How to Start a Pizzeria Business

Every neighborhood needs a local pizzeria on the corner serving the residents of the community with their delicious fresh-baked pies. Starting a pizza business is a smart business investment since 93% of Americans eat pizza at least once a month, and pizzerias are known to have one of the lowest closure rates among restaurant categories.

Starting a business is an extensive undertaking that requires a laundry list of supplies, a thorough administrative checklist, licensing, attention to detail, and of course, award-winning recipes. Keep reading to learn the ins and outs of starting your own pizza business.

The Business Checklist for Opening a Pizza Shop

The scope of popularity for pizzerias is so daunting that when you break down the statistics of how much pizza Americans consume per day, you’re looking at approximately 350 slices per second or 100 acres worth of pizza per day. There is a reason pizza shops account for 17% of the restaurants in the nation. In fact, the most popular pizzeria is located in Anchorage, Alaska grosses $6 million annually.

Create a Business Plan

The first thing to do when starting any business, regardless of the industry, is to create a business plan. A business plan will look different for each business, but it will allow you to set your goals and objectives for your pizza shop. It will act as an operational, marketing, and financial roadmap. It can also be a tool used to attract investors or secure financing through a banking institution.

There is an essential structure to any successful business plan. There are seven primary elements, though not all may apply to every business. In the case of a pizza shop, all are needed, with supporting documentation and data.

• Executive Summary: This section is where you outline your mission statement and information about senior leadership, operations, employees, and location.
• Company Description: This is a part of your executive summary and outlines the function of your business.
• Products and Services: This section outlines what type of products you will sell and what services you will provide. With a pizza shop, you would include your award-winning pizza recipes, recipes for sides, beverages, desserts, and so on. Be sure to include pricing and product lifespan. In terms of services, consider if you want to add a delivery service or online ordering for your customers. You may also want to include information about production processes or vendors.
• Market Analysis: This section focuses on your target consumer, competition, and how your pizzeria will fit into the existing industry, including outlining the business’ strengths and weaknesses. Market analysis will also provide data on consumer demand for your product, which will help you with the next section.
• Market Strategy: This section allows you to outline how you will reach your consumer with your product and attract and keep them. Create an advertising and marketing strategy for your business and the types of media you will utilize in your strategy.
• Financial Planning: The section includes your current financial standing and future projections. Information in this section will include balance sheets, financial statements, and other applicable information. Since your pizza shop is a new business, you will also include target goals and estimates for the first three to five years. Attach any information regarding potential investors or financing.
• Budget: One of the most integral pieces to your business plan is creating a budget. Your budget will include development, production, labor, marketing, and other expenses. Always leave wiggle room in your budget for unexpected expenses, which typically occur in the process of building a business.

Get Your Pizza Shop Registered

After completing the business plan for your pizza shop, you can start registering your business. For this, you will need to choose a business entity and acquire your employer identification number (EIN), also known as a business tax ID number. Visit the IRS website and register to get EIN online almost instantly.

Once you’ve acquired your EIN, you can register your business. Every state has a different process, but many offer an online database to see if your desired business name is available. If so, simply follow the guidelines to register your pizza shop under that name.

Get Your Permits and Licensing

Every business needs certain permits and licenses to sell its product, especially if your product is a hot and tasty slice of pizza. Food safety is always a top priority and will require special permits to serve. The requirements for these permits and licensing will vary from state to state but typically include a food handler’s permit for each employee, a food service license for the business, and a building health permit for the physical location. If you plan on serving alcohol at your pizzeria, you will also need a liquor license.

Be sure to obtain all these permits and licenses before opening your doors or serving a single customer. Not only will it cover you legally, but it will give your customers peace of mind about the product they’re receiving.

Obtain Funding for Your Pizza Shop

A financial plan was a crucial step in your business plan that should have been completed before registering your business or getting your permits and licensing. Opening a simple pizza counter with a few booths for customers can cost between $75,000 to $100,000. The cost rises if you want to open a full-scale, sit-down pizza restaurant or add elevated equipment like a wood-burning pizza oven.

Here are some expenses to keep in mind when securing funding and creating a budget:

• Equipment and Supplies: $20,000 – $400,000
• Permits and Licenses: $2,500 – $200,000
• Technology and Software: Differs
• Utilities: $1,000- $1,200 per month
• Food: $5,000 – $25,000
• Labor: 30 – 35% of total revenue

Fortunately, there are various options for financing, like business loans and credit cards. You can even finance equipment for your pizza shop. At this step, your business plan will come in handy. Any financial institution or potential investor will want to see that you have a solid, throughout business plan.

Open a Bank Account for Your Pizza Shop

Once you obtain your financing, you’ll need a business bank account for the funds to keep track of expenses, especially for tax purposes. Opening up a business bank account will also allow you to keep your personal expenses from those pertaining to your business. Being able to differentiate will also assist in building your business credit score. A business credit score is also a good reason to obtain your EIN, regardless of whether your pizza shop absolutely needs one.

To start, your pizzeria will need a business checking account and business credit card. Once they’re set up, be sure to only use them for business expenses pertaining to the pizza shop. Expenses include payroll, supplies, bills, and so on.

Operational Checklist for Opening a Pizza Shop

Some steps you’ll take in opening your pizza shop overlap with others. For example, you will have to decide on a concept before you can create a business plan for your pizza shop. Not only will this help you with licensing and permits, but it will help determine a realistic budget for your venture. Creating your business branding will take place in writing out your business plan as you’re looking at marketing.

Choose a Concept for Your Pizza Shop

There are several dining options when it comes to pizza. Looking at the geographical area you desire to place your business or the concepts of your competitors could assist in determining what concept will work best for you. Always be aware of your financial options as you dream up your ideal pizza shop.

Some of the options for dining are as follows:

• Food Truck: Perhaps there is more than one location you’re interested in servicing. Having a mobile pizza shop will allow you to take advantage of several customer bases like special events, college campuses, and business districts. There will be special permits and licensing for this option.
• Takeout: Pizza is more often takeout than dine-in, especially if shared among a large group. Offering takeout only will reduce some of your business costs, making the overall business more affordable. However, takeout is always a good idea, even if you go the full-service route.
• Delivery: Like takeout, offering delivery is always a good idea, no matter what route you go for your pizza shop. If you decide on this option, determine if you will hire your own delivery drivers or use a third-party service like DoorDash or UberEats.
• Full Service: Despite often being ordered as takeout, a dine-in option is always welcomed, especially if you’re planning on offering alcohol. Consider if your full-service pizza shop will be the type of establishment with dozens of screens for watching sports and having a beer with the pizza or a go upscale with the wood-burning oven and a reservations list.
• Ghost Kitchen: This option is relatively new and formed out of necessity during the pandemic. Ghost kitchens are exclusively online ordering with delivery, so there is no need for a storefront or associated costs.

Decide on a Pizza Shop Location

If you opt for a storefront instead of a ghost kitchen, you’ll need to scout a location. In your search, there are points you’ll need to consider and questions you’ll need to answer. These steps will help you find a location that is primed for a successful business.

Here are some points to consider when searching for a pizza shop location:

• Know Your Customer: Figure out, in detail, exactly who your ideal customer is so you can know where to find this customer and how to target your product to them.
• Know Your Competition: If you have a geographical area in mind, find out who is already there running a similar business. Once you have identified who your competition is in a particular location, you can observe how business fairs for them in that location.
• Find Your Site: Once you’ve honed in on a neighborhood, you can begin scouting available properties and storefronts that meet your needs. When looking, bear in mind the foot traffic and ease of access to ensure your business is seen and visited by the average passerby, as well as those that use search engines to find you.
• Find Your Agent: Knowing the site you want is only half the battle, then comes the process of securing it for your business. Partner with an experienced professional commercial real estate agent who can help you navigate the process or help you look for other options if the one you desire isn’t available.

Some of the questions you’ll be asking yourself through this time have to do with the market in your desired location, foot traffic, condition of the desired location, and target demographic. Questions like, are there important landmarks, venues, or destinations in the area? Is there enough foot traffic for business? Who are my competitors, and how will their business affect mine?

Design the Branding of Your Pizza Shop

Getting stable business requires more than the occasional passerby or word of mouth of previous customers; you need to properly market your pizzeria. How you advertise your product is part of your marketing strategy. The first step in formulating that strategy is figuring out what your business offers and who your ideal customer is. Once you’ve collected that data, you can begin to think of how to appeal to your target demographic.

Your target demographic will determine the aesthetic you select for all your branding. The point is to make advertisements that are appealing to your ideal customer. It will also help you to decide what platforms to use for your marketing.

Some of the questions you might come across in this process are as follows:

• Who is the target customer?
• What does your ideal customer like?
• What appeals to your ideal customer?
• Where will I advertise?

Technology has made leaps and bounds in enabling us to reach a wider audience than we may be able to physically. A strong presence on social media connects you to thousands, if not millions of people. Social media will give you the opportunity to not only talk about your pizza but also show your pizza. The best part is that the majority of social media apps are free.

Plan your Pizza Shop Menu

The type of restaurant format you decide on will often dictate what kind of food you’re going to sell. The primary product will always be pizza, but there are other items to consider as well. Start with your best pizza recipe and go from there.

A couple of areas that are commonly seen on a pizza shop menu and would easily integrate into your menu are as follows:

• Pizza Style(s)
• Appetizers, small bites, and side orders.
• Salads, some pizzerias offer soup as an alternative.
• Sandwiches, optional
• Desserts
• Drinks

Put together a concise list, build an aesthetic around the menu, bringing in the market research from a previous step. Be sure the menu reflects the branding of the business and goes hand in hand with the marketing campaigns you’ve created.

Secure Your Supplies

Once you know what food you’ll be selling out of your Pizza shop, you can make a list of the ingredients and materials you’ll need to make those menu items. After you’ve made your exhaustive list, you can start the hunt for an inventory supplier.

There are various wholesale suppliers for the food industry that would meet all your inventory needs, but there is also the option of sourcing locally. Using local retailers is entirely dependent on your location and what is available in your area.

Before making a decision on a supplier, be sure to do your research and learn about other customers’ experiences with that supplier. Reading reviews and chatting with other industry professionals could help you avoid miscommunications or inventory delays.

Set Up your System

To run a successful business, you need to be able to keep track of your inventory, easily order your supplies, keep account of your spending, and exchange goods for currency with your customer. All of these processes involve incorporating technology through software like a Point of Sale (POS) system. Other considerations are accounting software, restaurant inventory management, and more.

A good POS should allow you to program your regular menu items while allowing for customization. You’ll also need a system that accommodates promotions and discounts, including coupon codes, customer rewards programs, dynamic pricing, and delivery and curbside capabilities.

Design Your Pizza Shop

This is the step where you really get to stretch your creative muscles and design the look and feel of your pizza shop. You’ll start with your restaurant floor plan and layout. As the owner, this is your opportunity to put your unique thumbprint on the business.

Personal design preferences aside, you want to make sure your pizzeria is inviting and pleasing. You want to create a space where people will want to sit down and have a meal. A place that is warm and beckons customers to linger and continue to enjoy the delicious food being sold.

There is a long checklist of equipment and furniture you will need to accommodate your customers. Here are a few to consider:

• Kitchen supplies
• Pizza ovens and other kitchen equipment like mixers, fryers, and so on.
• Tables and chairs or booths, barstools.

When you’re designing the layout of all these items, especially on the restaurant floor, be mindful of the windows, doors, and exits. You want to make sure the layout doesn’t cause any obstructions or hinder any customer from swiftly exiting in the event of an emergency.

Hire Your Pizza Shop Staff

Recruiting and hiring the right crew to work and manage your pizza shop can be the factor that makes or breaks your business. Customer service is always the top priority of any business, and good customer service comes from friendly, knowledgeable, and capable employees.

Though recruiting can seem overwhelming, there are simple steps to follow to break it down easily:

• Find a lawyer at the beginning of the business process, either before or as you’re creating your business plan. Not only will they help with tasks like securing your EIN, but they can also assist with payroll setup, acquiring worker’s comp insurance, and registering with the labor department.
• Figure out what positions you need filled and define those roles in detail. Positions will include back of house like line cooks, prep cooks, dishwashers, and so on, and front of house like host/hostess, bartenders, and servers.
• Recruit reliable, hardworking, and friendly workers to join your pizza shop crew. The restaurant industry is very competitive, and there is often a high turnover rate for restaurant employees. Having a clear-cut job description and a thorough interview process will ensure you get the team you need to succeed.
• Create a training program for your staff. A good training program must be clear, concise, and detailed. Every individual learns at their own pace, so be sure to keep that in mind, as well as different learning styles in mind. You’ll also want a training program that is fun and excites the employee to be an integral cog in the pizza shop machine.
• Create a foolproof retention plan. Due to the high turnover rate for restaurant employees, you want to create a means for keeping your current employees for as long as possible. It’s a waste of energy and money to constantly be training new people. It’s known that happy employees are more loyal to their employers and productive in their work than others. Help create a happy environment with a demonstrated commitment to work-life balance and competitive pay, and you’ll not only be holding onto your employees, but you’ll see an increase in overall productivity.

Final Thoughts

Accomplishing all the steps laid out in this article will have your pizza business up and running successfully in no time. You’ll have the pizzeria of your dreams with a personally designed aesthetic, wonderful food, a fantastic location, and a staff that feels more like family than employees.

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