How to start a profitable pizza business: Everything you need to know
Pretty much everyone loves pizza. Not only is it among the world’s favourite dishes, it is also considered one of the ‘healthier’ junk food options. Everyone who makes their own pizzas from scratch has their own unique method of doing things, whether that’s in the way they make the dough or the secret ingredient in the sauce. And once you’ve managed to master the perfect pie, you might think you’re ready to start selling to the masses. But the competition is fierce. Not only are you going up against the industry leaders — like Dominos and Pizza Express — but you’ll be going head to head with the growing number of independent pizza restaurants too.
So, whether you’re looking to set up a pizza restaurant, go on the road with a pizza van, or target the delivery-only market, there are some things you need to take into consideration in order to increase your chances of success.
research your target market
When launching any business, market research is crucial. You need to think about the type of person you’re targeting with your pizzeria, and how they’ll respond to branding and marketing efforts. For example, Lost Boys Pizzeria in London is themed loosely around the cult 80s movie. Not only is the entire menu littered with puns and movie references, but all of their pizzas are black, which is in keeping with the film’s dark theme. Because of this, the restaurant stands out among film buffs and the alternative crowd. For your own, you need to think carefully about what kind of person you’d like to appeal to, and what will make you stand out and become their new favourite pizza place.
Take some time to look at local restaurants, whether they’re pizza places or not. Ask what types of food works well in the area, and what sort of dishes are particularly popular and let this knowledge shape your menu. For example, there may be a high number of vegans in the area, so it’d be a good idea to offer some vegan options on your menu. Similarly, if there are religious groups in the region with specific dietary needs, you may want to consider incorporating this on your menu in order to appeal to a wide range of customers. Just keep in mind that you only want this to lightly influence your menu, and not completely change your business plan.
Carefully consider the demand
As mentioned, the pizza restaurant industry is incredibly competitive, so you’ll need to carefully consider if there is demand for another. Customers can easily get pizza from a huge range of places — whether that’s mainstream delivery brands, smaller independent restaurants, or even supermarkets that sell pizza they can quickly and easily heat up in their oven.
Consider your unique selling point and how you can use that to your advantage and attract customers. This could be anything, whether it’s speedy delivery times, an app-based ordering system, locally sourced ingredients, or even frequently updating your menu. Whatever it is that makes you stand out and gets customers interested in your business, you should try.
Consider your location
As well as market research, you need to think carefully about where you want your pizza restaurant based. You may want to target city workers for the lunch and dinner rushes, but this then means that you run the risk of having quiet weekends. The opposite could be true if you set up in a small town, where you could rely solely on dinnertime outings and weekend get-togethers. If you’re offering a delivery or takeaway service, you want to be close enough or within a residential area to keep delivery times as short as possible, so your pizzas can be enjoyed as fresh as possible even when they’re leaving your shop.
Of course, the cost of property prices depends on where you want to set up your business. Doing so in a city will naturally mean high rent prices, while more affordable options may leave you far away from your target market. Carefully consider what you can realistically afford.
Register and launch your pizza business
Any business needs to be registered with HMRC and Companies House under the business type, such as a sole trader, limited company, or partnership. But, when dealing with food, it’s crucial that your local authority is aware that you’re selling food to the public. This is so they can offer food preparation inspections and give you a food hygiene rating based on your cleanliness and preparation. You must display this rating clearly to customers so they know where your business sits on the scale. You also need to register your business at least 28 days before you start trading food to customers.
Costs involved in starting a pizza business
Along with registering your business, you need to get your physical restaurant ready for diners too. But this is also where you’ll spend a large portion of your funds and business income. Of course, you have your initial costs for things like equipment, while you’ll also be faced with regular outgoings on a monthly or annual basis, such as:
- Rent for commercial premises
- Ingredients and stock
- Licensing fees
The types of licensing fees you’ll need to pay depends on your business plan. For example, if you’re planning on serving alcohol, you’ll need to hold the relevant alcohol license and comply with the legislation. Or, if you’re planning on playing music in your restaurant, you’ll need to pay for a music license, as well as the relevant licensing fees, which are usually paid annually.
Get the right insurance
As well as licensing fees, you’ll also need to hold the right insurance policies for your pizza business. Having the right insurance protects you financially against any accidents or claims made against you, which could get costly. For example, if a piece of your equipment breaks or is damaged, business equipment insurance will prevent you from footing the replacement or repair bills.
There are a few different insurance covers associated with setting up and running a successful pizza business. The most important ones are:
- Public liability insurance: This protects you against any claims made against you by customers who suffer injuries or illnesses as a direct result from your business — whether it’s an accident or not.
- Employers liability insurance: This is a legal requirement if you have any employees, and will help you if a staff member suffers an illness or injury while on the job.
- Business interruption insurance: In the event you need to close your business — even if it’s only for a short period of time — this policy will cover you against any revenue lost.
- Business contents insurance: If the things you keep in your business are lost, damaged, or even stolen, this policy will ensure you won’t have to foot the bill in replacing or repairing them. Similar to business equipment insurance, business contents insurance covers more than just equipment, and extends to everything on your premises, including tables and chairs.
It’s also a good idea to invest in targeted insurance policies to protect your pizza business, including:
- Pizza delivery insurance: Get all the insurance cover that extends to delivering pizza to your customers
- Fast food restaurant insurance: Stay protected with fast-paced nature of fast food, protecting you against any accidents
- Take-away insurance: Protect yourself against any accidents with customers who want your food in the quality of their own home with take-away insurance