Writing Sample #12: Location, location, location: Finding the best spot for your pizzeria requires research before rewards (Pizza Today, October 2007)

Location, location, location has long been the guiding axiom of real estate, a mantra surviving in the residential world as well as the commercial arena. Pick the wrong spot for your location and doom could follow; select the right home and you’ll be baking pies for years.

“It’s important for a pizzeria to identify its key demographics and then strategically position itself to capitalize on that location,” says Russell Barnett, head of the restaurant specialty group for CB Richard Ellis, one of the nation’s leading real estate services firms.

While perhaps easier to execute in theory than reality, an operator’s research skills must take flight if the right location is to be found. From population growth to underserved communities and from tax legislation to competitive environments, the finished product provides success, but a well-scouted location surely doesn’t hurt.

Emerging Communities
On May 15, Steve Cornelius opened his Nick-N-Willy’s Pizza outpost in Elk Grove, California, a booming community near Sacramento. An Elk Grove resident, Cornelius said he was motivated by the sprouting population—Elk Grove had doubled in size since 2000—and presence of few established pizzerias.

“It was a growing area, so we knew that we could grow right alongside it,” Cornelius says, noting the advantage of opening in a spot where loyalties are scarce given such a fresh populace.

It comes as no surprise that four of the top 10 fastest growing cities according to U.S. Census data maintain a California address: Elk Grove, Moreno Valley, Rancho Cucamonga, and Irvine leading the Golden State’s population surge. Florida boasts three emerging cities in Port St. Lucie, Cape Coral, and Miramar while Arizona, with Gilbert and Chandler, has also inherited thousands of new residents. North Las Vegas, adjacent to Sin City, has proven that real estate can rival blackjack as the biggest game in town.

Pizza-Starved States
Ever wonder about the most underserved pizza communities? New Jersey-based investment management firm W.R. Huff did and proceeded to analyze all 50 states to discover the nation’s most pizza-starved constituency.

The states warmest on weather are some of the coldest on pizza. With Mississippi claiming but one pizzeria for every 8643 residents, the potential market share is immense for those who get the All-American food just right, guys like Jeff Good and Dan Blumenthal, owners of Sal and Mookie’s New York Pizza and Ice Cream Joint in Jackson.

“It’s fascinating that the metro Jackson area has few ‘home grown’ or upscale pizzerias,” says Good. “Certainly, [we] took that into account when we created [our] concept. In the first five months, the feedback and rabid repeat customer business…has positioned Sal & Mookie’s as the place to get pizza in Jackson.”

Other pizza-starved states include Louisiana, Texas, Alabama, Hawaii, Georgia, Tennessee, and California.

The Government: Your Small Business Friend
Taxes. Rarely a word that sparks any positive reaction from an American small business owner. While some states are heavy on taxation—New Jersey, California, Rhode Island, Maine, and Minnesota among the chief culprits—others do a noble job avoiding the business owners’ pockets.

The Small Business and Entrepreneurship Council, a Washington D.C.-based small business advocate, reports that South Dakota, Nevada, and Wyoming all avoid personal income tax, capital gains, and corporate income tax. Other states, meanwhile, such as Alabama, Florida, Mississippi, Washington, and Colorado keep taxation to a minimum, offering an undeniable boost to the pizzeria’s bottom line.

Some Competition and the Golden Rule
Though the northeast remains the most pizza-filled region of the country, an immortal industry truth emerges: product remains king.

Despite boasting a pizzeria for every 2300 residents, the nation’s most competitive marketplace as sheer numbers go, Maine hosts several operations that merge a track record with a unique experience. Portland Pie, for instance, applied the micro-brew concept to pizza dough and claims not only a plethora of flavored pizza crusts—basil, garlic, and beer among them—but also a loyal customer base.

“We came out of the gates [in 1997] with a different concept…and there’s no question we’ve grown over the last ten years because we’ve differentiated ourselves from the competition, created our niche, and established a name for ourselves,” says Steve Freese, co-owner of the three Portland Pie locations.

Barnett says a competitive environment can often be a plus given the herd mentality of American society, a fact evident in cities across the country where rivals share street corners.

“People tend to congregate in the same place,” Barnett says, “and if one place is full, they’ll often move on to the next.”

Freese reminds that he and partner Nat Getchell opened their first shop next to an established local chain.

“People thought we were crazy,” he says, “but we believed in our concept and our product.”


(Sidebar)
Hungry for Pizza: Some of the Nation’s Top Spots for a Pizzeria
These American cities possess some of the key ingredients to hosting a successful pizzeria:

North Las Vegas, Nevada
Population: 198,000
Pizzeria to Resident Ratio: 1:4923 (Nevada)
Why North Las Vegas?: One of the nation’s fastest-growing cities, North Las Vegas claims a friendly small business climate with low taxes, high disposable income, and, more applicable to the pizzeria operator, the nation’s top projected restaurant sales growth according to the National Restaurant Association.

Gilbert, Arizona
Population: 192,000
Pizzeria to Resident Ratio: 1:5296 (Arizona)
Why Gilbert?: Despite a surging population, Arizona claims less than 1,000 pizzerias and resides among the nation’s most pizza-starved states. Gilbert, meanwhile, stands atop the state’s population push while offering a family-centered demographic with disposable income and favorable taxation policy.

Port St. Lucie, Florida
Population: 145,000
Pizzeria to Resident Ratio: 1:5066 (Florida)
Why Port St. Lucie?: Tabbed “A City for All Ages,” Port St. Lucie, which has seen its population triple in the last 15 years, promises extensive growth opportunities, residents with disposable income, and low taxes. Each year, meanwhile, the town entertains the New York Mets and their fan base, many of them pizza-eating Yankees, for spring training.

Denton, Texas
Population: 110,000
Pizzeria to Resident Ratio: 1:7727 (Texas)
Why Denton?: A music and art hotbed north of Dallas, Denton boasts an intellectual flair and two state universities with a combined enrollment of 45,000. Despite high property taxes and a corporate income tax, Denton avoids personal income, capital gains, and estate taxes as well as a saturated pizzeria market.

Raleigh, North Carolina
Population: 367,000
Pizzeria to Resident Ratio: 1:5218 (North Carolina)
Why Raleigh?: With steady population growth in recent years, an abundance of industry and commerce, and the presence of North Carolina State University, the state’s capital city boasts some key indicators for success. One negative: tax rates are among the nation’s highest.