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Buying A Pizza Restaurant For Sale Tips: What You Need To Know

Who doesn't love a good pizza right?  It's a low cost food that appeals to all ages and genders. Buying an established pizza restaurant is a great way to avoid startup costs and buying an independent pizza restaurant is a great way to avoid franchise fees.   According to IBISWorld.com, pizza restaurants were projected to generate nearly $43 billion in revenue in 2012 and independent pizzerias control almost 52% of those sales.   So, when you see a pizza restaurant for sale, give it some consideration because there is definitely money to be made.  If you are already considering it here is what you need to know.

As the owner, you most likely be spending a lot of time at the business. I've seen pizzeria owner's put in 60-70 hour work weeks so you may want to find an established pizza restaurant that is for sale close to your own home.  Pizzerias are most successful when the owner is onsite and a part of the day to day operation.  Like many other businesses, there is potential for employee theft given the high volume of cash going in and out of most established pizza restaurants.  Labor costs in this business should be below 20 percent, not including the manager's salary, but be careful not to cut this too short. You want to be adequately staffed and have the right team in place to provide good customer service.

Next, and this may sound ridiculous but make sure the pizza is good at the restaurant you are considering!  If the pizza isn't that great, you may not be buying into a loyal customer base.  If that's the case, you will have to change the pizza recipe, perfect it and re-introduce it to the market.  You would basically be building the business from the ground up like you would a startup.  This will most likely increase your marketing and advertising costs significantly too, so be sure the pizza restaurant is already producing a quality product.

The most common places for an established pizza restaurant are either in a stand-alone building, a strip mall or a shopping center.  Almost 48% are found in standalone buildings so unless you are specifically seeking out a shopping center/strip mall location, you will likely find an established business in its own facility.  Regardless of where it is located, consider the rent or lease agreement.  Rent and utilities should be less than 9% of your total costs.  Also, consider the competition that is within a 10 mile radius.  Obviously the fewer competitors the better, then when your customers need to grab something quick on their way home from work, they will have less options to choose from and hopefully end up at your counter!

Next you want to look their financials.  Dig into their records and get a handle on their expenses, revenue, profit, and debt. Have an accountant take a look, as well, so you have an accurate range of expected revenue. In looking at the company's inventory, check to make sure they are keeping food costs below 30 percent.  Taking benchmarks like this into consideration will help you to be sure that you buying into an efficiently run business.  You may also want to have your professional team, such as your attorney or accountant, take a look at everything you find as they may be able to provide additional insight as to what you would actually be getting should you purchase this pizza restaurant.

So if you have a love for pizza, don't mind long hours and have found an efficiently run established pizza business for sale, you have the potential to generate some good revenue.  Despite our sluggish economy, the pizza industry is expected to grow as new variations of pizza are being introduced into the market regularly, which ultimately expands your potential customer base.

View all: California Pizza Restaurants For Sale

Need Help?: Pizza Restaurant Business Brokers & Agents To Assist YouCategories: BizBen Blog Contributor, Buying A Business, How To Buy A Business

Contributor:

Peter Siegel, MBA
Areas Served: Nationwide - All Areas
Phone:  925-785-3118 Cell, 925-785-3118 Text
Peter Siegel, MBA - Founder Of BizBen.com (since 1994), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.

Blog Comments

Posted By: Joe Ranieri, Business Broker: LA, Orange Counties

My advice to new owners is not to skimp on the quality of ingredients. I have had clients who have taken over and in an attempt to lower food costs have started buying less expensive cheeses and meat toppings, and although the customer cannot say exactly why it tastes different, it does, and so they stop and buy somewhere else. Door hangers for marketing work great with pizza shops, some of my clients have had great success by putting them on doors of nearby apartment complexes, and get calls because it is the first thing people see when they get home, and don't feel like cooking, so they order a pizza.



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