Fun Math: Adding Dollars to Your Weekly Sales with Additional Revenue Streams

When I began my journey in the pizza business, the phrase ‘revenue stream’ was not in my vocabulary. If asked, I imagine I would have described it as follows: “I make the pizza, you buy the pizza, and that’s my revenue stream.”

Yes, it used to be that simple.

Not today.  Here’s a list of the revenue streams we will explore:

• Dine-in
• Drive-Through
• Arcade
• Self-Delivery
• Take-out
• Loyalty Programs
• Apps
• Online Ordering
• Party Rooms
• Gift Cards
• Third Party
• Catering

These revenue streams may be placed in three categories: Facility, Customer Centric and Delivery. Let’s apply some FUN MATH to each revenue stream.

Facility Revenue Streams

Take-out: Take-out is the bread-and-butter of your pizzeria. The facility must have enough parking to accommodate the take-out customer. If the facility has no parking, is the foot traffic sufficient to sustain this revenue stream? Take-out pizza sales represent $20B per year in the US alone, compared to total pizza sales of $47B. The average take-out annual sales of a pizzeria are $275K.

Sales Goal: Take-Out Sales of $5000 per week.

Dine-in & Party Rooms: Offering tables to customers has costs associated with it. These costs include the cost per square foot for rent of the seating and restroom area (which is applied even if you own the property) along with maintenance and heating/cooling costs of that space. A target number is $200 in annual sales per square foot of this space. In other words, if the dining and restroom area comprise 1,000 square feet, you would need $200,000 in annual dine-in sales, or a weekly average of roughly $3846. Party Rooms are part of this consideration. Taking on an additional 1,000 square feet of space (or more) that will only be used heavily on weekends, and may stand empty during the week, is a tough call to make. Apply the formula to the added space to see if the sales numbers are achievable.

Sales Goal: (Square Feet x 200)/52 = Weekly Sales expected.

Drive-Through: Pizzerias are the last segment of the fast-casual business to incorporate drive-throughs as a revenue stream. Consider this: 70 percent of all fast-food sales come through the drive-through. Drive-through sales are rising at the astounding rate of 10 percent per year. It is time for pizzerias to turn on this revenue stream. Some studies have take-out sales increasing by 20 percent almost immediately after adding a drive-through to an existing restaurant.

Sales Goal: Increase in Take-out sales of $1,000 per week.

Arcade: Often, pizzerias miss out on much of this revenue stream because they allow an outside amusement company to provide and service the equipment. Capsule dispensers, crane & self-redemption machines, video games, virtual reality games, and pub games all provide an additional revenue stream, especially when self-managed and not sharing the income with an amusement company. Investment in this area can easily go into the hundreds of thousands of dollars, but starting small is a great way to add revenue without major expense. The expected ROI (return on investment) can be as little as one year. A capsule dispenser, three self-redemption games, and two video games can be purchased for less than $25K.

Sales Goal: Revenue of $500 per week.

Customer-Centric Revenue Streams

Tapping into your existing customers to create additional revenue streams is often the most cost-effective strategy. To take advantage of these revenue streams, you must have a POS system (Point-of-Sale) that accommodates each strategy.

Gift Cards: Gift cards may be physical (like a credit card) or digital (using a code or tied to a customer account). Gift cards provide your customer with the opportunity to spend more money buying gift cards which they then use to convince other people in their lives to order pizza from you. What better way to obtain new customers! An estimated 70 percent of restaurant customers surveyed say they would purchase a gift card. A pizzeria doing $500K, applying standard average ticket and # of regular customers, gives us some inspiring results.

Sales Goal: 70 percent of customers buy 1 gift card = sales increase of $400 per week.

Loyalty Programs: A high-frequency customer orders once per week. On the other end of the spectrum, a low-frequency customer orders once every two months. What is the expected result of the implementation of a Loyalty Program? A minimum of one extra order per month, with a 50 percent participation rate. If that is true, and countless statistics indicate it is, this is some crazy math. Using the same base of a pizzeria with $500K in annual sales, here are the expected results.

Sales Goal: 500 customers ordering an extra $30 per month = sales increase of $3750/week.

Delivery & Catering Revenue Streams

Online Ordering and Apps: Your POS company will help you set up a website with online ordering and an app that your customers may load on their cell phone from either Google Play Store or Apple App Store. Even if you do not deliver, adding this service for your customers to place pick-up orders will give you instant sales results.

Sales Goal: 10 percent increase of to-go sales $500 per week.

Self-Delivery & Third-Party Delivery: Whether you hire your own drivers, sign up for Third Party Delivery, or do a combination of both, sales increases due to adding delivery are proven out at 25 percent or more time and again.

Sales Goal: Increased sales of $2500 per week.

Catering: Catering may be dropped off or may be done as full-service. Adding a catering menu adds an additional revenue stream, even if you don’t expect to go the route of full catering. A drop-off catering menu is a simple way to add catering as a revenue stream.

Sales Goal: Increased sales of $500 per week.

I promised Fun Math. Your weekly sales with these added Revenue Streams:

$5,000 take-out sales

$3,850 dine-in sales @ 1000 sq ft

$1,000 drive-through sales

$500 arcade sales

$400 gift card sales

$3750 loyalty sales

$500 online and app sales

$2,500 delivery sales

$500 catering sales

Total Weekly Sales = $18,000

That’s some Fun Math!