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Pizza on fire: Key tips for tightening up in 2009


February 26, 2009
By Tom Stankiewicz

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Everywhere you turn people seem to be preoccupied with the media. Media outlets keep making predictions and business analysts forecast mixed theories. However, in general, they all agree that this year will be tough for many. With so much uncertainty in the air, businesses could suffer as consumers cut back on their spending.

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Tightening up is the theme of 2009 as consumers close their wallets in the face of a recession.


 

Everywhere you turn people seem to be preoccupied with the media. Media outlets keep making predictions and business analysts forecast mixed theories. However, in general, they all agree that this year will be tough for many. With so much uncertainty in the air, businesses could suffer as consumers cut back on their spending.

What effect will all of this have on pizzerias in Canada? Partly that will depend on how well you are prepared. We could see our sales decrease as people become more careful about where and how they spend their money. For those who have been putting off reviewing their business practices, this is the perfect time to take a close look at necessary improvements.

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Staffing is one area where we can tighten up. This could mean picking up some extra hours to cut down on labour costs. It’s a simple idea that will add up in savings week over week. Pay extra attention to employee training to ensure your store is running as efficiently as possible. Unfortunately, tightening up could translate into cutting down on work hours for your employees. This might be a necessary step to ensure the business survives if your profits take a serious fall. If you decide to go this route, don’t forget that your customers are still expecting fast, high-quality service. If you have to reduce employee hours, make sure you balance the two factors equally. There is no point in making changes that would significantly decrease your service and quality as this will drive your customers away. In fact, you might find that in stressful times people can be more demanding and impatient than usual.

Another human resources challenge that will affect your decisions is the rise in minimum wage occurring in most provinces across Canada this year. While it’s great for workers, it could mean some adjustments for your business. Increases in pizza prices may be necessary to offset this change. If you have employees who are paid more than minimum wage already, then their hours might have to be cut to compensate for the increase in order to pay for the rest of your staff. Look at this simple calculation: 10 employees at $9.50, the new minimum wage in Ontario as of March 31, will cost you $7.50 more an hour. If they all work an average of 20 hours a week, your costs will increase by $150 per week or $600 per month. 

In order to attract new clients and keep existing ones coming back, many businesses are advertising huge sales and specials on their products. This might not be the right solution for everyone. A big special could very well mean that twice as many customers have to buy your product to generate the same profit. Rather than offering a huge discount on everything, consider attaching a special offer to the purchase of a regular order. This would guarantee that you are generating additional profits rather than cutting existing ones by 50 per cent. Be sure to look carefully at your own business, as this strategy will benefit some more than others.

Just like our customers, we have to think twice before we decide to make new business purchases. Most of us think of ourselves as business owners first, but we are consumers as well. Other businesses depend on us for their survival. The purchases to really question are major ones that might not be necessary. All it takes is one big wrong decision to hurt your bottom line enough to make it difficult to survive a recession. Plan for sales volumes to decrease this year, and if they don’t you will be in an even better position.  

On the bright side, Canada goes through a recession about every 10 years and, every time, businesses bounce back. The important thing is not to panic and always plan ahead. Have a safety net in case it’s needed and take it one day at a time.
 


Tom Stankiewicz has been in the pizza business for over 15 years. He has been the proprietor of Bondi’s Pizza in London since 2001. Tom is an international pizza competitor.


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