In the spring of 1900 Galveston, Texas stood on the threshold of greatness. It was clearly winning the race to become not only the largest, grandest city in all of Texas, but also the major port city in the entire Gulf region. The New York Herald had already proclaimed Galveston - the “New York City” of the Gulf. Life was good. Houston looked to finish second… at the dawn of the 20th century - the race was still undecided.
But, as fate would have it – a winner was about to be chosen.
Because, on September 8th, 1900 a monstrous, thundering squall of biblical proportions was barreling across the Gulf of Mexico, and when this storm popped open its eye, Galveston was centered right in the crosshairs. At 7:33 pm, a furious, cyclonic rampage exploded homes into splinters and murdered more than 8,000 people. A fifteen foot-high tsunami propelled by 130 mile-an-hour howling winds had flattened Galveston and erased it off the map. Today, Houston boasts a population of over 2 million, the largest city in Texas. And sleepy little Galveston (population 57,000) keeps a wary eye on the sea.
Location was important then. Location is important today. And if you don’t choose a good one for your pizzeria – the relentless pounding sea of competition may well turn your dream into a barren landscape of regret.
“Where” you are is more important than “what” you’re selling. Just ask any body peddling air conditioners in Siberia. Anyway, you’ve spotted that “perfect” location… or have you?
To find out – I talked with Deborah Hayden, President of Quantitative Analysis. Her company analyses potential locations for chain operations, and predicts gross sales. Not only that – she guarantee’s to be within 15% (spooky) - or she’ll refund her fee – she’s that good.
In the pizza arena, five factors greatly enhance your potential success – or failure. They are:
Let’s start with your customers.
The first thing you want to consider is demographics, with population density being the number one consideration. Deborah tells me you want to start with a residential population of 20,000 or more. And you want to keep a sharp eye on population “density.” The more people per square mile – the better.
Deborah also says occupation is more important than income levels because “what” people do for a living is indicative of the lifestyle they choose to lead. And this is an excellent indication of the type of pizza they’ll be buying for their family. Fact: Upper income, white-collar families are willing to spend more – to get more.
Look for an average family size of 2.5 (and up), and be very wary about locating near high elderly populations, like retirement communities, because their per capita pizza consumption is close to zero. Younger families with kids are ideal, as well as close proximity to colleges and military bases.
Okay, we’ve got the right people. What’s the competition like?
Whoever said “competition is good for business” wasn’t in the pizza business. Competition is fierce and the grim reality is - that with the low cost of opening a pizzeria, you can count on them constantly popping up like weeds. That said, competition should be factored in – but not avoided. For example: Two or three successful pizzerias within a block of each other is a good sign. Lot’s of people ordering pizza. On the other hand, just one “struggling” pizza shop could be a warning sign. It’s either rotten food, or rotten location. Scope out all direct competition within two miles of your proposed location.
If you hunger for a thriving lunch business – you’ll need a large daytime business population of 10,000 people within two miles.
Get as close as you can to a “traffic heavy” retail hub. Look for fast-food places like McDonald’s and Burger King. They’ve done their homework. Medium sized strip “shopping” centers have proven to be one of the most desirable places to open a pizzeria.
Besides retail magnets that pull loads of traffic, locate next to other businesses open in the evening. Now that we’ve nailed down the numbers – where do we actually build our pizzeria?
A free-standing building sitting right off the road can’t be beat. Retail studies have proven over and over that paying “up” for a good, high visibility spot is a wise investment. Just depends on your concept. Upscale, dine-in shops will want the more expensive easy to see location. However, Deborah says pizzerias focusing on delivery can do just fine with lower visibility inline space. The 80% delivery concept can succeed just fine in a less visible – and less expensive spot.
Sitting on the right-hand side of a busy “drive home” street is a BIG plus (a friend of mine pulls in over $60,000 a month from a drive-thru coffee stand – on the right-hand side of the street, on the way to work). And traffic counts of 1500 to 2500 cars per hour from 4:00 pm to 6:00 pm will put you in the sweet spot.
Beware! Commercial realtors have access to an amazing array of demographic data – but don’t be bamboozled by it. For example: If a realtor comes dashing in waving a report showing income levels across town – are the same as your trade area. And you’re thinking about popping that second location, be sure and ask to see the “occupation” statistics. Because a white-collar neighborhood spends a $50,000 income much differently than a blue-collar neighborhood spends the same amount. Your current successful concept will most likely work with the same exact type of customers – regardless of income.
And here’s a neat little shortcut. Have a commercial realtor pull a site report on a successful competitor or concept that’s as close to yours as possible. See what kinds of demographics are supporting that business – then compare those numbers to the site you’re looking at. If the numbers are comparable, a fat bank account is more certain.