The Value Of Local Business Dominance

I have a friend that launched his own pizza parlor with his long-term girlfriend. They are the only workers, and get to keep whatever they earn.

They have entered an industry of brutal competition that has existed at least since Domino’s launched their 2 for $5.99 each deal almost a decade ago. Competing on costs, or ease of internal technologies, with these entrenched pizza giants is almost possible.

But they did do something ingenious. They posted numerous signs in four local apartment complexes that said (i) if you order via their g-mail account and (ii) self-identify as a member of one of those four apartment complexes, your $19.99 will be $15. And if you specify in the e-mail the time you’d like the pizza to arrive, they’ll comply with it.

He delivers the pizza in a 2009 Honda Civic and operates out of a leasing space that is under 1,000 square feet, thus keeping start-up costs low.

In his first quarter of business, he made almost $20,000 with an estimated half of the profits coming from these four apartment complexes alone. He was shocked how, on a Friday, he would deliver four orders for 9 pizzas in an hour to these apartments, and he would instantly be pocketing $135 pre-expenses.

I understand his sense of wonder. By statistical definition, about half of the United States population makes less on a typical work-day than he makes for ninety minutes of work on a Friday night for his nascent business.

My affection is for the simplicity of how he has managed to demonstrate the spirit of entrepreneurialism in an area where many others would look at the strength of Domino’s, Pizza Hut, and Papa John’s.

He successfully tapped into the psychological desire to get an exclusive deal that nearly every consumer enjoys, and he made a tasty product that he delivers in a straightforward manner.

Often times, I cover the characteristics that are necessary to find success if you are business trying to get from $100 million to $1 billion in profits. If your goal is to build a $6,000-$25,000 monthly profit stream, there is a menu of gritty tactics that build capital.

By making a deal that is logical to him (the four apartment complexes are a short-drive from where he launches his business) and to his consumers (he chose a market that is likely to order a lot of pizza and value an exclusive discount), he has been able to turn a profit in the first year when general American restaurant data says that he has a 90% chance of failure.

Local businesses are underutilizing this type of advertising edge. You often see ads telling you to support local business for the sake of it, as if you are complying with a moral duty or obligation. It would be far superior for these type of small businesses to add a personal touch, either in the form of discounting or added gratuitous services, that its nationwide competitors do not match. Political and logistical constraints bar the major companies from giving that original, personalized touch. Therein lies the opportunity for smaller competitors.