Di Fara is considered one of the best, if not the very best, pizza in the country.  People travel from all the states just to taste its drizzled oil greasiness.

The price for a plain slice is $4.  The price for a regular pie is $20, and a sicilian pie is $25.  Each pie has 8 slices.  Di Fara is open Tuesday thru Sunday, noon to 4:30pm and 6-9pm, a total of 7.5 hours per day, 6 days per week.

A best-case scenario

I’m going to come up with a best-case scenario for Di Fara’s gross sales.  To do so, let’s assume, on average, a pie takes a half hour to produce: 15 minutes of prep time, and 15 minutes of cooking.  While the pie is cooking, another pie can be prepared.  So there are effectively 4 pies produced every hour.  Those who have visited Di Fara will realize that this is a very optimistic average, considering that waits of 2 hours or more are a regular occurrence.

Let’s also assume that all pizza is sold by the slice, since individual slices are more expensive than slices by the pie, so this will boost our projected sales.  We’ll say the average slice is $5, even though this is far above a realistic average.

Furthermore, let’s assume Di Fara is open the full 7.5 hours per day, 6 days per week (Tues thru Sunday).  We all know that it is often closed intermittently, but assuming longer hours will again give us a best-case appraisal of the business.

To complete our analysis, let’s assume that for every two slices, a customer also purchases a $3 beverage.

So, here are our assumptions:

• Cost per slice: $5 / slice
• Cost per Beverage: $3 / beverage
• Beverage sales: 0.5 beverages / slice
• Hours of operation per day: 7.5 hours / day
• Days of operation per week: 6 days / week
• Weeks of operation per year: 52 weeks / year
• Average time to prepare pie: 0.25 hours / pie
• Number slices per pie: 8 slices / pie

From this, we can calculate the number of slices sold per week:

Total number of slices produced each week = Hours of operation per day * Days of operation per week / Average time to prepare pie * Number of slices per pie
= 7.5 hours/day * 6 days/week / 0.25 hours/pie * 8 slices/pie
= 1440 slices/week

Gross pizza sales are:

Gross pizza sales = Slices per week * Cost per slice
= 1440 slices/week * $5/slice
= $7200/week

So Di Fara sells 1440 slices per week.  And for every 2 slices, they sell a $3 beverage, so total beverage sales each week are:

Gross beverage sales = Slices per week * Beverages per slice * Cost per beverage
= 1440 slices/week * 0.5 beverages/slice * $3/beverage
= $2160/week

Total gross sales per week are just pizza sales plus beverage sales.   So…

Total gross sales per week = Gross pizza sales per week + Gross beverage sales per week
= $7200/week + $2160/week
= $9360/week

Di Fara makes gross profits of, at best, $9,360 per week.  For the entire year, Di Fara would make 52 times this amount, for the 52 weeks in the year.

Gross yearly sales = Gross weekly sales * Number of weeks per year
= $9360/week * 52 weeks/year
= $486,720/year

So in a best-case scenario, Di Fara makes $486,720 in gross sales per year.

A worst case scenario

As we’ve already discussed, the total above is what we’re assuming to be a best-case scenario.  A very unrealistically great business.  The real number is probably significantly less.

Whereas in the best-case, everyone orders individual slices, our worst-case scenario will have everyone ordering plain pies.  Maybe Di Fara only produces two pies per hour…  And what if people only bought one beverage for every 4 slices, and Di Fara was forced shut for 4 weeks out of the year due to health code violations and knee surgery?

If we were to change our assumptions to reflect a worser case scenario, we might have something like this:

• Cost per slice: $2.50 / slice
• Cost per Beverage: $3 / beverage
• Beverage sales: 1 per every 0.25 beverages/slice
• Hours of operation per day: 7.5 hours / day
• Days of operation per week: 6 days / week
• Weeks of operation per year: 48 weeks / year
• Average time to prepare pie: 0.5 hour / pie
• Number slices per pie: 8 slices / pie

That would give us:

Total number of slices produced each week = Hours of operation per day * Days of operation per week / Average time to prepare pie * Number of slices per pie
= 7.5 hours/day * 6 days/week / 0.5 hours/pie * 8 slices/pie
= 720 slices/week

Gross weekly pizza sales = Slices per week * Cost per slice
= 720 slices/week * $2.50/slice
= $1800/week

Gross weekly beverage sales = Slices per week * Beverages per slice * Cost per beverage
= 720 slices/week * 0.25 beverages/slice * $3/beverage
= $540/week

Total weekly gross sales = Gross weekly pizza sales + Gross weekly beverage sales
= $1800/week + $540/week
= $2340/week

Gross yearly sales = Gross weekly sales * Number of weeks per year
= $2340/week * 48 weeks/year
= $112,320/year

So the worst-case scenario has Di Fara making gross profits of $112,320 per year, about four times less than our best-case scenario.

Conclusion

The reality probably lies somewhere in the middle.  If we take the average of best- and worst-case scenarios, we’d end up with an estimated gross yearly sales of around $299,520.

Gross sales do not take into account labor costs, supply costs, rent, taxes, waste, insurance, etc.  At any given time there are 2 or 3 people working in the pizza shop: Dom Demarco, his son, and/or his daughter.

Rates for net profit after all costs in the food industry are very low, usually in the low single digits.  But let’s say Di Fara, being a cheapo family business, has net profit somewhere between 10% and 30%.  Thirty percent would be considered amazing in the restaurant business, but maybe Dom is a genius after all and pays his children nothing while shorting his suppliers.

This conservative estimate would put Di Fara’s net profits between $11,232 in the worst-case, and $146,016 in the best-case.  If we are to take an average of these in order to get a best reasonable guesstimate of net profits, we’d have Di Fara’s earning a net profit per year of $78,624.

Conclusion: Dom Demarco is a fool

Dom Demarco of Di Fara