There are plenty of 99 cents pizza shops in some of the most expensive neighborhoods of Manhattan.
How can they possibly make a profit?
Or is the goal mainly to flip the business in a few years and that that is where all the value is? So if one bought the business (in cash or loans) for 500k, one hopes to flip the business and leave with 800k from a high bidder in a couple years?
A discounted cash flow (https://en.wikipedia.org/wiki/Discounted_cash_flow) approach to valuation would suggest that the idea of making an unprofitable business for the sake of "flipping" doesn't make sense: A thing is only worth the present value of the future cash flows. A savvy business buyer would not buy a company that is consistently losing money in its current business if it were expected to continue doing so in the future (can't really think of a good reason to believe a money-losing pizza business would suddenly become hugely profitable after a change in ownership).
Could be as Valborg says: The ingredients could be cheap enough that pizza + advertising is indeed profitable after rent and other costs.
Could also be a way to make a bet on real estate prices. Maybe setting up a pizza shop is the easiest way to make a certain (albeit low) return on land in Manhattan, while waiting for prices to rise. Easy to shut down (no fancy machines to sell off, easy temporary labor without contracts, etc) relative to leasing to office or something more long-term.