whats your thoughts on doing free delivery?
took over a pizza place in a small town 4 other pizza places 2 mom & pop places that have free delivery domino’s thats $1.50 charge and pizza hut $2.00 charge. sales are down we don’t do very many delivery’s at all and i think it’s because we charge $2.50 to deliver. so i’m thinking of offering free delivery but what does everyones thoghts on paying drivers. years ago before delivery fees i know dominos and places like that paid $0.85 per delivery and like $5.50 hr plus tips
any help on how to pay drivers with free delivery would be great! thanks.
I’ve had ‘free’ delivery since I opened. Drivers are paid min. wage, which is $7.25 at the moment with use of company vehicle. As we’ve migrated more towards ‘full service’ we’ll probably add delivery charges next year, but maybe not. Delivery is 30% and shrinking compared to take-out and dine-in. We’re growing a restaurant business not a delivery business.
So… should you reduce your fee’s? I’d think that if your product were the best, you wouldn’t have to. But, if your market ‘expects’ no fees, then you’re tat-tooed for charging a fee. Only you know your market. Do you lower prices, offer better ‘specials’ or reduce delivery fees? Ask your customers!!
obtw: most of my customers don’t even notice that we have free delivery.
There are some good points to look at in this thread. viewtopic.php?f=12&t=8777
I started with free delivery and added a fee when the gas prices hit $1.00/liter my customers never blinked at the fee. The takeout customers are no longer subsidizing deliveries.
We added a 99 cent delivery fee in January 2009 and it still really bothers me. I had to follow suit with the other two of our franchises in town. Nobody else in town offers free delivery and I think we really could have pushed our sales by marketing it well. After all, I am a pizza delivery place, I think it’s silly for a pizza delivery company to charge a delivery fee. I think it’s worse than the airlines charging for a carry on bag that will sit under my seat. I have yet to hear of a restaurant that tacks on a table sitting fee but the restaurants in my town experience huge expenses in their rent and utilities that I do not have.
Basically, If I were doing my own place that focused on delivery and didn’t have ties to others, I would offer free delivery and price my menu accordingly. I would have every one of my marketing pieces screaming FREE DELIVERY!!! I would make fun of the so called “delivery experts” that charge a fee for delivery.
right now drivers make $7.50 /hr + $2.00 a delivery
i’m thinking of paying $7.50 / hr + $1.00 and offering free delivery
if they are using there own car is that enough? the thing is right now they get $2.00 but we hardley get any deliveries and the ones that do deliver don’t tip because the assume that the fee is the tip
Personally I think pizza delivery should be free but it is a tricky situation with gas being as costly as it is and depending on how well your customers tip. Then it also depends on whos vehicle the driver is driving. I think you should price your product accordingly to cover the expense and spread it across the entire menu as it is easier to distribute that way without hitting someone with an actually delivery charge. That way you can pay your drivers a fair wage and pay them for each delivery to cover their vehicle expenses. Tips should be just that… a tip. It’s neither fair nor legal to pay a driver minimum wage and have them cover their own vehicle expenses. You then push their wage below minimum and open up a whole other world of problems…not to mention the fact that you want to treat your employees well.
In my case delivery is 40% of my business so the question begs to be asked Is it fair for the other 60% to subsidize the delivery costs?
Sorry guys but you hit my hobby horse again.
For the life of me I cannot understand the free delivery concept.
You pay for fuel, cars, wages for drivers etc so why not get a fee for it.
Paul, not wanting to argue with you about your thoughts or extremely successful operation you have, but all delivery companies charge for delivering, so why not pizzas? To say you offer delivery service does not mena that you must do it for nothing. Go to the big retailers who offer delivery and I would think nearly everyone one of them charge for delivery, despite advertising they have a delivery service.
The only reason peole want delivery is because they are just too lazy to come in and pick it up.
We charge delivery fees and always have starting from $5.50 and maxing at $8 and if people complain we say that is the cost for doing it and if you don’t want to apy then you are free to pick up at our menu price.
All the chains have a flat rate of either $7 or $8 on a very limited 4km radius delivery area and Dominos cahrge $3 extra per pizza for delivery over the pick up cost so you may pay $30 if you get 10 pizzas - and they do huge volumes of deliveries.
AS one of our politicla leaders pointed out during a major financial overhaul some years ago “there is no such thing as a free lunch.”
Dave
Who here actually has a delivery charge that covers the cost of delivery?
If you don’t, then how did you determine it is fair for the other 60% to subsidize XX% of the delivery costs?
Whether you advertise free delivery or openly charge a fee, they are still being charged for delivery. So the question is, would you gain more customers by having lower menu prices and charging for delivery separately or not?
I personally like to have options when I buy from a business so that I can choose how to save money.
I believe that every market is different, and what works in your market and culture does not usually translate across boundaries. There is no correct answer. I think the only absolute is that it’s your job to strive for the highest price you can get.
In my market, people associate pizza delivery cost as being included in the price. I have a minimum ticket price for delivery, but no extra charge. I also will offer a discount for customer pickup during some peak times. I’m a very flexible person and that shows into my business style and decisions. I think circumstances are always different for me and the customer, just as they are different for our respective markets.
Wow Dave that’s a lot in delivery fees compared to what I’m used to for pizza. Delivery fee’s are a classic case of “charge what the market will bear” and apparently Dave’s bear’s a lot 
There’s no way that kind of cost could be charged in my area. All of the places that have delivery do it “free” here, but then again there is a lot of competition having 3 major hospitals, 3 big college/universities, and manufacturing in town. One place here charges extra for using checks. when i was working for PH in another town they did charge a fee and many people assumed that was for the driver and tipped less. In reality only .50 of each $1 delivery charge went to the driver.
Dave is it customary to tip in your area and does the delivery charges affect that for your drivers?
Bryan
Free delivery is dead and has been for years. I don’t doubt that there are markets which are exceptions, but when the nationals all charge for delivery, you can rest assured that it is the industry standard.
We added delivery charges many years ago. People still ask, but when we tell them the charge is $2.00, they say “Oh, OK”, and go right ahead and order. We experience NO loss of sales when we added the charge. People understand that running a car across town costs money.
Our actual cost per delivery ((driver wages+vehicle cost+insurance)/Number of deliveries) is closer to $3.50 but I do feel that raising the deli charge that high would cut sales.
in Australia our wages are higher and we do’t have the “tipped” wage levels. Our drivers get $15 per hour plus from $2.50 to $4 per delivery depending on delivery zone. This is the cost of doing business in Australia. They also get double time and half on Public Holidays ($37.50 per hour !!!) as do all staff. We have 10% surcharge on Public holidays to offset some of this.
To us it’s not what the market will bear but what it costs us to provide a delivery service, hence why there is no free delivery here. Some pizza stores who pay “under the counter” cash to their drivers may charge $4 or $5 but to me I won’t take the risk of doing anything to jeopardise my business with the taxman. These guys are also the ones who do everything to avoid paying taxes, workers comensation policy, proper pay rates etc and to mine should be driven out of the buisness world.
For us and other reputable businesses to provide delivery it costs us a minimum of $5.50 to the closest delivery point (time plus delivery fee) and on most we either break even or the cost is more than the fee charged. A sad fact of life for us. Sadly I haven’t got the b@lls to charge $8 like the chains for someone less than a km from our store but then again If I had a million $ to spend on advertising each month to tell customers about us and brainwash them into thinking they are getting a great deal then I possibly could.
We don’t live in a tipping society so tips are an added bonus when they are given. Drivers don’t expect them but appreciate them when given. Some customers are very generous while others count out to the last cent but our guys don’t care as they are well rewarded for the time and use of their cars. Some nights they may get $20 - $30 in tips across 10 - 15 deliveries and other nights maybe $1 or 2. Just depends on the night and the customer. We have one customer who orders weekly and pays by card over the phone giving the driver a $5 tip everytime just because they know the drivers are students or just young guys or girls (yes we have both) doing their best in the world.
Dave
I’ve personally never understood why the cost of delivery isn’t just built in to the menu prices and never mentioned to the customers.
And let those who drive down and pick up pay more ???
dave
The more I read this the more I am thinking it really has to be a balance of both worlds. You have to buffer the base prices slightly to help cover some of your delivery expenses and the more I think about it…yes delivery should be a fair and expected fee. You the customer would spend the same amount of gas…more or less… picking up the pizza and the time lost spent with your wonderful family (read with lots of sarcasm, as I have a 3 year old that is driving me crazy) or whatever else is keeping you from picking up dinner is the price of convenience. Now the hard part is charging the right fee that won’t drive sales down but will also help pay for the actually expenses that you incur. This is where “hiding” a little into the bottom line of each purchase and then charging a lower perceived delivery fee might work to your benefit. :mrgreen:
I remember in Columbus, IN (our now-closed factory town location) really pushing the free delivery aspect in our marketing for a good 4 to 6 months. Some of the ads were in the MDL format pointing out how everyone else was charging for delivery and we were still offering FREE delivery! The sales meter didn’t move in any noticeable way after all that time so we figured it wasn’t a selling point and wondered why we weren’t adding a service fee also.
The following year, we implemented a delivery fee that smack dab in the middle of the range that other Delcos were charging. Our delivery sales slowly began to slide and never recovered up until the time we pulled the plug. Did the free delivery matter to our customers? I’m not sure but it really seemed that way. Wasn’t enough to pull new customers but maybe it was helping us to retain the base we did have - we’ll never know for sure.
On the other hand, we jumped on the delivery-fee bandwagon pretty early in our college market - even to the point of charging a bit more than our main competitor. It has allowed us to hold off on a price increase on our package deal. That allows us to advertise the deal at $10.99 +tax (& + delivery!) instead of $11.99 + tax. Every time we raise the deal price the volume drops - we didn’t take a hit near as bad when we added the delivery fee instead.
So, I am clearly straddling the fence on this issue… unfortunately, I think it’s made of barbed wire.
I have argued with many people here in the past who throw the “why should the carryout customers subsidize the delivery cost” argument to which I have countered with the absurdity that most would see in adding a sit down fee to cover the extra occupational costs associated with having seating. Here’s another analogy in the foodservice industry that I’ve come up with:
In my town, there was a closed 2500 square foot building with a drive through for rent for over 10K per month. Just four lots away, with better signage was a 5200 square foot fully equipped restaurant with a bar for rent for $4400. It seems obvious to me that the drive through added significant costs to the tenant that rents that building. Would anyone here think that it would be acceptable if the burger place that locates here adds an additional drive through fee to their customers that opt to use the drive through as a way to recoup the $6000 per month expense the drive through costs them. If you don’t think this would be acceptable, why would you think customers of a pizza delivery company would find it acceptable to pay an additional delivery fee?
Delivery fees really is a big bone of contention for some even these years after it has become common in the pizza marketplace. It is something that we chew on every now and again at our shop. My short response is below . . . followed by topics of consideration and discussion between my wife and me or with other operators:
THE MARKET, FOR VARIOUS REASONS, HAS ONGOING DOWNWARD PRESSURE ON PIZZA PRICING
WE CANNOT AFFORD TO SUCCUMB AS AN INDUSTRY TO BOTH MENU PRICING PRESSURES AND DELIVERY
FEES AT THE SAME TIME WHEN FUEL IS ABOUT TO CLIMB AGAIN AND FOOD PRICES ARE NOT DROPPING
It may be a purely acedemic argument if the market you operate in will not allow for price increases to cover actual cost of providing delivery services. People aren’t taking price increases to cover food cost increases, and somehow they are supposed to add in increases in labor, fuel, insurance, etc.? Not seeing the real world effectiveness of the plan. Here are the things we often talk about in my workd when talking about delivery fees:
1. Type of business: If you area DELCO, then the consideration is far different than a restaurant that is or trying to be a more dining room centered location. Pick-up is the center ground that accounts for the rest of the customer percentage. If your concept is delivery centerd, then it can make some logic to buildit into the pricing as a cost of doing business or a sort of extended cost of producing goods. Build some exta into the pricing to cover the [size=5]HUGE [/size]costs of providing delivery service. It just makes a seasonable flow of costs through to the customers who are generating the cost need.
If you have a large enough base of dine-in and carryout customers, then the picture clouds a little. You gotta make it all make sense with you blend of service types and percentage of customers using each. If customers are not overrunning your delivery service, then game on.
2. Princing as volume control: When you are providing pick-up and delivery for the exact same cost, then there is an enticement to customers to use delivery service more often. Convenience at no added cost. If that is already build into your pricing structure strategically, then you could be fine. If not, then you may be leaving money on the table. Variable pricing allows an owner/manager to have controls over various distances or any delivery at all. Higher fees will tend to reduce the numbers of delivery service requests for a given area. If you don’t want to tell customers “NO”, then you can assess a larger fee to tend to discourage all but the serious customers from asking for delivery. Marketing tools can focus on the “no fee” pickup, or the casual, relaxing and no-fee dining room. Either way, you just pick which way you want to drive your growth . . . reduce or eliminate fees to grow delivery service (as long as you are recovering those costs somewhere else) . . . increase fees steeply to sharply reduce delivery service . . . . and then all the ground in between.
3. Recover fees where they are incurred: It will make more bookkeeping sense and be easier to explain to customers when charges are placed where costs are incurred. It costs me a box to send a pizza out the door, so adding that costs to the pricing structure makes most sense for customers requiring boxing. It costs me less to provide our dining area and facilites than it would to provide 75% or my customers delivery service. My cost of goods to provide a pizza to the dining room is h#ll and gone less than a delivery pie (wages, packaging, insulated bags, waste/replacement from complaints, check/CC fraud incidences, cartop signs, insurance, worker’s comp kicker for driver, etc.). Even when you consider a marginally higher utility cost to condition that space, it just doesn’t compare. So, customers might be confised/freustrated at paying the same price for delivery as for dining in.
4. Market Position and branding: Let’s face it; if you live in a place where customers will pay you $3 delivery fee without complaint, then you should likely charge at least that much. We are ultimately operating a money-making venture that is about generating profits. If I could add $1.50 additional revenue to every delivery order and not cause waves in the marketplace, I would certainly have to consider it seriously. A ‘gourmet’ pizzeria and/or restaurant in Atlanta would be more able to have people willingly pay $5US for delivery than a small indy DELCO in rural Missouri. Those 2 markets are just different, and people will perceive the businesses differently. If there is a cache to the food, then higher delivery fees will be accepted. Same is true when you have clean cars, uniformed and courteous delivery personnel, and over-the-top service levels. (not to mention consistently hot food delivered in good condistion)
You also gotta pay some attention to who else is delivering and charging fees. It is insane to price yourself out of contention, just as it is insane to leave money on the table by charging no fees when all the rest are. [b]I offer that customers will only quibble about a $2 fee when the food is not spectacular.[b/] Collect the fee and spend time making sure you have the best food and service available at your price range. Have occasional “free delivery” specials if you are losing sleep over the fee; have no fee on orders over $50 if you must, have delivery loyalty cards where they get punches for every $30 in deliveries or whatever.
[b]5. Value added model:[b/] Another viewpoint and model to work from is that of building into the pricing structure all the costs of the most expensive service modality (i.e. delivery). that becomes your baseline . . . . and then you have some flexibility for value added for the other service types. Delivery customers get free delivery as a result: no fee. You as the operator get flexibility for marketing and specials that have better value to customers who dine in or pick up in our example. A signature appetizer could be given to every table in the dining room or have dining room only menu items; pick-up customers could get complimentary beverages while waiting for their order; whatever you find that gives the customer that feeling that they are getting more for their money.
We quibbed about adding a fee until we finally did in 2005. Everyone understood our costs, saw pizza deliver fees all over the places, and were accepting. Lost maybe 3 customers over it. Since my dine-in customers have my highest ticket average, and offer me greatest segment for growth, I am aiming at building that segment and encouraging more customers to come to the dining room more often. I will not punish the delivery customers since they are a valued segment to keep the business going . . . I will probably not make any fee reductions or great big special offers for delivery either.