You’ve worked hard to build up a successful pizza operation. Business is going well with plenty of loyal customers and repeat patronage. Tables are booked out on Friday and Saturday nights. Your ambitious streak kicks into gear and you start thinking about expanding to include a second outlet.
But as Club Perfect Ambassador Theo Kalogeracos points out, it’s not a step that should be rushed into. You need to make sure you’re ready — but how do you know when that is?
My accountant has a great saying: people don’t plan to fail, they fail to plan. And it’s true. It took me 14 yrs of hard work at my first Little Caesars before I took the plunge to open a second location. And that hesistancy wasn’t because there was anything wrong with the pizzas I was selling or the customer base I’d built up. It was because I looked at my business and asked, if I’m not there to supervise, will it work as well without me?
If you’re at the stage where you can go on holidays for two or three weeks, leave the store to your staff and when you get back it’s just the same, the quality of the product hasn’t dropped and neither has the patronage, then you can open a second store. If not — don’t.
Many of us pizzamakers might think, “I’ve built up a successful business, I’m doing great.” But there’s a reason you’re successful in that one location, and it’s because YOU are there.
The big issue about opening a second or third outlet is the need to maintain consistency across your operation. If the business can’t make a consistent product whether you’re there or not — you’re going to go backwards.
I used to be a baker before I got into pizzamaking, and a lot of bakeries used to open what we called a “dummy bakery”. That was a second location to sell their product — but they still prepared and baked it in the original location, then transported it to the second one to sell it. We used to call dummy bakeries “bakeries for dummies”. Because the staff in the second location didn’t know how to make the bread — and it’s all very well to bring it in from somewhere else, but you lose the aroma of fresh-baked product, you lose the ambience, you lose the genuine feel of the place, and that’s what attracts the customers.

It’s exactly the same with opening a second pizza outlet. I currently have three Little Caesars Pizzerias in Western Australia and I have two licensing agreements in place overseas. I’m looking at opening another outlet locally. So I’ve been successful in expanding my business — but I couldn’t do any of that if I didn’t have systems in place to ensure consistency across my whole business.
The systems I’m talking about are to ensure that the pizzas are prepared and made the same way every time. The ingredients are the same every time. The staff are trained and know exactly what to do and what’s required of them, every time. And your system has to be bigger than your staff — because you can’t afford to have anyone who’s irreplaceable. You need to have a training system that works, so when a staff member leaves there’s someone to replace them, who can step into that role. I hear people say, “My best staff member’s just left, I’m back at square one, I’m lost” — well, you’re not lost because your staff member left, you’re lost because you don’t have a system.
In my business, all my pizza outlets run properly, whether I’m there or not. It’s just like the McDonald’s business model. Whether or not you like their food, you can’t argue with their success. It’s all built around consistency, which is why no matter where you go in the world, McDonald’s food always tastes the same. You need to take note of that and understand why it works.
There are lots of important considerations when opening a second outlet. I wouldn’t open a second store that’s too close to your original one, and I would want to make sure that whatever other pizza stores are in the area you’re going into, there’s not one that does the same type of pizza as you. In just the same way that Eagle Boys, for example, won’t open up an outlet too close to where there’s a Domino’s — because they’re selling a similar type of product. So if you’re making a really nice Neapolitan style pizza, I wouldn’t go into an area that’s already got someone doing that. I’d go somewhere that’s underserviced. Remember, you’re not out to steal someone else’s customers — you’re there to create your own.
Another thing that people often don’t think about is branding and marketing. If you’re going to open a second outlet, is it going to have the same name as the first? Will your website have the second location on it? Or will there be two websites for two different outlets, and if so are you going to link the two together so people know they’re connected?
I also want to point out something else you may not have considered. Very rarely will you make as much money at your second location as you do at your first. You’ll make more money when you get to three locations. It’s a question of buying power. Even if your turnover with two locations is twice as much as one, you’ll find it’s costing you more to run them. When you get to three, you’ll have more buying power so then you can start to negotiate cheaper prices with your suppliers. And THEN you can start making more profit.
When I opened my second store, I was making a bit more, but not double what I made with just one. It took me 14 years in business before I opened a second store, but then only nine months before I opened a third. But that’s because I had those systems in place which let me duplicate my original success pretty quickly.
If you don’t have those systems you may open a second outlet but you won’t get to a third — because instead of just one headache, now you’ve got two!
It’s simple: you need to get everything working smoothly when you’ve got just the one location. Train your staff. Know the right ingredients and the right amounts, standardise your pizza recipes. You’ve got to make sure that 90g of cheese goes on every pizza whether you’re there to supervise it or not.
The business has to stand on its own and work without the owner. When I started I worked seven days a week and took my first holiday — two weeks off — only after seven years of work. This was because I couldn’t leave the business without hearing complaints of things not working. It wasn’t the staff’s fault — it was mine, I didn’t have the correct systems in place.
The good news is that when you have everything running smoothly, then you can expand to two or three outlets and you can take advantage of your greater buying power to keep your prices down while making more profit. So there’s no danger of pricing yourself out of the market. My pizzas haven’t gone up in price in two years, but I’m actually making more money. My flour is now $10 a bag cheaper, and I can pass that saving onto my customers.
I don’t have to sell my pizzas at $35 and justify the price by saying they’re “gourmet” — I can sell them for $20 and have customers tell me what great value I’m giving. And this is all because of buying power.
You’ll even find your distributor comes to you with bargains, because they know you’ll buy in bulk — which gives you even more opportunities to save. They’ll say, “I’ve got five pallets of olives to sell, and if you’ll take three I’ll give them to you at $17 instead of $20.” Every dollar saved like that really counts.
So don’t fall into the trap of thinking opening a second outlet will guarantee you more profit — that’s a mirage. It’s not as easy as it looks. I work as hard now as I did when I just had one shop, but I work differently now. I used to be just a pizzamaker — now I’m more of a businessman. It’s a natural process of evolution. You have to evolve and grow, and opening a second and third outlet is all about that sort of evolution. But you want to make sure you go forwards not backwards — and to make it work, it all comes down to planning.
Theo Kalogeracos
Award-winning pizzamaker Theo Kalogeracos