Q. I am interested in starting my own local pizza restaurant. Where can I obtain information on business related rules of thumb for this industry such as: volume vs. population in a specific radius, delivery vs. sit down/take out, POS systems, average cost per square foot on rental space, etc?
-James Hostetter, Marietta, GA

A. Hi James,

These questions are pretty broad. 

As far as volume: I would analyze the competition. I would estimate how much sales they are doing by discreetly asking employees, suppliers and video taping incoming food orders and computing that info back to sales. I might also plant myself across the street on a Friday night with a clipboard and count cars, deliveries etc. This would give me a rough indicator of how successful they are and if I could and want to compete with them. 

As far as carry out, dine in and delivery: From personal experience the most profitable operations are "Delco's" acronym for delivery carry-out. This is the Papa Johns theory. Dining rooms are great if they are always used. They really raise the cost of operations because they are fairly non productive areas that you have to heat, cool, pay taxes on, clean and maintain. If you don't have to have one I wouldn't do it at this time. I had a Delco for 3 years and then expanded and added 60 seats, 15 years later I expanded and ended up with 120 seats, 5000 sq. feet. Big monster to manage. If I had to do it over again I'd find a building with 1300-1500 sq. ft. and do it lean and mean. 

The best POS system in my opinion is RapidFire. I had the system for 3 years. It ran flawlessly. Customer support is great, located in Alpharetta, GA. I consult for RapidFire. If you go to www.rapidfire.com find the ask the expert section. I've answered lots of operational questions there. Order your free copy of Big Bucks with Big Dave and consider ordering my audio series. 30 years of info in 3 hours. 

Rental space cost per foot is a local question. You must know a good realtor. They can pretty much advise you on the going rate. I've helped negotiate leases for clients and saved them thousands. Food service operation leases are tricky. Since I have been a commercial landlord I bring both sides of the table to the project. 

The areas that you will also need to be successful are operational. How do I make great pizza? How do I market it? Who will be my supplier. How do I coordinate with all of the governmental agencies? How do I hire, fire? What will I serve? How much should my food and labor expenses be in percentage of sales? How much can I earn and what is my breakeven point? The best accountant that specializes in restaurants is Jim Laube. He is a national speaker, like myself and can be contacted at 888.233.3555 or on the web http://www.restaurantowner.com/. 

I would also urge you to attend Pizza Expo 2001 in Las Vegas. This years convention will be March 20-22. Info at http://www.pizzatoday.com/. Another source of free info is Pizza Marketing Quarterly magazine, http://www.pmq.com/. If you are serious and still have the passion to do it and need expertise, contact me and I would be pleased to send you a proposal. Good Luck.

Big Dave Ostrander

Q. I have just taken over a local pizza shop that has a great household name, but I have 60% lost of market share because of bad management and lack of advertising. Is there a way to improve?  There is now Papa John's as well as Donato's in my market. I do not have the funds available to advertise, but I do have a PT CRUISER to use.
- Garvin Cummings, Rascal House Pizza, Lakewood, OH

A. Hi Garvin,

It may be too late to salvage your store.  You're up against very formidable competition.  If you are to succeed you will have to implement a damage control and marketing plan immediately.  Questions I have that aren't discussed in depth are:

1. Is your pizza quality better than your competitions?  How much better?  How do you know this for a fact?  If the answers to these questions are positive you have a chance.  If not, we'll need to help you raise the bar on the quality issue. 
2. How long has the operation been in decline?  Define 'Bad Management', specifics help a lot.
3. How long has the competition been in town?
4. Do you have any ownership in this store or are you a salaried manager?

• Customer Appreciation Night.
• Accepting all Competitors Coupons.
• Door-hanging.
• Ultimate Pizza Guarantee.
• Bounce Back Cards.
• Pizza Challenge (think Pepsi Challenge)

Finally, you will need some marketing money.  Not excessive amounts.  If you can't get your message out you will continue to lose market share.  If you are a RapidFire user you've been overlooking the most powerful tool of all.  Your customer database.  You should be able to get reports on who your customers were before, during and after the competition came to town.  You'll know exactly who used to order from your store and who switched over.  These families should be your first priority by sending them a 'Please try us again, were under new management' postcard.  This should be a high discount certificate.  Please reply to my questions and I'll help you devise a counterattack. 

Q. How do you track daily money operations/flow? Do you have your managers fill out a form at the beginning and end of each day with beginning $$/ending $$/sales and outflow?
- Christine Harris, First Class Pizza, Placentia, CA

A. Hi Christine, 
In addition to my End-of-Day RapidFire Reports, I have developed a Daily Sales Recap sheet. I 3-hole punch it and fill it out every night. If you don't have a POS system this is pretty time consuming. I've provided a sample to give you a feel for it. On the back side of this sheet is a customer survey. My manager must call back 5 customers a day and ask the open ended questions on how their experience was. We query about service, quality of food, friendliness and comments. We numerically rank the the responses and try to catch our crew being great as well as fix any problems they may have had.

Q. Big Dave, Two things: 

1. I can't even get people to APPLY to join our team. High tech in Redwood City and Santa Clara pays way more than I do and they are always hiring at the entry level. I've tried Newspaper ads, school job postings, in house postings, handing our business cards, employee referral rewards (which is the only one to work) but I still don't have near enough people on my schedule. Any thoughts? I am going to institute a REWARD program for customers who recommend a new hire. Was thinking about a $100 pizza party and one pizza every month the new hire stays employed. 
2. How do I get past the gatekeeper and to the administrative assistants that place orders for Intel, Oracle, National Semiconductor, Applied Materials and all the other BIG companies that surround me? I want 20 new accounts by the end of the year.

- Randy Blair, Pizza & Pipes, Redwood City, CA

A. Hi Randy,

Question One:
If I had an absolute, surefire system of recruiting entry level employees into our industry I'd be the busiest consultant in the country. 

You have tried all of the traditional methods and they haven't done you much good. You have a lot of competition for the same people. Download a free copy of my booklet Big Bucks with Big Dave. In that booklet is an article called How to Hire Eagles that details my hiring practices and philosophy.

Like you, the only way I got great new hires was to turn to my existing employees. They were encouraged to recommend friends that would make super crew members. I think your idea of rewarding your customers for leads is great. 

I've recently done a lot of research on the practice of hiring senior citizens. This has worked very well for McDonalds and Wal-Mart, to name a few. Reaching that specific demographic, with a perfectly crafted message is the challenge. I don't know about you, but I would have loved to balanced my younger crew with an older much more mature influence. Since we agree that we're in a competitive state, let's start to market your store. 

Since you gotta fish where the fish are, I'd barter out a couple of slick full color wanted posters with a computer friend or printer. I'd find a way to post them in senior centers, churches, grocery stores, high school and college common areas and so on. Any place potential hires frequent. I'd pass on the bars and parole officers. 

This poster should be an invitation to have fun and earn extra money. Wages are the sixth thing on the hierarchy list of why people work where they do. My thoughts on the wage scale disparity are: Charge enough for your pizza that will allow you to pay the prevailing wage scale in your market area. Out source all non essential work to vendors. Avoid spending any more for labor than you have to. Eliminate mundane prep tasks like chopping all of your own produce and washing your own windows. Invest in tools that speed up the operation and eliminate the need for extra people. Be prepared for a $0.50 hour increase in minimum wage this coming new year and the same for 2002. It will happen. Get proactive on this one. 

I never thought I'd advise this but the times they are a changin'. I'd actively pursue, seek out and meet with potential superstars on their turf.

Question Two:
I just worked with a client that dreamed of doing the very same thing. The answer lies in the putting yourself in the shoes of these AAs. Their needs are simple. They are charged with ordering food for groups and never having a problem. If you ever drop the ball on an order more than twice, you're toast. The food must be above average. It is vital that it is delivered at the right temp, on time, every time. The price is not that important. Frequently they have a per person budget to work in. This dollar amount should include a value meal. Pizza, salad, beverage, cookie etc. Tax and tip included. 

They often prefer to pay with a check or credit card or ask you to wait until accounting cuts the check. Design a B&I (business and industry) menu. It's so confusing ordering ala carte off of a menu for an office, for them and you. Adopt the number system for bundled lunch offerings similar to Mickey Ds. Now print up some copies on your PC and hit the bricks at lunch.

Next get a copy of the targeted companies internal phone directory, the extension, department and voice mail thing. I'm sure that many of your existing customers have access to them. Then call the department head and tell them they have been randomly chosen to be the recipient of the office of the week. This entitles them to free lunch, compliments of Pizza & Pipes for tomorrow. Set a limit on how many you'll comp. If they blow you off (they won't) keep dialing. 

Who says TANSTAAFL? This stands for 'their ain't no such thing as a free lunch.' When you arrive at their office strut in like a hero, announcing that you have FREE LUNCH for Ms. Jones. Handing out your new menus and office cube (refrigerator) magnets that have your logo, phone, fax and Who says TANSTAAFL? mantra printed on it. If you're up to it, for a dollar more, you can get the same information imprinted on a mouse pad for the decision maker. Leave behind lots of this stuff. You will be the talk of the building if you do it several times. 

The next time they order charge them accordingly. Now you have broken even on food and labor cost. The third time they order really blow them away with the Tijuana Toss. When you get to the delivery point of contact, take out a silver dollar and tell them if the coin comes up heads lunch is on you, tails and they pay. Get the most important looking person in the vicinity to do the toss. No matter the outcome you will become famous overnight. 

Looking down the road the food you comp in the beginning will be returned to you over and over and over. This promotion accomplishes both of my goals for marketing. First, we will accomplish ATR, awareness, trial & repeat. Secondly you will deliver Positively Outrageous Service. T Scott Gross coined the phrase and defines it as an experience that is;

1. Random and unexpected. 
2. Out of proportion to the circumstance. 
3. Customer invited to play. 
4. Creates positive, compelling word of mouth. 

Who says TANSTAAFL?

Q. Can I download my customer base onto a disk so I can take it home and put it on my office computer where I am able to do customized mailings? Can we list customers by street names?
- Karen Chaplin, Jerseyville, IL

A. My initial answer was yes. I contacted RapidFire's product manager and system Guru. He advised that under marketing function the information could be downloaded in an ASCII File. Once at home you could load the data and convert to Excel. From that point Excel could sort by alpha or numeric. This should allow you to do strategic database marketing to selected addresses as well as names. This pinpoint marketing is fun and really wows the customer as long as the piece is not perceived as junk mail. Great Question! 

Q. How do we get an updated phone number list for our town - I need an updated listing every year. Our town is a college town and students move around a lot.
- Harold Terry, Simple Simon's Pizza, Tahlequah, OK

A. I needed to get the same information when I installed RapidFire a couple of years ago. My local telephone company (Ameritech) sold me the entire phone book on disc. The disc had every name, address and phone number of every one in my local area. The unlisted are not on disc. The cost was approximately $500 for 10,000 numbers. If you call your local phone company they probably will offer the same service to you. Another source is the R. L. Polk Company. This company publishes a book as well as a CD ROLM. The book is listed by phone number first, followed by name and address. Make sure the telephone companies phone book is published after the fall semester starts. If not the numbers will not be current. Also, you may try to contact the college. They have all of the most up to date info at all times. 

Finally, wouldn't it be neat to have every student's e-mail address? This info would be more powerful than phone numbers. The students may move about campus but they still retain their same e-mail address from year to year. Most colleges maintain in house accounts just for students. (dot.edu)

I would devise a plan to access those accounts. I smell a huge pizza party for the Information Services Dept. In the Spring issue 2000 of Pizza Marketing Quarterly, I wrote an article exploring strategic data base/e-mail base advertising.  http://www.pmq.com/.

Q. What do you mean by useless advertising, and what type(s) of advertising do you advocate?
- Ronald Scott, Coral Springs, FL

A. Useless advertising defined in my opinion is: Anytime you pay money to any media that doesn't or can't guarantee that particular ad will bring in X number of new customers and X number of loyal repeating customers in a given period of time. These results must be trackable and measurable. With this definition, most of today's advertising aimed at the pizza consumer is a waste of money. In the past ten years our brains have become immune to most marketing messages. The brain is in overload and filters out most advertising messages. The most expensive advertising in the world is soon forgotten. Who had the top 10 ads on the Super bowl? Don't remember? Me neither. The sad thing is they paid mega millions for the privilege to sponsor it.

I advocate relationship marketing. I advocate crazy, unforgettable promotions. I know I'm going to invest a certain percent of my gross sales towards marketing. I feel that proprietors have run out of creativity and allowed a commissioned stranger to put together lame promotions. But as long as the individuals get a little return on investment they're happy.

Q. I operate a small pizza shop in a town of approximately 20,000. At one time I was one of two pizza shops in town.  Then came Papa's Pizza with two for one.  And if that wasn't enough two more small shops came followed by Domino's.  What can I do to get some of the market back? Help!
- Al Hoyle, Hitching Post Pizza Store, Ellijay, GA

A. I have lived your nightmare. In the March, 1988 edition of Pizza Today my pizza shop was listed as the 25th busiest independent in the country. I knew my store was in the top 5% based on Dun & Bradstreet as well as Robert Morse & Associates ratings. My banker told me so, so it must be true.  In all reality the study was flawed because it's a big country out there and I was in a small town of 20,000 on the shores of Lake Huron. We weren't the edge of the world, but you could see it from there. Magazine comes out. I get 5 copies for my Mother. Guess what happens next? The big boys came to town. Buy one, get one free as well as the worlds fastest delivery company. They were intent on wiping me out, send me packing, teach that independent he can't compete.  Serves 'em right. We are BIG. We are BAD. Move over Big Dave, we have arrived. Does this sound familiar so far? What is one to do? 

The events that followed sums up what drove me to study, really study pizza marketing. After I crippled one of them and closed down the other as well as three independents, I got a reputation. The word got out and people started calling for advice. A lot of people. I developed what I call Pizza Guerilla Marketing, I couldn't outspend them so I had to out think them. I developed a plan to exterminate my competition by beating them at their own game. If they had 30 minute delivery, I had 29. If they did two for ones, so did I. I also accepted their coupons and allowed them to print for me. I have always guaranteed my pizza quality. I even guaranteed theirs! If you purchased a bad pizza from any of my competitors and did not like it I'd replace it for free. I call it the Ultimate Pizza Guarantee. A lot of the tactics that I used against the Big Guys can be had for free in my booklet: Big Bucks with Big Dave.  

Q. How can I increase my bottom line?
- Scott Stone, Uncle Paulie's Pizza, Mesa, AZ

A. Simple Increase your top line while controlling fixed overhead and variable costs.

Q. We are in a strip mall. The government owned beer store has the only marquee for the mall. The city allows only one marquee per strip mall. How can we get our store name visible and as effective as a marquee would be?
- Dan Desrosiers, Pizzaville, Guelph, ON, Canada

A. Don't you just love sign ordinances?  If I was independently wealthy I'd crusade against every politician that thinks they know more about attracting business than us entrepreneurs do. This subject just makes my blood boil.  They should close their eyes and visualize Las Vegas with 100 square foot per business laws. 

You need to go to the Big Dave School of Down and Dirty Signage School. The first thing you need to do is get a copy of the law and look for loopholes. My town forgot to talk about signage regarding motor vehicles. Huge panel truck with your lettering on it. I bought a fan driven wind sock, a forty footer. It moved and swayed in the wind and danced, it created so much attention they asked me to remove it. I declined, stating it was a scarecrow to ward off seagulls. If it's not addressed in the statute it's up for challenge. How about white Christmas mini twinkling lights? What about a 7' costumed person dressed as a slice of pizza, waving at traffic. Get creative, and think outside of the box. 

After all you're right, and they are bureaucrats. I played mind games with city hall for so long they gave up enforcement. You know what? The town still looks pretty and the business community is making money. If you are really courageous, defy the law, and just do it. I'll bet they don't have the guts to prosecute you. And if they do, and you have to pay a fine, I'll write a 2000 word article on it and have it published in as many trade magazines worldwide as possible. Good Luck and I'm with you!

Q. What do you do, when you know you have the best product in your area, and you maintain a delivery time of no more than 35 to 40 minutes max,  offer a wide variety of products other than pizza, spend $70K a year on advertising through direct mail and sales have leveled off, and are actually dropping slightly from a year ago? Yes we have Domino's, Pizza Hut, Papa John's, Godfather's Pizza, Ci Ci's, Pizza Inn and 13 other independents in a three mile radius from our store.

I really don't worry much about what they are doing, other than to check their offers to see if I am competitive. I offer free Italian crust, which is awesome. To be different, I offer pizza and wing specials, pizza and rib specials, pickup specials, etc. I do all the right stuff, believe me, I'll challenge you to come see for yourself. What do you suggest I do to get from an average week of $13,500 to that magic $20,000?
- Paul Friedman, Paul's Pizza Shop, Houston, TX

A. A store of your volume with all of that high profile competition is truly amazing. I'm proud of your sales and creativity. As I read your statements I empathize with your frustration. First of all, I'm good but I don't have one single bullet for raising sales from 700 thousand to a million. I will offer a couple of suggestions for getting off of dead center and really jump starting your store.
 
First, your advertising budget is way too high. You have been sucked into the shotgun approach to direct mail and flyer-them-till-they-buy syndrome. It just doesn't work anymore, as that fact is becoming evident to you now. It must really kill you to write that check every month for $6000 knowing that junk mail doesn't work. I hate to be sarcastic but after all it's junk mail. People perceive it as junk mail and trash it faster than it hits their house. Don't you do the same? I do! 

Secondly, the only people that are jumping on your flyers and junk mail are your existing customers and a handful of price shoppers. Why discount your loyal customers with high liability offers when they would be happy with a simple thank you and an occasional spiff? 

Thirdly, most of the food service industry has determined and agreed in the factor of $10 spent for every brand new customer. Based on your math, you should have had a new customer growth rate of 7000 customers last year. If they each spent $500 a year with you, your return should have been at $350,000 add that to your existing sales and bingo, your over a million. 

Fourthly, your advertising sales reps will have a stroke on this one but I would fire them all. Even though they are highly trained professionals, and take matters into my own hands.  What have you got to lose? Only $70,000. 

Finally, I'm absolutely positive that you must develop a no nonsense, attainable, measurable marketing plan. I did this on my own when I was in your shoes with the help of a consultant and several good books on the subject. I highly recommend, The Ultimate Marketing Plan, and The 22 Immutable Laws of Marketing. Several software manufactures have developed marketing plans on CD-ROM. You just fill in the blanks, my favorite is made by JIAN. Steve Green's database program PizzaSmarts  877.9SMARTS This is the most powerful pizza penetration program I know of. 

Does your current POS system track all of your customers all of the time and give you reports on lost, lazy, loyal and infrequent buyers? If not or if you don't utilize the information you should bly consider RapidFire. Nobody will ever slip through the cracks again. I guarantee that your goals are attainable if you abandon AdVo itis and start communicating with current and potentially new customers in a newer and cost effective way.

Q. How can I use customer irregularity to boost sales in a rural area? My business is in a very small town. I need to bring in surrounding business, but how?
- Justin Osborn, On the Run Pizza and Subs, Dora, MO

A. My very first pizzeria was in a town of 400 people. I was 22 years old and even though I'm going grey I can remember what it was like to make a living in the boonies. 

First of all make your product praiseworthy. Give your customers something to talk about. Word of mouth will always be the most powerful form of advertising. People in neighboring towns know each other and talk, a lot. What you lack in crime you probably make up for in gossip. 

Advertise in regional weekly shoppers guides. These weeklies have a large reach in rural areas and they are read. Then off to the outhouse. Just kidding. I think you have to fish where the fish are. Translated: penetrate your neighboring towns High Schools, Parades, and Festivals. Your presence has to be felt several towns over. 

A roadside sign is a must, on the main drag. Community involvement is also a must in rural America. Be a supporter of a good cause and you'll be rewarded with community loyalty. Advertise in motels and gas stations. Visitors frequent these places and ask for local suggestions and referrals.

Q. I have just recently purchased a Pizza/grinder restaurant. I am facing a dilemma that I think other people may be facing. I see that prices here are not in line with keeping a good food cost. These prices have been the same for three years and with our great world of inflation we know that theses prices do not reflect what they should be. With the current prices, I am running about a 32% food cost. If I raise the prices where they need to be I think that I may run off present and long time customers. I also don't want to compromise product quality to get cost down. Is there anyway to get the prices where they should be with minimal customer loss?
- Rodney Reames, Pepperoni Express Pizza, Kentwood, MI

A. Fear of raising prices is worst than fear of rejection at a high school dance.  At what point do you get the courage to do the only thing that is keeping you from high profitability?  You're on the right track by not compromising your product quality.  What makes you think that you'll run off loyal customers if you raise prices, especially if they are 3 years over due? 

Let's formulate a strategy to justify this step from a customers point of view.  The reasons that you have customers are 1. They love your food and service.  2.  Any old pizza will do because you are the lowest cost producer.  The first group of customers are loyal. The second are satisfied.  Loyal customers will never dump you for price.  Satisfied customers  can be satisfied anywhere and may shop price. 

I find that owners are their own biggest enemies when it comes to raising prices.  Your job is to position your pizza as the best in the area.  How do you communicate with your satisfied customers to tell your story?  Do you ever let them know that you bake all of your sandwich bread from scratch?  All of your pizza dough is made every day on premises?  You slice and dice scratch toppings every day to insure freshness. If you don't blow your own horn you will not create a perception of the greatest. This is how Muhammad Ali did it.  When your customers know your story they will be afraid to switch and get a pizza of lesser quality. 

Unconditionally guarantee your food. While you're at it, unconditionally guarantee your competitors food.  Download a free copy of  Big Bucks with Big Dave.  It explains the Ultimate Guarantee in detail. Timing is everything.

  Are you still delivering for free?  If you are you're hemorrhaging at the current cost of fuel for you drivers.  Hot flash!!  It's not going down in the near future.  What a perfect time to start charging a couple of bucks per order.  You know it costs you almost $3 to deliver.  If you did this and raised prices by 3%, 2-3 times a year you would be a money making machine.  If you don't you'll be working for leftovers.  Scraps from the profit and loss statements.  This business involves significant risk.  On the flip side we should be rewarded with significant reward. The choice is yours.  I assure you, you will not have significant customer loss.  You'll simply have to give them a reasonable explanation when they question you.

Q. We are in a very competitive market. In our small suburban town we are saturated with pizza. Most of our competition offers low cost, low taste pizza. We offer a gourmet pizza that is reasonably priced but not low cost. We know that once people try us they keep coming back. But how do we get the guy that automatically calls the same pizzeria not knowing that there is a better product just waiting for him?
 - Donna Morris, Jet City Pizza / M & M Pizza, Lynnwood, WA

A. I admire you for choosing to serve high quality pizza. I think you have several great possibilities to work with. How do we get pizza eaters to try your product for the first time?

Why not give it away? I'm sure you've tried all of the normal advertising stuff and probably wasted thousands of dollars on radio, TV and print, just like I did. It just doesn't work anymore. You have to create huge word of mouth and breakthrough guerilla marketing tactics to stand out from the crowd. I'd like to invite you to download a free copy of my booklet Big Bucks with Big Dave. I recommend you implement three of my time proven, low cost high return strategies. The first one is Employee Bounce Back Cards. Then follow up with the Ultimate Pizza Guarantee. Now you'll be ready for the knock out punch, Customer Appreciation Night.

Another tactic I've used very successfully is printing door hangers out of beautiful four color card stock. The best stuff comes from Concept Printing, 800.841.3404 ask for Dana. I purchased full color on one side and blank on the other stock. I had my local printer print very specific messages for different niche markets. I.E.: Office workers, factory workers, neighborhoods etc. These were small runs of only 150-200 post card size door hangers.

I understand that some of the newer personal home laser printers are capable of printing on 80# card stock. The next printer I buy will have this feature. The neat thing was the message. One of mine went like this. "You're in luck. Big Dave's has expanded its delivery range to now include your neighborhood. For the next 2 weeks delivery is only a penny, and the first one is on us!" We taped a shiny new penny in the corner of every card and hung 80 on homes. 56 of them took us up on our offer. Not bad. Its Un-American to throw away money, even a penny will get your message read and acted on. We've attached $2 bills and challenged customers to try us. We'll count it as $4 at the register or, if they don't eat pizza give it to someone they love who does. If they don't know anyone consider it a gift and spend it anyway you please. This stuff is out of the box, but it creates huge word of mouth and curiosity in your pizza.

Last time I checked, 30 second radio spots were pushing $15. each. Sign a contract for 20 of those or give samples of your pizza to 60 new households. Then follow up 4 days later. Think about it. Which one will bear the greatest fruit? They both cost the same. Question: What would happen if you could convince every loyal customer of yours to personally recommend your pizza to two of their closest friends? What would happen if one out of those families became regular loyal customers of yours for life? Answer:

Your business would double. How much sampling would you do to accomplish that goal?

This stuff is not hard to do. It simply takes thought, a clear measurable plan and a little creativity. Too bad they don't teach creativity in school. Please don't let your advertising reps read this. They will sneer and profess to highly trained professionals. If you stop advertising you'll go belly up. Who's interests are they more interested in? I'd love to continue this conversation in Vegas.

Q. What are the most effective methods of advertising for a new start up?
- Doug Johnson, Joe's Pizza & Subs, Atascadero, CA

A. Great question. I'm assuming that you went over budget on your store and that you're looking for low cost, high return tactics. Some of my favorites for low cost openings are:

• Contact local newspapers and radio stations and have them interview you. Sometimes they will run a feature story. This is called free PR. It's ten times more valuable than paid advertising.
• Print and distribute door hanger flyers to every house in your neighborhood. Mention a Grand Opening Contest. Raffle off a prize and be sure to keep all of the names and addresses to mail to in a few weeks.
• Purchase small teaser ads. "Coming Soon." "Coming in two weeks" And so on. Create a little anticipation.
• Put banners and reader board signs on and around your location.
• Give sample freebies to motels, offices, police and fire departments, gas stations, churches. Anywhere and everywhere lots of people gather or where people ask for information. You must get people talking about your pizza. In order to do that they have to taste it. They are anxious to try your pizza, but they don't want to be the first one. They are waiting for a recommendation of a friend.
• You will be deluged with every advertising rep in the world. They will be pitching you hard. They can smell new money from five miles away. Do not sign any contracts. Suggest to them that you are new and broke. If they can prove themselves you'll sign a contract when you have money. Suggest that they barter out ad space and air time. Every radio station needs something to give away on the air. Why not your pizza?

In marketing three things have to occur to get a new customer. A T R. Awareness, Trial and Repeat.

Q. We had a manager that everybody loved. The customers, employees, and anybody that he ever talked to. He franchised and now we have a new manager. He is a great guy, but he just doesn't have the people skills that we are used to. Then to top things off, a new competitor, Papa John's, moved in across the street from us. Our sales have been down for the last 6 months and I was wondering how to get sales back up? Our service is the best that it has ever been. Our pizzas look and taste just as good as they always did, and our new manager is very competent. It's just that he is not as well known as our old manager and he doesn't have that magnetic charisma that we are used to having. How do we raise sales with new competition without getting rid of our current manager?
- Lisa McCollum, Domino's Pizza, Martin, TN

A. You've got to get over the loss of your old manager. Once or twice in a career you are privileged to work along side of a person that has the gift of magnetic charisma. I believe you can learn almost anything relating to a job skill but a truly charismatic personality is not teachable. It's a gift to be shared with others. Thank your lucky stars you were able to work with your prior manager. He must have had a very positive influence on you and your crew. No other manager could ever fill his shoes. So what are we to do?

I'm looking at two issues. The first is a new manager that can never fill his predecessors shoes. How do you think he feels? I think you would have a little more understanding if you were not in the middle of a sales slump. I think that's the only key issue we can focus on. I discern no hint of incompetence in your current manager. He simply is different than Mr. Wonderful. The only suggestion I would make is to have Mr. Wonderful mentor your new manager in the ways he developed to energize your store. Then I would have him do store manager seminars throughout the organization. I'd love to chat with him someday.

On to the competition. Did you think that your sales would increase after a very worthy competitor opened up? Did you have a plan in place to slug it out before, during and after their grand opening? They are cleaning your clock and you're looking for a reason. Let's blame it on the manager. Don't you see it's nobodies fault. Not yours or his. It's as predictable as the seasons. Whenever a competitor enters your market they will take a piece of your pie. (no pun intended) The challenge is, what are you going to do about it?

My reaction is develop a plan of attack on your competition and get down and dirty. Fortunately you know all of Papa John's strengths and weaknesses, as well as your own. I think you are responding to the competition reactively rather than pro actively. You are on the defensive rather than the offensive. You job is to cover up your weaknesses and expose theirs. Create doubt. Finally I would covet my existing customers. I would implement a Customer Appreciation Night and The Ultimate Pizza Guarantee. I would mail my data base and would find out how I could mail my competitors. Download a free copy of my booklet Big Bucks with Big Dave. Purchase How to Drive Your Competition Crazy by Guy Kawasaki. Then buy Positively Outrageous Service by T. Scott Gross. Oh yeah, read them cover to cover. You might want to read my article in the Spring 2000 issue of Pizza Marketing Quarterly, High Touch Tactics = Customers for Life. These books and articles are packed with strategies on how to be competition proof. Good luck.

Q. How do I recruit new couriers for the motorized bicycles and how do I attract new customers without giving (big) discounts?
- Tanny Van Den Maagdenberg, Al Capone's, Bussum, Netherlands

A. These ideas have worked for me and many of my clients. Recruiting can be done one of two ways. The first, more traditional way is to advertise. Place signs and advertisements. Paid ads are expensive. Why not pay your existing employees for introducing and mentoring new hires? A great employee is not born, they have to be trained, trained and trained some more. I post a job opening on the employees' bulletin board. "If any of your friends would be interested in working here advise them to come in soon and fill out a job application. I need 2 couriers immediately. The cool part about this system is after I interview and background check the applicant I have a conversation with his or her friend. I ask lots of questions about their friend. I probe deeply into their reputation, good and bad habits, honesty level. I couldn't ask these questions to the applicant directly because of discrimination laws in the USA. Once I feel good about the candidate I ask the friend a few questions and we agree on an informal contract. The questions are, "If I decide to hire your friend / acquaintance on your recommendation and a positive interview, will your sponsor him? Sponsoring a new hire means that you will do most of the training, answer questions in my behalf and generally see to it that they succeed in their new job. If the sponsor agrees we shake hands and have a deal. The deal is, if the new hire is working well on the job for 10 weeks I agree to pay the sponsor $100. If the new hire is not employed after 10 weeks, for any reason, the sponsor agrees to pay me $50. This has worked well for the past 15 years. I get no half hearted endorsements and answer the question to the sponsor," What's in it for me, why should I bother?" $100, amortized over 10 weeks and possibly much longer is a small price to pay for high caliber employees. Besides the new employees will accept criticism from a friend rather than the boss. I willingly paid out thousands and only collected two 50s.

Part two:
I have dozens of ideas on how to attract new customers. In order for you to create a new customer three things have to take place. They are; AWARENESS, TRIAL and REPEAT.

How are you creating awareness of your pizza? Is it cost effective? Are you sure? I'm a guerilla marketer, I creep in on my competitors' customers, sample them and disappear. I keep in touch with my new potential customers with my RapidFire POS computer system and mail them thank you post cards and low liability discounts until they become a regular customer or don't respond anymore. I can't outspend my competitors by I can out flank and maneuver them. Some of my all time favorites promotions are in Big Bucks with Big Dave.

Q. I don't have any franchise competition (Domino's, Papa John's, etc.) and all my competitors sell a 16" pizza. At the fall Pizza Expo in Atlantic City you talked about pizza being sold by the square inch. How do I reduce the size of my pizza to 14" and not upset my regular customers and market against the competition when I'm not on the same playing field?
- Rodney Davidson, Rocky's Pizza & Subs Express Inc., Frackville, PA

A. I'd like to describe a scenario that will better help me advise you on your challenge. Imagine that you and your significant other finally are getting a Friday night off. You've got dinner and a show planned. The baby sitter is at your place. You've instructed the sitter to order pizza delivery for dinner and given her $15 to spend. When she calls the order in she inquires about any specials. She is quoted two 10" cheese and 3 item pizzas for $12, or one 14" cheese and three item pizza for $12. Which deal is she most inclined to take and why? Nine times out of ten she will take the two 10" pizzas, because two 10" pizzas are perceived to be a lot more than one 14" pizza. In reality the difference is a mere 3 square inches. 

The mathematical formula that determines the area of a circle is pi (3.14) X (radius x radius) or 3.14 x 7x7 = 154 sq. inches for a 14" pie and 3.14 x 5x5 = 78.5 sq. inches for one ten or 157 sq. inches for two. To compute a 16" pizza multiply: 3.14 x 8x8 = 201 sq. inches. 

It costs me approximately 1.3 cents a square inch to make a basic cheese pizza, including paper. No matter what size. The difference between 154 and 201 square inches is a whopping difference of 23%. Customers don't get it. They think it's a little bigger. All things being equal the operator that labels a 14" pizza as a large compared to another that calls a 16" pie a large has a 23% price advantage. 

I down sized from a 16" to a 14" large in 1988. Prior to that I had no national chain competition. For the most part, the franchise operations have set 14" as a large. My customers would price shop and I would lose the business to my competitors because they would price their specials at two large pizzas for $10 and my price would be one large pizza for $6. I tried to explain to them that they were getting the same. They couldn't comprehend. I ran full page ads in the paper that proclaimed that ...call does it all - means one call does it small. Still didn't work. I down sized to a 14" large shortly there after so I could compete on the same playing field as my new competitors. Only after that move could I effectively compete on a cost-only basis. When I made the move I expected questions from my customers. I was ready with rehearsed answers. I told them to eliminate confusion I had adopted national sizing. We didn't change pricing. We just re-named the pizzas. This would allow me to accept their coupons and be perceived as the lowest cost provider of the highest quality pizza in my town. It worked, but it was an agonizing decision. 

Your concern is will you upset your regular customers? My concerns are: 

1. Are they loyal customers or satisfied customers. Big difference. The loyals will follow you no matter what. 
2. Will they accept the change with or without an explanation? 
3. Would you want your competition to come out with down sizing first and force you to follow along? 

If your competition was the first to down size and create pricing excitement, and you were forced to go along in order not to look stupid to the public, wouldn't you be better off to one up them and be first? People remember firsts. They rarely remember who came in second. 

If you are secure in your pizza quality and have excellent communication with your loyal customers, through a database, I'd go for it. At that time I'd tear up the town with specials unlike they had ever seen before. For every customer that switched I'd create two that were amazed by my new pricing. 

Exit thought, I offer an 18" XXL pizza for the ego that really wants the biggest pizza in town. I never coupon or discount them. They account for only 10% of my menu mix and are priced between $16 and $21. When you want the biggest and the best call me. No risk..........No gain.

Q. What is the average cost to deliver a pizza?
- Louis Lamoureux, Hinsdale, IL

A. Great question. I conducted my first cost analysis per delivery during the Gulf War. Big Dave’s offered Fast, Hot, Free Delivery for 15 years. When Desert Storm got into full gear, gas prices went up, up, and up. Just like what’s happening now. I pay my drivers a little over minimum wage per hour. On top of that I reimburse them .50 a delivery to cover their fuel. My drivers were feeling the pinch at the gas pumps. They collectively asked me if I would raise the .50 to .75 per delivery until the gas crisis was over. I couldn’t refuse them; it was the right thing to do. At that time I was delivering 4000 deliveries per month. By raising the bar a quarter per delivery times 4000, in affect increased my cost of doing business $1000 per month. It looked like I was going to take a personal $12,000 annual loss in personal income. This was a problem for my accountant. Even consultants need a little help from time to time.

After explaining the problem to him I challenged him to go through my P & L statements and advise me how to get past this problem. Shave a little here and a little there and all would be well. He told me that since we scrutinized every line item that I would have to personally bear the loss. This was unacceptable to me. What alternatives did I have? His answer was simple, charge for deliveries. But, every competitor in my area offered free delivery and I was afraid that if I was the first one to charge, or the only one to charge, my customers would abandon me. He thought I was wrong and asked me three questions.

• Are you prepared to lose $12,000 a year?
• Is it morally wrong to charge the end user of the service, for the service they want?
• How much does it cost you to deliver a typical order?

The answers were NO, NO and I don’t know. At that time we did the math. I went back to my records and added up the dollar value of the last 10,000 deliveries. After arriving at that figure, I computed how many total dollars were spent to provide that service. I added up the sum of total delivery wages, matching social security, delivery fees, unemployment, workman's comp and non-owned vehicle insurance costs. I divided that number into 10,000 and came out with $2.51 per average delivery. It cost me $25,100 to deliver 10,000 orders. This was a shock to both of us. Since my drivers are hourly employees, whenever they are not on the road they are very productive in house and do a lot of prep and cleaning, I still have to have them on the clock all of the time. We were competing with the big boys and offered 29-minute delivery guaranteed or free.

Within two days I had distinction of being the first pizzeria to charge $1.00 for delivery. I was nervous about losing a ton of customers to my competition. I dropped 500 deliveries a month and had them all back in 90 days. The neat thing was gas dropped to normal levels in the next 90 days. I rolled back the drivers to .50 and added an additional .50 a delivery for the next five years. When Little Caesars entered the delivery arena several years back I decided to increase my fee to meet theirs. Now $2.00 per delivery is the norm in my town. The true cost now is close to $3.00 per delivery so my dine-in and carry out customers still subsidize the service somewhat. To offset this all of my people are cross-trained to make-it, bake-it and take-it. But that’s another question.

Q. I want to get it right from the beginning! If I could just keep my existing customers and only lose those that die, move, or something else beyond my control my sales would skyrocket. I have 9000 active customers (ordered within past 140 days)and still get 180-220 new customers a week. Aside from good product, service, image, etc.. what can I do to keep them?
- Ramon De Leon, Domino's Pizza, Chicago, IL

A. You have a very powerful client base. And the 200 new customers a week you are getting is enviable. The real question is, "Why do my customers only repeat with me every 35 days?" The answer is they are not loyal customers. Your numbers suggest that you do a lot of aggressive marketing but it appears that your market jumps around possibly shopping for the cheapest price. When you're the lowest cost provider you get the sale. When your competition comes out with a better offer they go there. 

Once every 14 days is the target you should be striving for. You mustn't let your customer stray over to the competition. This will cost you a little cash but will be a very solid investment for the future. With my RapidFire POS System I cut my shotgun approach to marketing in half. I invested that savings into reinforcing first time buyers with 3 personal contacts. One by phone and two by mail. I hand write thank you postcards, with a small discount for their next purchase. It's mailed 3 days after they make their first purchase. A week later they receive another one. If you know where they live and have their phone number and don't keep in touch with them they will stray. 

On the flip side of that, RapidFire alerts me when a customer hasn't purchased in the last 30, 60, 90 days. I get real aggressive with this list. I mail and call them to find out why they quit buying, and do whatever it takes to retain them. It takes 10 times as much money to create a new customer than maintain an existing one. 

Buy a copy of the book "Satisfied Customers are Worthless, Loyal Customers are Priceless", by Jeffrey Gittomer, and call Adam at Impact USA at 1-800-653-8837. This company specializes in excellent pre-printed, pizza specific postcards that increase customer frequency.

Q. I run a pizza business in a small, college town. The town's population is about 15,000 and the college population is about 20,000. We have two well-read free newspapers and one not-so-well-read small-town paper. We also have about 15 pizza places in this town. We have 4 big-name chains and the rest are all independents (like mine). How do I carve out our niche when the owner doesn't want to spend the advertising dollars?
- Marc Smith, Courtside Pizza , Athens, OH

A. Great Question, The most powerful form of advertising is word of mouth. What are you doing to create positive word of mouth in you town? Please download my booklet, Big Bucks with Big Dave. I have 3 or 4 times tried, proven, low cost promotions in it. One of them cost me $400 and increased my annual sales $90,000. Conventional media just doesn't work as effectively as it used to. Our customers are bombarded with hundreds of messages a day. Our brains are programmed to tune them out. I became a Guerilla Marketer when I was attacked by two large chains in less than 30 days ten years ago. I couldn't outspend them but I could out think them. You must have some sort of advertising budget or you will lose your market share. But I do not advocate letting a print, radio or TV sales rep take my hard earned money and not deliver results.

Q. Where can I find new customers? I do mass mailings of coupons, but I seem to see the same faces in every time redeeming them.

A. I went to my employees to help me. I gave each employee a packet of 10 Employee Bounce-Back Certificates. These coupons allowed any employee to give a friend or acquaintance a 50 percent discount off their next purchase. I left a blank line on for my employee to put their name and a line to put the customer's. The only catch with this was that they had to be given to non-customers only! My employees had thirty days to do this and at the end, the employee with the most certificates redeemed got a $100 bonus! At the end of the promotion, even I was surprised at the numbers - we got 356 certificates back. But, the real test was how many of them would return to pay full price in the future and 187 did! We tracked the new customers by name and phone number in my RapidFire database for six weeks. If they returned to purchase from us more than four times in six weeks, we counted them as a regular, loyal customer.

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