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Start a pizza-by-the-slice restaurant by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your pizza-by-the-slice restaurant. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a pizza-by-the-slice restaurant?
The costs to open a pizza-by-the-slice business will be heavily dependent on the rent or mortgage rates of where a business owner opens. The most competitive markets may require hundreds of thousands of dollars, while a smaller venture may only cost $10,000 or less. Owners need to take into account the cost of equipment, ingredients, staff salaries, and administrative supplies. They’ll also need excellent commercial insurance and workers’ compensation coverage.
What are the ongoing expenses for a pizza-by-the-slice restaurant?
Owners need to take into account the cost of ingredients, rent/mortgage, equipment maintenance, staff salaries, and insurance.
Who is the target market?
People who are looking for something fast and delicious — whether it’s a snack or a full meal. This could be professionals on a 30-minute lunch break or a group of kids craving pizza after school. While owners are more likely to attract those from a lower- or middle-class background, a pizza shop with a good reputation can attract anyone who enjoys a quality piece of pizza.
How does a pizza-by-the-slice restaurant make money?
Pizza-by-the-slice restaurants make money by selling individual slices of pizza to customers. This allows customers to mix and match types of pizza, and get the perfect amount they desire. These businesses may also sell whole pizzas, sandwiches, salads, or other quickly prepared food items.
How much can you charge customers?
People will pay up to $5 – 6 for a single slice of cheese pizza (depending on the size and the location of the pizzeria.) The general rule is to charge about three times the cost of the raw ingredients. Most pizza owners will run different combination specials to bring up the average size of the check. For example, running a promotion for a small discount on pizza/soda or pizza/salad. Check on similar rates around you to determine how much to charge.
How much profit can a pizza-by-the-slice restaurant make?
Profits can be substantial for the right pizza business. A single lunch rush can bring in $600 or more, which adds up quickly. If the cost of operations is firmly set at $500 a day, then owners would need to sell an average of 150 slices a day at $6 to make about $150,000 a year in profit.
How can you make your business more profitable?
Owners may want to consider adding additional items to their menu, such as desserts or gourmet salads. You can also consider offering breakfast pizzas to catch the morning crowd or opening a food truck where you can serve your lunches to people in different parts of town.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your pizza-by-the-slice restaurant is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Federal Business Licensing Requirements
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a pizza-by-the-slice business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A pizza-by-the-slice business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a pizza-by-the-slice business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your pizza-by-the-slice business will be in compliance and able to obtain a CO.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a pizza-by-the-slice restaurant
Pizza-by-the-slice businesses are usually catering to people who don't want to worry about how they're going to eat a whole pie, so this is a good place to start. A quick salad and pizza lunch is appealing to business professionals who want to balance their diet with their desire. Owners can start locally, establishing themselves as a presence on the block by handing out flyers or holding a grand-opening party. There’s also direct mail, internet ads, and radio/television that can be used to promote your business. Because pizza shops are so local and accessible, owners should be able to generate the interest they’re looking for from right off the bat.
How to keep customers coming back
Customers aren’t going to be expecting a gourmet meal, but they’re going to want good food quickly. Their food needs to be hot, the staff needs to be courteous, and the process needs to be organized and easy-to-follow.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Pizza-By-The-Slice Restaurant In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Owners should enjoy giving people fast and delicious food in a casual environment. They should enjoy learning about the trends in quick-serve restaurants (e.g., new technology, tastes, etc.) and keeping up with how customer expectations are changing over time.
What happens during a typical day at a pizza-by-the-slice restaurant?
The majority of the day is typically taken up by operational duties. Ingredient inventory, customer service, stocking, marketing, and managing will be just a few of the primary duties of the owner. While owners may want to hire managers to take care of the general day-to-day functions, they should be overseeing general operations to ensure the business is meeting its long-term goals.
What are some skills and experiences that will help you build a successful pizza-by-the-slice restaurant?
Owners should have some experience in the restaurant industry to get started. It’s easy to purchase a pizza-by-the-slice store and then hire staff to take care of the specifics, but there’s a danger that the business will become invisible or generic in a sea of competition. Owners should have a set goals about how they're going to be different than their direct competitors and who they can best serve through their business model.
What is the growth potential for a pizza-by-the-slice restaurant?
Practically everyone loves pizza, which is definitely a good start. Plus, there's usually a need for places that offer convenient lunches and dinners with practically zero wait time. Even areas with well-known pizza shops can be substantially threatened by a shop with quality ingredients, friendly staff, and fast service.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a pizza-by-the-slice restaurant?
Owners should look for needs that aren’t already being serviced in their neighborhood before doing anything else. This may mean coming up with entirely different business idea (e.g., offering gluten-free crust, etc.) or improving upon ideas that have already proven successful. For example, if there’s already a successful business that sells Sicilian style pizza in the area that’s doing spectacularly well, an owner could open a similar business to catch the overflow (and potentially become the favored pizza joint.)
There needs to be a very clear business model once an owner knows what they want to accomplish. Owners should also beware of the logistics of their ideas. Deep-dish slices may sound great, but they may not taste great if they sit around for longer than a few minutes. Owners should work on streamlining the customer experience so everyone can get their slices quickly and without hassle. Number systems often work the best, with employees using an ordered system to keep track of what needs to be done and who still needs to be served.
Or owners can also look to serve a different type of need in the area. If people are becoming more health-conscious, owners can consider offering organic options or low-calorie cooking methods. The best thing a pizza owner can do is focus on getting the best possible ingredients for the lowest possible price. It’s extremely easy to cut corners (no pun intended) in the pizza business, but doing so will backfire in the form of bad reviews or underwhelmed patrons.
Owners should also invest in their employees. The better your staff members can handle lunch-time rushes, customer complaints, and anomalies, the more likely it is the restaurant will begin growing right from the very start.
How and when to build a team
Pizza-by-the-slice owners need to build their team immediately. Managers should ideally have direct experience with pizzerias and team members should have previously worked in some type of customer service role. The chefs should be excellent at following directions, but also capable of bringing their own ideas to the table based on customer feedback and their own knowledge of how the industry is changing.