A pizza shop is a restaurant where pizzas are made and retailed. The pizza restaurant is an important segment in the restaurant industry in the United States. With consumers dining in, getting takeouts, and ordering delivery, pizza restaurant sales reached over 46 billion U.S. dollars in 2020.
The U.S. pizza industry is worth nearly $46 billion in revenue as of September with the top pizza chains dominating the industry with nearly a 60% slice of the market, or $26 billion. Independent and small chains are worth nearly $19 million in revenue.
Steps on How to Start a Pizza Shop Business
Table of Content
Conduct Market Research
If you are considering starting a pizza shop, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process for your pizza shop should be to develop market-based research questions in line with your overall business goal and objective.
In this regard, you should source information that will help you maximize your business, information that will give you reliable data of what your potential market will be looking out for from a pizza shop, and also help you operate your pizza shop with less stress.
a. Who is the Target Market for Pizza Shop Business?
If you are thinking of opening a pizza shop, then you should make your target demographics all-encompassing. It should include students, migrants, entrepreneurs, business people, sportsmen and women, tourists, and every adult in the neighborhood where your pizza shop is located.
b. Is Pizza Shop a Profitable Business?
Yes, a pizza shop is always a profitable business. The average sales generated per unit in U.S.-based chain pizza restaurants amounted to close to $783,000 in 2022, up from approximately $762,000 in the previous year. Statistics also show that 93% of Americans purchase pizza at least once a month in the U.S.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to pizza shops because pizza shop is a niche idea in the fast-food restaurant industry.
d. Who are the Major Competitors?
- Pizza Hut
- Domino’s Pizza
- Little Caesars
- Papa John’s Pizza
- California Pizza Kitchen
- Papa Murphy’s Pizza
- Marco’s Pizza
- Chuck E
- Frank Pepe’s
- Di Fara
- Pizzeria Bianco
- Una Pizza Napoletana
- Pizzeria Mozza
- Sally’s Apizza
- Modern Apizza
- Paulie Gee’s
- Apizza Scholls
- South Brooklyn Pizza
- Al Forno Pizza.
e. Are There County or State Regulations or Zoning Laws for Pizza Shop Business?
Yes, there are county and state regulations and zoning laws for pizza shops in the United States. Note that the Food and Drug Administration (FDA) sets the federal Food Code, but the FDA doesn’t oversee individual pizza shops. Instead, the various states use the Food Code as the basis for their food codes. They may adopt its rules, interpret them differently or set their own rules.
Please note that in the United States, you are required to follow your own state’s food service code. Visit the FDA website for a list of food service codes by state. Use this to find the state authority handling restaurants and bars and view the laws that apply in your state.
f. Is There a Franchise for Pizza shop Business?
Yes, there are franchise opportunities for pizza businesses. Here are some of them;
- Pizza Hut
- Little Caesars
- Marco’s Pizza
- Sam & Louie’s
- MOD Pizza
- RedBrick Pizza
- Papa John’s
- Hungry Howie’s
- The Pizza Press.
g. What Do You Need to Start a Pizza Shop?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Shop facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Suppliers of ingredients
- Startup Capital
Memorable Pizza Shop Business Names
- Hunger Box© Pizza Shop, Inc.
- Mouthed® Pizza Shop, LLC
- Delicious© Pizza Shop, Inc.
- Lionel Moses® Pizza Shop, Inc.
- Milky Way™ Pizza Shop, Inc.
- Patros™ Pizza Shop, LLC.
- Thiago Accenture© Pizza Shop, LLC
- Bonny Moore® Pizza Shop, Inc.
- George Shannel© Pizza Shop, Inc.
- Day Fresh© Pizza Shop, Inc.
- Larry Duncan® Pizza Shop, LLC
- Cameron Brown® Pizza Shop, LLC
- Lowey Martins™ Pizza Shop, LLC
- Bally Blanco© Pizza Shop, Inc.
- Hip Hurray® Pizza Shop, Inc.
- Mouth Full™ Pizza Shop, Inc.
- Rees Morgan™ Pizza Shop, Inc.
- All Shades© Pizza Shop, Inc.
- Wills Kate® Pizza Shop, LLC
- Double R™ Pizza Shop, Inc.
Register Your Business
a. What Type of Business Structure is Best for Pizza shop?
The truth is that there are several options when it comes to the business structure of a pizza shop, but most players in this line of business consider an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits. Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Pizza Shop Business?
- General Business License
- Health and Safety Permit
- Food Handlers’ License
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
- A music license if you want to play live, recorded, or streaming music in your pizza shop
- A dumpster placement permit that specifies where you can put your trash dumpster outside your pizza shop
- A valet parking permit if you plan to offer valet parking for customers
- Sidewalk permits if you plan to offer outside seating
d. What Type of Certification is Needed to Open a Pizza Shop Business?
You don’t need any certifications to open a pizza shop business.
e. What Documents are Needed to Open a Pizza Shop Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering opening a pizza shop, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Pizza Shop Business?
There is no clear-cut startup cost for a pizza shop, but available data shows that the cost of starting a pizza shop ranges between $75,000 to $150,000. Typically, about half a million is required to set up a sit-down pizzeria.
b. What are the Costs Involved in Starting a Pizza Shop?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $1,300.
- Marketing, Branding and Promotions – $1,000.
- Business Consultant Fee – $2,500.
- Insurance – $1,400.
- Rent/Lease – $35,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $15,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and Equipping the Restaurant and Kitchen – $50,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Pizza Business?
- The size of the pizza shop
- The choice of location
- The required licenses and permits
- The type of facility
- The type of pizzas, and related products retailed in the shop
- The cost for branding, promotion, and marketing
- The cost for furnishing and equipping the pizza shop
- The cost of insurance
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the pizza shop
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your pizza shop, but, if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Pizza Shop Business?
- Supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Shop Manager (Owner) – $45,000 Per Year
- Accountant – $32,630,000 Per Year
- Pizza Maker – $30,000 Per Year
- Delivery Guys – $28,100 Per Year
- Cleaners – $25,000 Per Year
- Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Pizza Shop Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Hunger Box© Pizza Shop, Inc. is a registered pizza shop that will be located in one of the busiest business and residential districts in Baton Rouge – Louisiana. We have been able to lease a shop facility along a major road that is big enough for the kind of pizza shop we intend to launch.
b. Products and Service
- Beverages and water
c. Mission Statement
Our mission is to build a world-class pizza shop that will meet the needs of all our customers in the regions/cities where we have our outlets and to sell franchises all across the United States of America and Canada.
To be amongst the top 10 leading pizza shops in the United States of America before our 10th anniversary.
d. Goals and Objectives
The goals and objectives of a pizza shop business are to provide a retail outlet where patrons can go to buy pizzas or order pizzas if the shop has delivery options.
e. Organizational Structure
- Shop Manager (Owner)
- Pizza Makers
- Delivery Guys
- Security Guard
a. SWOT Analysis
- Ideal location for a pizza shop business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Unique pizza recipe
- Reliable and efficient inventory management system.
- Financial constraints may restrict the publicity and branding of the business
- Our new business will be competing with well-established pizza shops in the city.
- Inability to retain our highly experienced employees longer than we want during the teething stage of the business.
- A rise in the number of pizza lovers within our market space
- Online market, new services, new technology, and of course the opening of new markets.
- The arrival of a new pizza shop within our market space
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Pizza Shops Make Money?
Pizza shops make money by selling the following products;
- Beverages and water
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce your pizza shop business by sending introductory letters alongside your brochure to households, gyms, schools, socialites, celebrities, and other key stakeholders throughout the city where our pizza shop business is located.
- Advertise on the internet on blogs, forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across,
- Create a basic website for your business, to give your business an online presence
- Directly market your products.
- Join local pizza shop associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product/Service?
The price of pizza depends on the size and type of pizza but the median price of pizza range from $7.25 to as much as $15.
b. How Much Profit Do Pizza Shop Owners Make a Year?
The profit a pizza shop owner is expected to make in a year depends on some factors, but the available report shows that most pizza restaurants bring in profits of between 7% and 13%. Therefore, a restaurant with annual revenue of $800,000 will have net profits somewhere between $56,000 and $104,000.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the pizza shop
- The types of pizzas and related products retailed in the shop
- The location the pizza shop is covering
- The management style of the pizza shop
- The business approach of the pizza shop
- The advertising and marketing strategies adopted by the pizza shop
- The number of years the pizza shop is in business
d. What is the Profit Margin of a Pizza Shop?
The profit margin of a pizza shop is not fixed. On average, pizza shops tend to have a profit margin of between 7% and 13% annually.
e. What is the Sales Forecast?
Below is the sales forecast of a pizza shop. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $320,000
- Second Fiscal Year: $450,000
- Third Fiscal Year: $600,000
Set Up your Shop
a. How Do You Choose a Perfect Location for Pizza Shop?
- The demography of the location especially as it relates to people that eat pizzas regularly
- The demand for pizzas in the location
- The purchasing power of businesses and the residents of the location
- Accessibility of the location
- The number of pizza shops, and related businesses in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Pizza Shop?
- New York City, New York
- Las Vegas, Nevada
- Los Angeles, California
- San Francisco, California
- Washington DC
- Chicago, Illinois
- Dallas-Fort Worth, Texas
- Atlanta, Georgia
- Boston, Massachusetts
- Palm Beach, Florida
c. What Equipment is Needed to Operate a Pizza Shop?
- Industrial Oven
- Dough Cutters.
- Dough Scrapers.
- Pizza Cutter Wheels.
- Olive oil cans.
- Sauce ladles & spoons.
- Dough boxes and lids.
- Dough box trolleys.
- Sauce dispensers
- Pizza boxes
- Heat-resistant gloves
- Pizza delivery bag.
When it comes to hiring employees for a standard pizza shop, you should make plans to hire a competent shop manager (you can occupy this position), account clerk, pizza makers, delivery guys, cleaners, and security guard.
Launch the Business Proper
In recent times, no pizza shop opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the pizza shop, you will officially inform people in your city that your pizza shop is open for business.
a. What Makes a Pizza shop Business Successful?
- Choose a good location and shop facility to launch the business
- Make available several recipes of pizzas (give your customers options)
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your pizza shop business
- Leverage on all available online and offline platforms to promote your pizza shop business
b. What Happens During a Typical Day at a Pizza Shop?
- The shop is open for the day’s work
- The kitchen, ingredients, serving areas, serving wares, chairs, and tables are cleaned and properly arranged
- Walk-in customers are attended to
- Delivery of orders are made
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Pizza Shop Business?
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Bargaining skill
- Work experience in a pizza shop environment
- Experience in managing people
- Experience in business administration
- Experience in making different types of pizzas.