On Tuesday we implemented our first price increase over 4 years. Kept price down by high AUS$ (dollar for dollar with US) a few back making imported lines a lot cheaper and getting great deals from suppliers.
As the AUS$ weakened to 70c for US$1 imports rose dramatically and local deals were withdrawn on tight economic markets here in Australia.
Took the hard decision to drop all or our pizza deals 2 large for $28.90, 3 large for $42.90 and 2 family for $39.90 plus increased prices between 5 to 10% across all lines sold.
As at close Thursday night sales so far have increased average orders from $33.11 to $39.11 for the week on similar volumes the previous week (and yearly average) = + $500 over 3 nights of trading 5pm - 9pm
I worked the night of the increase and only one customer asked a price and didn’t order ($13 order) and others when asked for the deals were explained we have run specials for 11 years but they are no longer viable to maintain. All accepted without a murmur and placed their usual order at a higher price ($5 - $15 higher depending on order size)
Was away from business Wednesday night as I had a minor eye operation and was kept in hospital overnight and didn’t work tonight but looking at sales figures online we had a great dollar value night with average order at $36.32 still $3 up on past week average.
Will find out tomorrow from Wednesdays team leader how the increase went and if there was any customer fallout. He normally leaves a note if things like this happen and as none was left it probably wasn’t an issue. It was a quieter night than usual but average order sales were up from previous week from $31.78 to $37.33.
It was a bold decision to drop deals and increase prices in a very tight economic market but I kept remembering what someone said on this very forum a few years back. They did a similar thing to us and he stated at the time that he could drop 20% in volume but increase profits.
It’s very early in our new pricing and volumes have not dropped so hopefully this can turn out for the better in the long term.
Why am I posting this???
I see it as an important wake up to those who are low price, multi deal orientated and think this is the only way to go.
Eagle Boys one of our big 3 cheaper chains has gone into voluntary administration as they try to find a buyer. They have lost over 50% of their stores in the past 18 months with the majority closing and some franchises going solo and PH are on the brink. Domino’s are selling their so called large 10 1/2 inch for $5.95 but where they are making huge inroads to EB and PH is that they have aimed their marketing at the young market with timed pick up apps, order tracking apps and a host other apps which young market appeal to. They made themselves very app orientated and are selling this rather than their pizzas as the main thrust. Very clever indeed.
EB and PH tried to go with Domino’s on price and have floundered big time because they focused on price without any differentiation to them all.
We have not only kept our 13" large at a starting price of $16 but now risen it between $1 - $2.50 against Domino’s low pricing.
If you have a good product, give good service above what others do and are honest to your cause customers will stay with you.
You don’t go to a restaurant and get 3 or 10 meals for a special price, Macca’s don’t do multi burger deals (or they don’t here) nor do KFC etc but the pizza industry seems to think that they have to. The big fast foods mentioned do bundles but not multi deals.
Thought I’d just throw it out there if anyone else was pondering doing what we have done.
As I said early days yet but if the rest of the week goes the same way with Friday, Saturday and Sunday making up 65% of our weeks takings we can look forward to an increased sales from the price increase and removal of deals of around $1,450 for the week.
And that is pure gross profit not to be sneezed at.
Food for thought.
Dave