Building relationships with existing customers is a great strategy if you have lots opportunities for vertical growth, but what kind of opportunities does a small, local pizzeria have? People aren't likely to eat twice as much pizza in one sitting, or to eat pizza more often. They can also only raise prices so far before pricing themselves out of the market, and too many complementary products like pasta and canolis will just cannibalize their core business, since people can only eat so much food.
Sure, it's more expensive to get new customers than to retain existing ones, but it seems likely that they need more customers if they want to sell more pizzas.
Facebook may help with that by propagating their brand through existing customers' social networks; except, as the article points out, that doesn't appear to translate reliably into sales.
They went into the local restaurant business. All they can do is build a limited customer list that will only net X amount of profit.
Once it is possible, they can systemise the whole thing and duplicate efforts by opening another locale.
As limited as we may see it, this is how most big pizzerias came to be.
I have a local chain that has been going for about 35 years. Only have they begun expanding in the last 15. They now have about 10 locales, and their revenue is close to 3 million/year.
I do realise there is a bigger issue at hand, and that is that most businesses are started on a whim. Without any planning whatsoever. When these fail, their founders blame everything but themselves. Of course, this is human nature (as detailed by Dale Carnegie in his book).
This seems to be the way most restaurants expand, probably precisely because their ability to open parallel revenue streams are limited.
One local restaurant in my town used to sell ad space on its placemats, but that probably is a negative impact to customer perceptions of quality. Maybe a pizzeria could sell ads for other local businesses on its pizza boxes.
Sure, it's more expensive to get new customers than to retain existing ones, but it seems likely that they need more customers if they want to sell more pizzas.
Facebook may help with that by propagating their brand through existing customers' social networks; except, as the article points out, that doesn't appear to translate reliably into sales.