I have been dreading to a price increase for about a month. I just opened Late Nov. of last year. Today i found out that the Papa John’s down the road is 1.20 more on their gourmets than i am. And i have heard they are charging 2.50 for delivery. Needless to say, that made my outlook on raising my prices alot better!
Sounds like you should raise your prices by $4.
We as owner/operators are always trying to monitor the reaction of our store activities and customer retention. Anything that is construed as negative needs to have an excellent implementation to it. I personally am starting to raise prices for the first time in 3 years. Everyone that has ever done this has rarely drawn the wrath from our customers that we expected. What I have found is that it is the price of the specials that need to be tweaked. With the economy in the state that it is in, we need to remember and understand that cash flow is going to be very important.
Yes, raising prices may be needed, but wouldn’t it be easier to rebundle some high margin items with pizza? Instead of raising prices, in the past, I reconfigured my phone specials and mailout coupons for a better price point.
Remember above all else…we need to do what is necessary to make the phone ring. We need to be on the front line and know what specials are being asked for. Get rid of the ones that aren’t and continue to doorhang.
A very sharp individual, who works for my franchisor, sat me down a while back and asked me to draw a circle and put my store in the middle. He then asked me to divide the circle into 1/4ths. Now pick the quadrant that most of my business comes from. This proved to me that I need to focus on where the pizza is being eaten. It lets me know that I need to spend my marketing dollars in the quadrant mostly and work on the next most popular quadrant.
Sorry for rambling…we just need to go back or stay at the basics of what we do.
Wow, $2.50 per delivery?
Must be a per region thing…we charge $1.50 per delivery here.
We will be charging $2.50 for delivery as well. We will have out own cars and will be serving ‘gourmet’ pizza. $2.50 will cover the true costs of delivery versus pickup.
That would make more sense.
I can’t imagine charging over $1.00 to $1.50 per delivery when it’s on your driver’s cars and not yours.
Are you sure $2.50 actually covers the true cost of delivery?
Last time I figured it, it cost me over $3 per delivery - including drivier comp, driver wages (including taxes), and all insurances. We also “just” charge $2.50, and that covers a lot of the cost, but not all of it. BTW - Our drivers drive their own cars.
Many stores in our franchise group charge $3.50 for delivery - and I often wonder if I should be doing the same.
We’re at $2.50 as well and you’re right, it doesn’t cover the actual cost of delivering a pizza. Drivers use their own cars and receive between $1.50 and the full $2.50 depending on the range of delivery.
For short runs, they’ll be gone at least 7 minutes. That alone costs me 83 cents in labor costs and I only have $1.00 to work with from the delivery charge. This is best case scenario.
For our longest runs they’ll be gone for 35 minutes round trip. In that case they receive the full $2.50, leaving me with nothing from the delivery charge. Their labor alone will cost me $4.17, and I still have insurance costs to cover.
Drivers taking doubles helps, but then you also have to factor in the labor spent when they’re standing around waiting for deliveries. That increases the average cost per delivery quite a bit.
Dewar, having your own cars doesn’t help the picture too much. You’ll still have the same labor cost as above. Of course you’ll be keeping the full delivery charge, but fuel and maintenance costs will eat all of that up. Not sure about your insurance company, but I know our’s charges much more for owned vehicles. Overall, I think it may come out to a wash with owned vs. non-owned vehicles.
With that said, we’ve been at $2.50 for over a year now and will probably increase to $3.00 or $3.50 if fuel prices rise as expected. I plan to fully pass along any additional costs on to the customer.
Yup. We are only delivering within a two mile radius to begin with. We will expand to a maximum radius of 3 miles (but not in all directions). With some processes we have come up with for delivery efficiency, we expect to average 6 orders per hour per driver (during the rush). Will let you know how it works out in the real world.
Piper, We use store owned cars as well. The insurance is the same price. Fuel and repairs do add up, but all in all it comes out a little less expensive than paying drivers to drive their own cars. The real advantages are that, first of all, I can hire people who do not have a car which more than doubles my pool of possible employees for driver and second I am not dependent on their cars. No more calls that they can not work the shift because their car is not running, in the shop, etc etc
Our delivery charge is $2. I figure the actual cost is more like $3.50.
Wow…I wonder how my store is handling this, then?
We take deliveries in the largest radius for my area…we’re talking some deliveries are more than 15 miles away.
I have never seen the computer adjust to a higher delivery rate per sector…so I am left to assume that the delivery rate is the same for all customers.
Hmm…maybe I need to share this with my boss.
So here is the catch. I am a dine in/carry out store. I know my pizza is better…i have been told from countless customers. I dont want to increase to much as to lose the carryout biz due to the price factor of the customer paying more for a better product, but having to come pick it up. So as a newbie, do i match or stay .50 less than their price to still make it worth their time to come and get it. Thanks to all in this forum…ya’ll are a plethera of knowlegde!
The PJs did that here too. What do they care how far they make the driver go when they are only out $1.00? The drivers are subsidizing the business with the fuel and wear-and-tear on their cars.
My partnet and I bought a poor performing pizza place many years back…The 1st thing I did (with my partner kicking and screaming) was raise our prices so they were higher than anywhere else in town…Then we started marketing the fact that we could not make the best pizza without charging a decent price…At first our sales dipped but they came back quickly…The extra money allowed us to use better ingredients, get custom printed boxes and colour menus…And most important we were carrying more to the bottom line…We bought the shop for less than the value of the used equipment and sold it one year later for 4 times that…
Who do you use for insurance? I’m with HRH, and paying about $2,000/yr for non-owned for all of my drivers. They want about $2,000/yr per car for owned insurance, and I would need at least two cars.
You must do less than 50% of sales for delivery to get coverage like that. Basic Hired and Non-Owned for a delco runs about 4K. We have 1M/2M coverage with National Indemnity (a division of Berkshire Hathaway)
BTW, What is HRH?
In the end, it is not the cost factor that controlls the issue for us, it is the tough employement scene. I calculate that, all in, we come out $2-3K ahead per year with our own cars, but the ability to hire from a larger pool would be worth giving that savings up if I had to.
Well that’s probably what makes the difference; we’re primarily a dine-in restaurant (70%) and only deliver between 15 and 20%.
HRH is Hilb Rogal & Hobbs. They handle the non-owned insurance program for NAPO.
I thought maybe that was the case. The NAPO program is not available to Delcos. You have to have less than 50% delivery to qualify for it.
Delivery fee is 2.00…just logged in on their web site. Man i thought i was close to them on prices when i opened in Nov. They must have went up. im 2 to 3 dollars cheaper on them on all their pie’s!!! We got our highest selling day yesterday and am praying for another record tonight, need to make up for the slower part of the week. Makes me wonder what i could do with delivery…RG