Sometimes you just have to bow to the prevailing business model. In pizza, if you are on the DELCO side of things in a market where the franchises operate, that model includes coupons. You can choose to swim upstream and in some markets may be able to do so but walking away from such a large piece of the pie can hold you back.
Nobody pays sticker price for a car and consumers have been taught to expect that. The same is true with the big franchise pizza operations in delivery/carryout. If you want to go after that market at all, you are generally going to have to play the game to some extent. The good news is that you can pretty easily build it into your price model.
I am not suggesting that you have to go after their price point. It is fine to be more expensive than they are as long as your product is better. Ignoring the role of coupons in the market is not the same thing as pricing. If the consumer is motivated by a deal you can have a price structure that puts you higher than they are, give a discount for a desirable order and still be more expensive than they are but motivate a customer to order from you or to add on to their order.
Focus that offer on the orders you want! Multiple pie orders are far more profitable than single pie order. Pies with lots of toppings are more profitable. $5 off when you order 2 named menu combos (our menu combos all have at least 4 toppings and some price out up to 9 toppings) may make more sense than $2 off a single pizza that does not require a large number of toppings.
(BTW, if you are not doing menu combos you a missing a significant opportunity. Customers are just not all that creative. You can give them an attractive combo with 4-5-6-7 toppings that has a name and attractive description and they will order it instead of the 2-3 topping pie they would have thought up themselves. We have about 20 of these on our menu.)
Almost nobody’s delivery charge actually covers the true cost of delivery. I know that in my operation if I take driver wages plus all vehicle/mileage related costs plus delivery insurance and divide it by the number of deliveries we take in a year that our delivery charge ($3.00) covers about 60% of those costs. By my calculation, a carryout order is at least $1.50 more profitable than a delivery just based on that. So yes, an offer that promotes carry-out orders makes sense. If my pricing is based on being able to offer a couple of dollars on a large pizza I can easily offer $3 on one for carryout and still come out ahead. If a promotion adds another 25 delivery orders to the dinner rush I need another driver and another cook. If it adds 25 carryout orders I only need the cook.
Agree w/ you guys- appreciate the replies.
I did the same, really- where do I need to be price-wise where I am comfortable and reasonable.
After my 32 years w/ Domino’s I was so tired of bottom-feeders, counting pepperoni, using the cheapest crap that they would drop off at the store and having chest pains when I saw people over-cheesing.
People would say “$7.99 for a large 3-topping? Don’t you have any deals?” “Yeah- there are a few in the dumpster from last night- those are half-price”
Anyway… I set the place up the way I did and I will sink/swim!
I’m the anti-Domino’s; Really a slice place, though I do whole pies. I offer 3 items: Paninis, pies/slices and salads- that’s it. Literally. Eat in/Carry out. NO delivery. Nice place, close at 8pm, closed Sunday, etc. So I am in no way playing with them- at all in any way. Don’t want to.
Someone came in and said "Well, I could call Domino’s or Checkmate (local DELCO) and I said “Your in the wrong place if you want a $5 pie” I was nicer than that but…
At this point- and at this point in my life (53)- I have to be (and stay) true to my vision even if it does not work.
Totally makes sense. I would not offer coupons in a slice place either unless I was tying to build up lunch or some night of the week that was slower… but never as a basic part of the everyday business. I might offer a punch card for regular customers though.
Not to beat this to death but… lady comes in yesterday and says “Do you have any lunch deals?” And I think to myself “…other than the $2 (18”) cheese pie slices?" I even carry cans of soda so I can sell a drink for a buck! Really trying to have some great pizza, but also have a place for an inexpensive lunch; 2 cheese slices and a can of pop for $5!
The place I took over was a $5 large pizza place before. At first I just raised it to $7 large carry out special thinking I could keep those customers while building my own customer base. Everyday people would come in, ask for the $5 pizza, then walk right out. It was very disheartening. Some days we would barely make $100 for the entire day. After about a month of that, I made the decision that those people weren’t going to be my customers and stopped selling pizzas so cheap. There were still days where I made only $100, but at least that was with MY customers and not people that were just looking for the cheapest pizza possible.
As a side note, I started a loyalty program to replace coupon type specials. If you want a deal, you have to receive it through email and I don’t have to train my employees on a million different coupon specials. You might want to think about something like that, or like Bodegahwy suggested, a punch card. Something that encourages people to order more.
Like the punch card idea. Thought about it- and it was suggested- early on.
Quite frankly, I hoped to not have to, if that makes any sense… not being arrogant… just figured I’d do a bit better.
But you are right- you have to know and embrace who your customers are.
Early on- before DP became the 5.99/7.99 pizza depot, I had the highest ticket in the DP system- or so DP told me; $31.72 I knew who I wanted my customers to be and marketed the store to them and for them. Worked for 10+ years but as soon as DP went to the Wal*Mart model (successful as it is for both) it became increasingly difficult to constantly swim upstream; That gets VERY tiring.
There is always more than one way to skin it, you pick the easiest and the best for you. Yes, we want to survive doing this but each one of us has different goal/objective. I never really cared for big pizza chains because my typical clientele don’t shop there but their clientele is welcome to stop by at my place and that puts me in advantageous seat.
People love coupons it gives them a sense of saving money. You can over price something by $3 and give them $5 off and they think they hit the lottery. JC Penny tried going the no coupon route and they almost went out of business. If you look at Dominos pizza prices they are probably more expensive than most of the other independents out there but they offer the huge discounts and people relate to them as being cheap. But if you don’t take advantage of their specials you’ll end up paying $25 for a 12” 3 topping pizza after delivery charge and taxes.