchen. BelEvo is perfect for restaurants seeking the highest-quality product at a substantially reduced price from that of authentic extra-virgin olive oil.
A Solution for Restaurants
It is well-established that restaurant owners have had a difficult time with the substantial increases in the price of authentic extra-virgin olive oils. The market has become saturated with counterfeit oils of questionable origin. While high-end restaurants can afford to spend more to purchase authentic extra-virgin olive oil, many pizzerias and casual restaurants are having a difficult time maintaining their standards of high quality and are looking at alternatives. While there have been attempts to source a replacement, there has not been a viable solution—that is, until BelEvo.
BelEvo Is the Answer
BelEvo is a proprietary blend of all-natural, high-quality extra-virgin olive oil and vegetable oils. It has a bold olive taste and a thick luxurious consistency. It is a great option for chefs and restaurateurs who want lower costs while maintaining high standards of quality. It is perfect for both salads and sautéing. With its great taste and great price, whether BelEvo is used on a Margherita pizza or in a dish of pasta—one taste and you’ll believe.
Learn more about BelEvo and other products available from Edesia Oil: (732) 851-7979 • edesiaoil.com
Now Appearing in your Pizza Restaurant!
$8,900
Characters Unlimited Inc.
Animatronic people, animals, fortune telling machines, love testers, and more. We are only limited by your imagination.
709 Foothill Ct. Boulder City, NV 89005 702-294-0563
www.charactersunlimited.com | www.zoltar.org
CONGRATULATIONS!
1st Place – Rico Lunardi, Slice On Broadway, Pittsburgh, PA 2nd Place – David Conti, Red Planet Pizza, Ansonia, CT
CONGRATULATIONS!
Congratulations to the winners of the ’21 Virtual U.S. Pizza Cup! The competition was fierce but, in the end, there could be only three.
Ten finalists were selected from the field of 25 competitors and judged by a panel of culinary and photography specialists on eye appeal, recipe components and execution. Taking top honors for the day was Rico Lunardi of Slice On Broadway, David Conti of Red Planet Pizza and Sean Dempsey of Dempsey’s Brewery Pub & Restaurant.
For more information about the Virtual U.S. Pizza Cup or the U.S. Pizza Team, contact Brian Hernandez at brian@pmq.com
2021 VIRTUAL
UNITED STATES PIZZA CUP
3rd Place – Sean Dempsey, Dempsey’s Brewery Pub & Restaurant
PRIMUS WAFER PAPER
Primus Wafer Paper provides edible labels to differentiate your pizzeria in the marketplace. Their potato-starch based labels (printed with natural inks) are gluten-free, vegan, kosher and bake-stable, with a shelf life of 24 months. Apply them on the dough before you put your pizzas in the oven so they come out fully branded, enabling you to carry your brand messages right to the dinner table.
PRIMUSWAFERPAPER.COM Watch the video at PMQ.com/primus-wafer-paper ZENPUT
Zenput helps top operators elevate team execution in every store. Restaurant chains such as Domino’s, Chipotle and P.F. Chang’s use the platform to automate how operating procedures, public health and food safety protocols, and other key initiatives are rolled out and enforced. Supporting 60,000 locations in over 100 countries, Zenput turns strategy into action faster and equips teams to deliver on it.
ZENPUT.COM Watch the video at PMQ.com/zenput
CULLIGAN INTERNATIONAL
Water experts since 1936, Culligan International brings together application engineering, innovative products and technical services to reduce restaurant operating costs and improve guest experiences. With 600 dealers across the U.S. and Canada, Culligan offers reverse osmosis water filters to turn your community’s water into New York-style water for great pizza and bagels.
CULLIGAN.COM Watch the video at PMQ.com/culligan FACTURA.AI
Factura.ai is AP automation software designed for multiunit restaurants. Used by Papa John’s, it offers custom workflows, digital invoice storage and intelligent capture and coding, all incorporated into one centralized system that’s easy to access anywhere. Built for a high volume of invoice processing, Factura’s technology is fast and can extract invoice information and codes in under 30 seconds.
FACTURA.AI Watch the video at PMQ.com/factura
BE PART OF AMERICA’S LARGEST PIZZA DELIVERY!
Join with the World Pizza Champions and the U.S. Pizza Team on National Pizza Day (February 9) to donate and deliver at least 10 pizzas to your local shelter, soup kitchen, or any hunger action center. Don’t know where to donate your pizza? Pizza Across America will help you set something up. The more pizzerias that participate, the bigger the story it will make for the national media! Please help Pizza Across America meet its goal of enlisting participating pizzerias in all 50 states!
How does it work?
• Register your pizzeria as soon as possible at
Sliceouthunger.org/paa. Have multiple locations?
Register each one!
• Let Pizza Across America know where you’ll be donating/delivering your pizzas. Not sure where to deliver? They’ll set you up!
• They’ll send you a digital asset kit to help you spread the word to local media.
• One week before, Pizza Across America will send you a reminder with all your delivery details.
The first 100 pizzerias to register will receive two free cases of Perfect Crust liners. The top five pizzeria donors will each receive a case of delivery bags from Incredible Bags.
ROMAN GOURMET
(Clockwise from top left) Roman Gourmet remains the oldest restaurant in Maplewood, New Jersey; Vinnie takes a break on flour bags, circa 1983; Anthony and Giovanna worked in a Jersey City pizzeria in 1969; the founding couple hands out Halloween candy; Anthony supervises in 1984; Vinnie works the counter; Anthony and Giovanna celebrate their 50-year anniversary; Roman Gourmet offered coupons to early customers; the family poses in 1996.
Now in its second generation of ownership—with a third in the works—this Maplewood, New Jersey, staple melds old-school work ethics with modern-day updates. BY TRACY MORIN
When Italian immigrants Anthony and Giovanna Loffredo arrived in the United States in 1968, they didn’t have much, but they did have a strong work ethic and an entrepreneurial spirit. While working in a Jersey City, New Jersey, pizzeria, they saved their money to open their own place, Roman Gourmet, about 15 miles away in Maplewood, in 1971. “Some of the recipes came from the old country—they were from Salerno, south of Naples,” explains Vinnie Loffredo, their son and the restaurant’s current owner. “They learned how to make pizza in Jersey City, took a chance, and it worked—the place became famous.”
Over the years, all four of the couple’s children paid their dues by helping out in the pizzeria, but Vinnie was the sibling who fell in love with the business. Since transitioning into ownership in the early 2000s, he has ushered in plenty of modern updates: a POS system, delivery, ordering through third-party companies and the Slice online platform, and 40 or so specialty pies on rotation that expanded the menu from its bare-bones beginnings. Vinnie even expanded to a still-thriving second location in Hillsborough, New Jersey, in 2013.
At the same time, however, he upholds the old-school business wisdom passed along by his parents. “They told me, always work hard and never change the quality of the food or the recipes, and you’ll always be successful,” Vinnie recalls. “Now, we’re a Maplewood staple—the oldest restaurant here that’s stayed in the same family. I have two boys and a girl, and my son, at 13, is working with me the most. He helps the customers, and he’s really into it! If you don’t love this business, don’t get involved with it, because you have to sacrifice a lot.”
Though the pizzeria’s 50-year celebration was put on hold in 2021, Vinnie plans to mark the occasion this year with a big bash, including rolling back prices to 1971 levels for a day, giveaways and social media tie-ins. As a longstanding member of the community, Roman Gourmet will be celebrating with a big family—from the seven elementary schools it provides pizza for each Friday morning to the generations of regular customers to the remarkably loyal employees, many of whom have logged a decade or more at the pizzeria. “You come to know everyone in town and become part of their family; you know their aunts, uncles and grandparents,” Vinnie says. “With our employees, too, it’s a family affair—we’re very lucky, we all work together. As the owner, you’re not better than everyone—you’re actually the one person who has to be willing to do everything yourself, no matter what. But I couldn’t even imagine doing anything else.”
Tracy Morin is PMQ’s senior copy editor and the editor of PizzaVegan.com.
ADVANCING THE PIZZA BUSINESS COMMUNITY JANUARY/FEBRUARY 2022 | PMQ.COM
With a passion for fresh and local ingredients, pizzaiolo Lars Smith California Dreamin’ lives every day in a golden state of mind.
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