We earn commissions if you shop through the links below. Read more
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on March 25, 2022
Investment range
$14,550 - $29,100
Revenue potential
$275,000 - $820,000 p.a.
Time to build
1 – 3 months
Profit potential
$41,000 - $125,000 p.a.
Industry trend
Growing
Commitment
Full-time
Here are the most important factors to think about when you are opening a pizza shop:
Discover the Story Behind Cleveland’s Famous Pizza Bagels
Starting a pizzeria has pros and cons to consider before deciding if it’s right for you.
Trends
Challenges
Startup costs for a pizza shop range from $15,000 to $30,000 or more. Costs include a space rental deposit, space preparation, and kitchen equipment.
You’ll need a handful of items to successfully launch your pizza shop business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150–$200 | $175 |
| Business licenses and permits | $100–$300 | $200 |
| Insurance | $100–$300 | $200 |
| Business cards and brochures | $200–$300 | $250 |
| Website setup | $1,000–$3,000 | $2,000 |
| Pizza shop space rental | $3,000–$5,000 | $4,000 |
| Space preparation with a counter, tables and chairs | $5,000–$10,000 | $7,500 |
| Kitchen equipment | $5,000–$10,000 | $7,500 |
| Total | $14,550–$29,100 | $21,825 |
Pizza prices range from $7 for a small cheese pizza to $20 or more for a specialty pizza with toppings. You can also sell beverages, so these calculations will assume that your average sale price will be $15. The average profit margin for pizza shops is 15%.
In your first year or two, you might sell 50 pizzas a day, bringing in nearly $275,000 in annual revenue. This would mean $41,000 in profit, assuming that 15% margin. As your brand gains recognition and you get repeat customers, sales could climb to 150 a day. With an annual revenue of $820,000, you’d make a tidy profit of almost $125,000.
There are a few barriers to entry for a pizza shop. Your biggest challenges will be:
Now that you know what’s involved in starting a pizza shop, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research pizza shops in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a gluten-free or vegan pizza shop.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as Indian-inspired pizzas or Middle Eastern-inspired pizzas.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll need to come up with a pizza menu, but you can also offer additional food and beverage items like garlic bread, chicken wings, and alcoholic beverages.
You’ll need to check local pizza prices to make sure you’re competitive in your market. Prices will also depend on what it costs to make your pizzas. You should aim for a profit margin after all costs of about 15%.
Once you know your costs, you can use our profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be broad, since almost everyone likes pizza. You should spread out your marketing to include TikTok, Instagram, Facebook, and even LinkedIn.
The location of your pizza shop is a crucial factor that can determine the success or failure of your business. To ensure success, aim to find a spot that can be considered a pizza lover’s paradise. Look for an area with a high volume of foot traffic, where potential customers are constantly passing by.
It’s also beneficial to choose a location near residential areas, as this will make your shop easily accessible and convenient for customers looking for a quick and delicious meal.
You’ll need to rent out a space for your shop. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 300 unique pizza shop name ideas here. If you want your business name to include specific keywords, you can also use our pizza shop business name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to pizza shops.
If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your pizza shop will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, by mail, or by fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a pizza shop business. You might also try crowdfunding if you have an innovative concept.
Starting a pizza shop business requires obtaining a number of licenses and permits from local, state, and federal governments.
A pizza shop may need the following, depending on the requirements in your area:
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your pizza shop business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Restaurant 365, lightspeed, or toast, to manage your inventory, orders, staff, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.
However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today’s customers are inundated with buying options, so you’ll have a real advantage if they can quickly grasp how your pizza shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your pizza shop business could be:
You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a pizza shop business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in pizza for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in pizza shops. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a pizza shop business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Are you ready to share pizza joy with your community? If you can make great pizza, you’ll be pleasing many palates and joining a growing $50 billion market while making good money and having fun whipping up tasty creations. You can become the go-to pizza shop in your area, and eventually expand into a chain of pizza shops.
You’ve learned what you need to know about pizza entrepreneurship, so now it’s time to get tossing and launch your successful pizza shop!
Yes, pizza shops have a higher profit margin on average than other types of restaurants. If you have great pizza and unique flavors, you can stand out from the competition and be successful.
The first pizzeria in the United States is generally believed to be Lombardi’s, which was opened in New York City in 1905. Lombardi’s was founded by Italian immigrant Gennaro Lombardi, who had previously worked as a baker in Naples, Italy.
Popular pizza toppings in the United States include spicy beef and pork pepperoni, fresh or canned mushrooms, ground meat sausage, diced or sliced white or red onions, fresh sliced or diced green peppers, black or green olives, small pieces of bacon, divisive pineapple, extra mozzarella or other cheeses, and fresh or canned sliced or diced tomatoes.
To attract customers to your pizza shop, focus on using high-quality ingredients, creating delicious pizzas with unique flavor combinations, and offering a variety of toppings. Provide prompt and efficient service, establish a strong online presence, and offer convenient online ordering and delivery options.
To differentiate your pizza shop from competitors, develop signature pizzas with distinct flavors and innovative crust options. Provide exceptional customer service, create a compelling brand story, and utilize creative marketing techniques. Consider offering specialized menu items like gourmet appetizers, fresh salads, or unique desserts. Emphasize the use of local and sustainable ingredients to attract customers who value supporting local businesses and sustainable food practices.
Common favorites include cheese pizza, pepperoni pizza, margherita pizza, BBQ chicken pizza, and supreme pizza with various toppings.
Published on July 28, 2022
Hot dogs, pizza, snow cones and bubble tea are among Americans’ favorite street foods, which are quicker and more affordable than restaurantfo ...
Read Now
Published on July 21, 2022
Everybody needs to eat, so demand for food — especially good food — will never go away. This helps explain why the food industrycontinue ...
Read Now
Published on June 8, 2022
Food trucks have exploded in popularity in recent years and offer a unique, potentially lucrative alternative to brick-and-mortar restaurants. Foodt ...
Read Now
No thanks, I don't want to stay up to date on industry trends and news.
Comments