Meg shook my shoulder. “Wake up, Ty.”
I rubbed my eyes. “What time is it?”
“Almost noon.”
“You’ve been driving this whole time?”
“Yep, and you’ve been sleeping for all of it.”
I wiped a glob of drool off my chin. “Didn’t get much sleep last night.”
“Let me guess, you were prepping all night so your undersized staff could make it through the day without you?”
“Skip the lectures. Where are we?”
Meg shut off the engine. “A favorite haunt from my childhood.”
I blinked at the crowd. “What are all those people standing around for?”
“They’re in line.” She got out of the car, and I followed.
“For what?” I asked her over the hood.
Meg’s eyes danced. “For pizza, Ty.”
“Where? I don’t even see a pizzeria.”
“It’s just down those steps over there.”
“There?” I asked. “That faded sign that says Camilla’s?”
“That’s it.”
“It doesn’t even say they sell pizza.”
“When you’ve got a line down the block, you can skip the details.” She slapped my arm. “Come on, let’s get in line. We’re here early, so the wait shouldn’t be too long.”
A half-hour of standing outside struck me as painfully long, though the line kept stretching behind us. When we finally descended the steps into Camilla’s, I found a hole-in-the-wall. Seven tables covered in red and white checkered tablecloths were stuffed close together. My seat by the wall felt cramped. The waitress, chewing a wad of gum, approached without even a pad or pen and said, “How many can I get ya?”
“Can we see a menu, please?” I asked.
“We got one thing, honey, pizza. Either you want it, or you give up your seat to someone who does.”
“Toppings? Sizes?” I asked.
“No toppings. One size only. You each want your own, or you sharing?”
Meg rested her hand over mine. “We’ll take one each.”
“Anything to drink?” The waitress asked.
“You have options?” I half expected them to offer nothing but red wine.
Meg kicked me under the table. “Just water.”
“You got it.” The waitress walked off to the next table, not even bothering to place our order.
“What kind of a place is this, anyway?” I asked.
Meg laughed. “The kind that doesn’t have to sell slices for a dollar to bring customers in the door.”
I didn’t like the lack of toppings, but I had to admit the pizzas came fast. Giving customers no options meant Camilla’s pumped them out. The pies hit the table with a thud. By the time I looked up, the waitress was already on her way back to the kitchen. This wasn’t a place for small talk.
The pie was steaming hot—as if no more than ten seconds had passed between the oven and the table. I had to blow on my first slice before I could take a bite, and it still burned the roof of my mouth. The crust was thin and crispy as a cracker. The cheese stretched for miles. The sauce smushed between them was smooth and tangy.
Meg could never match my speed in a pizza eating contest. She was only half done with her pie when I finished mine. But what she lacked in speed, she made up in endurance, downing her whole pie like a champ.
“I’m stuffed,” Meg said as we got back into the car. When I said nothing, she looked over at me. “You aren’t, are you?”
“I was thinking of ordering another for the ride home.”
“Wouldn’t have helped. No takeout.”
“No takeout?”
“Why bother, when the people standing in line eat pies as fast as you can make them?”
I rolled my eyes. “They could open a second kitchen for takeout orders.”
“They could. They could also sell a frozen one in the supermarket. They could set up a whole assembly line to make the pizzas more efficiently. The pizzas could enter a brand new oven on a conveyor belt and be in for just the perfect amount of time, rather than being hand-loaded into that 100-year-old brick oven. They could use economies of scale to order massive quantities of cheese and bring down their supply costs. They could negotiate among vendors for the best deal. At the end of the day, cheese is cheese, right? It’s not like the customers can tell the difference between one mozzarella and another.”
“You got a point here?”
“On a busy night, you can easily wait over an hour to get into Camilla’s, and yet people do it gladly. Why? Because the pizza’s amazing.”
I licked my lips. “It was a mighty fine pie.”
“True, but there’s more. You can tell that pizza is more than a product—it’s a passion. You’ll never see a Help Wanted sign outside Camilla’s. As a little girl, I used to think I’d love to someday work at Camilla’s. I still remember how devastated I was when I learned all the staff were related. That’s all family in there, making pizza from the same recipe, in the same brick oven, in the same dingy hole-in-the-wall restaurant that their great-grandmother opened when she came from Italy over a hundred years ago. No one goes in there to fill their belly. When you eat at Camilla’s, you’re tasting history.”
“That’s a hard thing to duplicate.”
“You better believe it is.”
“So where does that leave me?”
“With something to ponder for the next three hours.” Meg turned on the ignition.
“Three? It took us four hours to get here.”
“That’s right.” She shifted the car into reverse and backed us out of our spot, satisfaction painted on her face. “But we’re three hours from the next stop on Meg’s Marvelous Pizza Tour.”
“Can’t wait.”
Graffiti covered every inch of wall space in the windowless basement of the next pizzeria. Some of the art was clearly professional, but markers on the table allowed us to add our own text or drawings to the random decor, not that it was easy to find a spot. Quite a few of the customers had drawn a Bull, the mascot of the big state university less than a mile away. Cream’s White Room blasted over the stereo, forcing customers to raise their voices to communicate. Despite it being 3 p.m., the place was packed, mostly with college students, and I gave up trying to speak over the noise. Unlike Camilla’s, this pizzeria had menus, but I was so confused by the options that I just let Meg order a pie for us both.
Our pizza came out unlike any I’d ever seen. The crust looked more like a bagel, covered in dried garlic and onion. Stranger still were the condiments. Six tall squeeze bottles were plopped on the table next to the pizza. “What are these for?” I asked Meg.
She wordlessly smiled and grabbed a slice, which she was barely able to hold, overflowing as it was with blackened chicken and artichoke. I took my own slice, but kept an eye on her as she ate her way to its crazy crust. Then she reached for a squeeze bottle, dribbled honey over the crispy dough, and downed that as well. I reached the crust of my slice, grabbed a bottle at random, and squeezed out a line of green sauce, which turned out to be the most garlicky pesto I’d ever tasted. Good thing this wasn’t a date.
I was full by the time I finished my half of the pie. But Meg only got to three of her slices before she called it a day. And though this was Meg’s pizza tour, I’d agreed to cover the gas and the pizzas. One slice wasn’t enough to box up and take with me, but I couldn’t just leave it sitting there either. So despite not being hungry, I put that one away too, using the honey to finish off the crust, which I told myself almost made it a dessert.
Climbing back out of the basement, we passed a small line of students squeezing their way in. I slipped into the passenger side of the car, which felt tighter than it had a couple of pizzas ago. “How do you know all these random pizza places across the state?”
“I used to do gymnastics. My parents drove me all over for meets, and we’d hunt out the best restaurants everywhere we went.”
“Not just pizzerias?”
“No, though pizza was certainly a favorite.”
I buckled myself in. “What was the point of this trip, Meg?”
“Ty, it’s obvious you’re deeply committed to your pizzeria. You’re working hard to make it profitable and sustainable for the long haul. I respect that.” Meg looked at me sideways. “I also suspect that if you’d bought a shoe store instead, you’d work just as hard.”
I gave a half-smile. “Probably harder. Can’t eat the inventory in a shoe store.”
She didn’t laugh. “You’re not passionate about your product. And I don’t think you’re passionate about your customers either. We’ve been to two very different pizzerias today, but they’re both killing it because they’re obsessed with their pizza and devoted to their customers. Pizza to them isn’t just a commodity—it’s their mission. No one goes to them for the cheapest slice or the fastest service.” She pointed towards the pizzeria as we drove out of the parking lot. “That passion is contagious. They’re places you want to be.”
I let out a slow breath. “Not the case with The Pizza Lab, is it?”
“Nope.”
We lived in a university town. The school was by far the biggest employer, and students, directly or indirectly, fueled most of the town’s income. But there were areas far removed from the university where I’d rarely ventured, where life didn’t cater to people between 18 and 22.
Meg dropped me off after the pizza tour, telling me she had something else to show me the next morning. Soon after dawn, we headed east and crossed under an old railroad bridge, literally going to the other side of the tracks. The homes here hadn’t had a fresh coat of paint in decades, not counting the graffiti, of course, which covered all the boarded-up buildings and quite a few that weren’t boarded up yet. Meg parked the car in front of a dusty storefront with an ancient sign that said Esposito’s.
“We’re going here?” I asked.
“You want ambiance? Or you want killer desserts?”
Desserts? That hadn’t come up since I took chocolate pizzas off the menu. “Lead the way.”
We entered an Italian bakery. There were only three tables. Two of them held old men sipping cappuccino, eating pastries, and playing backgammon. My gut told me this same group had been coming here every morning since before I was born. The third table held ladies, equally old, six of them squeezed around a table made for four.
But most of the customers weren’t looking to eat in. We stood in line behind eight others. The line moved fast, with three people behind the counter packing up a strange variety of cookies and cakes. The one in charge was a gray-haired woman in a crisp apron. She barked orders in Italian to two men half her age, probably her sons, who raced to fill box after box, tie them off with string, and ring them up.
They knew everyone by name. “Mrs. Defabio, what can I get you this morning?” “Mr. Luca, how did your wife like those cannolis yesterday?” “Franky, we have some biscotti that just came out of the oven. Here, try this.”
As we approached, the older woman said, “Meg, I haven’t seen you here in weeks! I worry about you, girl.” She swatted Meg’s arm with a practiced affection. “You’re thin as a rail. What can I get you to put a bit of flesh on those hips?”
Meg smiled, surprisingly unfazed. “Don’t worry about my hips, Mrs. Esposito. I’ve come with a much bigger problem.”
“Oh?” One of the sons perked up, still packing biscotti for Franky. “Not pregnant, are you? Pregnant ladies go nuts for our florentines.”
His mother swiped at him and missed.
Meg let it all go. “Actually, it’s my friend Ty here who’s in serious trouble.”
Mrs. Esposito turned to me, eyes narrowing. “What’s the matter with you?”
“He’s never had a quality dessert in his life.”
Mrs. Esposito eyed me with horror. “Oh no.”
“It gets worse.” Meg leaned in. “He owns a pizzeria and actually served a chocolate pizza.”
“That doesn’t sound so bad, actually,” the other brother said. “What did you use as the crust, Ty?”
“Sugar cookie dough.”
He smacked his forehead. “Please tell me you’re joking.”
My shoulders inched towards my ears. “Nope.”
“Sauce? Cheese?”
“Hot fudge and grated white chocolate.”
“OK. You could do worse. What about toppings?”
“M&M’s,” I said, bracing for impact.
All three groaned. “Mamma mia,” one of the boys called out.
I turned to Mrs. Esposito, trying to sound confident. “I sell to hungry college kids. They want dessert, and if they’re willing to buy it, I want to sell it.”
“You want dessert? Try this.” She passed me a crisp tube, flaky and golden, filled with cream and finished with a drizzle of chocolate.
I took a bite—and nearly melted. It was light but rich, creamy and not too sweet. “Oh wow.” My eyes closed. “But I could never make anything like this.”
Mrs. Esposito turned to Meg. “This college of yours is hardly the Ivy League, is it?”
Meg laughed. “He’s a little slow, but he gets there eventually.”
I eyed them both. “You mean…I’d get the desserts from you?”
“Supply a restaurant?” one of the brothers said.
“Can we do such a thing?” the other responded.
“Knock it off, you two.” Their mother snapped a towel in their direction. “Kid, we supply a dozen restaurants. Daily deliveries. Everything fresh.”
One of the brothers started putting together a tray with one of everything. “Do me a favor, before you eat each one, take a picture, because I’ve got a hunch you’re not going to remember which is the sfogliatella and which the bruttiboni. Snap a shot, taste it, then tell me how many you want. Got it?”
“Yeah. But how will I pay for all this?”
“In God we trust,” he said as he crossed himself. “All others pay cash.”
“College kids put away a lot of dessert. That’s a lot of cash.”
“He means we’re not going to extend Net 30 terms or any of that garbage,” his brother piped in, “especially for someone who is, how do I put this nicely, wet behind the ears. But credit card works. As long as we get our money right away, it’s not our business when you pay your end off.”
Using a credit card allowed me a month to pay, and my card still had enough room to handle a few hundred dollars a week in desserts. “Right. Got it.”
I received a giant tray with one each of about twenty different desserts. “These are our most popular among our restaurant clients,” the shorter brother said. “Try them all. For a pizzeria, I recommend you start out with five.”
“Why just five?”
“It’s a balancing act, kid. You put something on your menu, your customers expect you to have it available. But if you offer twenty of these babies and order enough of each that you don’t run out, you’ll be throwing too much away.” He picked one up. “I don’t care if you waste my money, but wasting a pastry my mama sweated over? That’s a crime.”
“Got it. But I guess I could offer different ones on different days to figure out which ones my customers like.”
“Whatever floats your boat, kid.”
The table of old ladies had finished their pastries and cleared out (though I suspected the old men would be there all morning). Meg and I carried the tray to the empty table.
“A word to the wise,” Mrs. Esposito called out. “Just a bite or two of each. More than that, you’ll have a crazy sugar high before you get halfway through. We’ll pack the rest to go.”
“Or slice off the bite marks and sell them to your college customers at half price,” one of the brothers said.
Mrs. Esposito smacked him with the towel.
Many of you loved our chocolate pizza. But was it better than desserts made by professional Italian pastry chefs?
That’s today’s experiment.
We’ve got five different Italian desserts on the menu today. And if you posted a picture of yourself eating the chocolate pizza last time, just show us the post, and we’ll give you 50% off your choice of today’s pastries.
Only at The Pizza Lab.
I took a shot of the five desserts lined up on the counter. I hoped the discount would nudge more people to post today, even if they hadn’t before. Would it work? I wasn’t sure. But that’s why we experiment, right? I posted the photo and ran off to class.
I brought the leftover samples from that morning’s taste tests to share in class. Professor Hunt pulled out the chocolate-covered creamy thing whose name I couldn’t recall. “What are your food costs on these?”
“I’m paying wholesale, which is 50% of what they charge at the bakery. But one of the brothers pointed out that restaurants can charge double what bakeries do, so my food costs would be down to 25%.”
“Assuming you sell everything each night,” Owen pointed out.
“That’s true,” I admitted. “I’m sure I won’t move everything. Professor Hunt said she liked to see the cost of ingredients under 28%, but even up to 32% is acceptable, so that gives me a bit of wiggle room.”
“Not much,” Owen said, brushing crumbs off his jeans. “You’ll still need to sell 80% of your desserts to keep below those costs.”
“Oh, I think Ty has more leeway than that,” Professor Hunt said.
“You think I should raise the prices even higher?” I asked.
“No need. Four times your costs is a decent margin. You charge more than that, and you’ll scare away many of your cash-poor college students.”
“But Owen’s math is right,” I said, checking the numbers on my phone. “To get under the 32% mark, I’ll need to sell 80% of my desserts, and if I want to be under the 28% mark, I’ll need to sell over 90%.”
“28% and 32% are just rules of thumb, not gospel,” Professor Hunt said. “Especially when dealing with add-ons.”
I crossed my arms. “I’m not following.”
“You’re getting blinded by the numbers,” she said, walking slowly toward the whiteboard.
“Aren’t you the one who told me I had to know my numbers?”
“You do. But you need to understand them, not just rattle them off.” She uncapped a marker. “No need to make that face, Tyler. You get this intuitively. I know you do because you made the right choice for the Hat Tournament.”
I relaxed at the rare compliment from Hunt. “When I sold $2500 worth of pizza for $1200?”
“Exactly.” She wrote these numbers on the board. “How high did your costs of ingredients go on that order?”
“Well, they were normally around 33%, and I sold that pizza for a little less than half price, so I’d estimate ingredient costs shot up to around 68% on that order.”
“And did you come out ahead?”
I shifted in my seat. “Well…mostly on the cash flow.”
“I gather it was a cash flow choice, but did the order help or hurt your bottom line?” She circled the $1200.
I hesitated. “Helped. I guess.”
“Stop guessing, Ty.” Hunt’s hands flew to her hips. Artemis mode: activated. “You know damned well that you came out ahead. Now tell me why.”
I sat up straighter to match her intensity. “I had excess capacity. The ovens cost me the same each month whether they’re full or empty. Carrie was already on the clock, getting paid the same whether she worked her hands to the bone making pizzas or was bored out of her mind checking text messages on her phone.”
“Exactly. What additional costs did you accrue by taking that order?”
“$800 in ingredients costs. An extra $100 for pulling Dedrick in for an extra shift. $20 for pizza boxes. $35 for credit card fees. Maybe I blew another $10 in electricity running all the ovens.”
Hunt tallied the figures. “So in total, you pocketed over $200 in profit?”
“Well, those were only my variable costs. I still had plenty of fixed costs, including the rent on the pizzeria for the day and Carrie’s time. When you factor all that in, I probably broke even.”
“This is where you have to be careful with the math. Your profits in October were $200 higher because you took the Hat Tournament order. True or false?”
“True.”
“But if someone audited your books without understanding the context, they would think your ingredient costs are way too high. Would they be right?”
I studied the numbers on the board. “No, they wouldn’t. That order made us money, even if we did have to take our ingredient costs over 65% to land it.”
“Precisely.” Hunt exhaled and came out of Artemis mode. “Numbers like average ingredient costs can help us understand where we’re making or losing money. But if we lose sight of the bigger context, these numbers can just as easily blind us.”
“How does that apply to the desserts?” I asked.
“I like to see ingredient costs below 28% because ingredients are just one part of a bigger picture that includes labor, rent, electricity, credit card processing, and more. Follow me so far?”
“Sure. It’s just like on the Hat Tournament order.”
“It’s similar, but let’s not get stuck on that example. In this case, you’re looking to add a product to an existing business. Tell me, how much additional labor will you need for the desserts?”
“Nothing. When we made the chocolate pizzas, I needed to bring in another employee just to make the crusts. But these I’m getting pre-made.”
“Precisely.” She wrote the word labor and put a zero next to it. “In this case, someone else is making the desserts, and their labor is already factored into the price. You’re not really paying for ingredients; you’re paying for a ready-to-sell product. How about rent?”
“No change.”
Another zero. “Utilities?”
“A small uptick if I get another fridge. But not much.”
Utilities now had a zero next to it as well. “Credit card processing?”
“That would go up.”
“By how much?”
I got her point. “If I ring it up on the same transaction, it would only add 2.9% of the cost of the dessert.”
“So even if Ty threw away 50% of his desserts each night, he’d still be making a killing on them?” Owen asked.
“Exactly.” Hunt scanned the room. “Let this be a lesson to you all. It’s almost always easier and more profitable to sell additional products to existing customers than it is to bring in new ones. So before you pour a ton of cash and effort into marketing, try to figure out what else your existing customers need.”
“Any tricks for how to do that?” Andrew asked.
“Absolutely. Ask yourself,” Hunt turned back to the board and wrote, “What do my customers buy before and after coming to me?”
“That’s it?” Owen said.
“It’s a simple but powerful question. In Ty’s case, plenty of his customers head straight to Giorgia’s for dessert. If he meets that need, he raises his average revenue per customer without seriously moving the needle on his costs. That’s a fabulous recipe for increasing both profits and cash flow.”
