A road map to opening a new restaurant
Bruno DiFabio — a veteran in the pizza space and a former world champion pizza maker — is getting ready to open five stores in London. He opened his first pizza location in the U.S. 1993 and isn't shy about his expertise, even acknowledging a fair amount of "cockiness."
A San Francisco concept he's invested in, Tony's Pizza Napoletana (owned by Tony Gemignani), rakes in more than $5 million a year and is only open five days a week, however, so perhaps such confidence is justified. DiFabio shared some of his expertise to attendees of the North American Pizza & Ice Cream Show earlier this week in Columbus, Ohio.
"If you can master these key elements, it will give you a long term advantage over your competitors," he said.
Identify your concept
Start by determining the pizza style suited for your strengths, and a price point. Learn other systems and borrow ideas. DiFabio said you can master a pizza style in 12 months, and a couple of different pizza styles in 18 months. Choose which services you're going to offer, such as servers/dine-in, takeout/delivery, wine and spirits, catering or educational courses. Calculate your expected revenue, which is a driver for your location search. DiFabio suggests the formula: Lease rate + utility cost should be less than 10 percent of revenue.
Target the location
DiFabio uses three components for his location searches, including:
- City demographics — the population, disposable income levels, households with kids and tastes and preferences.
- Neighborhood — what competition is nearby, accessibility and visibility. For competition, DiFabio's rule of thumb is 5,000 people per pizzeria. "If a community has 20,000 people and four pizzerias, I would shy away," he said.
- Building — availability, and if it is an existing pizza shop or a change of use concept.
Prepare for negotiations
Preparing for negotiations can help an operator acquire the location. DiFabio suggests whether you're eyeing an existing pizza concept, an empty space or a change of use building, to always conceal your intentions.
"You could be dealing with a guy who is retiring or who struggled and you could upset them if you came in and told them about your plans to open a new pizzeria. Or you could spark an idea for someone if you tell them too much," he said. "Say as little as possible."
He also suggests meeting with multiple realtors to get a feel for the square footage rate in a community. Also, find out what the landlord's contributions are before executing the negotiations.
Execute the negotiations
DiFabio's biggest piece of advice in execution of the negotiation is to get at least 20 years on a lease. He also says to never sign a CPI increase and to make sure you have right of first refusal so you're the first to know if the landlord plans on selling the building.
"Find out everything. Arm yourself with as much information as you can about what the taxes and insurance (contributions) are and use it in your negotiations with the landlord," DiFabio said.
If you have the full payment up front, he said operators can possibly use it to leverage a discount.
After this step, it's important to obtain the necessary permits, such as building permits, liquor licenses and outdoor café licenses. Then, acquire your equipment. Above all, watch your disposition.
"If you show you're too eager for a deal, you're not going to win. Be prepared to walk away late on a Friday afternoon. You'll get a call back later that night. They won't want to stew over that all weekend," he said.
Market to customers
Once the deal is signed, it's time to roll up your sleeves and get the ball rolling on your concept. DiFabio said there are plenty of avenues for free publicity, such as event sponsorships, community involvement, competitions, consulting, press releases and reviews.
He also suggested using your menu as a marketing tool, dressing your employees in consistent uniforms and sending out direct mail, which is "very effective."
"If you don't diversity your marketing, you're setting yourself up for your competitor to be aggressive," he said. Finally, try to get free press. "Get the newspaper to want to talk to you."
For example, he once hosted a Yankees/Red Sox promotion that included a balloon release and the promise of free pizza to whoever found the bouquet. A group of kids found and returned it, and the story was picked up on ESPN because of its sports tie-in.
"I was on ESPN for 4 minutes and I mentioned my pizzeria five times," he said.
He's also hosted charity promotions, giving away 100 percent of a day's sales to the American Cancer Society.
"I was blown away by the publicity of this. Everyone is affected by cancer. This promotion created goodwill for the restaurant. Pick a cause that means something and go for it," he said.
The finishing touches
Once you have the location and marketing strategy in place, DiFabio added that it's important to assemble a winning team. For example, find an attorney with experience representing landlords so they know how to review a lease.
Also, streamline your operations.
"If you tell me you can't afford a POS system, I will tell you that you can't afford not to have one," he said.
And finally, build a personal brand. This includes embracing, even flaunting your talents, utilizing a web presence and social media channels and being consistent, but not stagnant.
"Be creative. You've got to be different from the person down the street. Come up with something fresh," DiFabio said. "Think outside the box."
Photo provided by Wikimedia.
Read more about operations management.
Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.