Increasing Delivery Fees

Well petrol has now hit $1.60 per litre (around $7.25 per gallon) and the drivers are screaming poor mouth.

As from 1st June we are lifting our delivery charges by 50c which all will go to the drivers to compensate for the cost of petrol.

We are also increasing our minimum order value for delivery from $15 to $25.

At the moment we are losing about 50c - $1 per delivery at our current fee. It will still be the same with the increase but by increasing the minimum value it will increase our profit per delivery.

Since petrol went $1.50+ we have been getting a lot of single pizza orders for deliveries and hence we are not getting our full sale value. I hate it when people come into the store and order over the counter, or phone through and pick up and pay $15 for a pizza while others get delivery for a $15 pizza and we don’t get the same return on the sale. It irks me to see delivery orders come in as less profit compared to pick up / over the counter orders. All I’m doing is subsidising lazy slobs who want to sit on their a$$ and get it delivered.

I know there will be answers like “upsell” but we find that the single order pizza purchasers won’t buy anything else, and the drivers hate them because they rarely tip and either have the correct money down to the last cent or have a big note they want changed.

I only wish I had the balls like another outlet here in Perth who now has a $50 minimum order for delivery, plus a delivery fee of between $6 - $10. He has the following on his website under “deliveries” … ’ Due to a shortage of available drivers we wil only be accepting delivery orders with a minimum value of $50. Delivery charges extra. Please understand that this is a necessary measure to maintain any delivery service’. $50 order for this store would be around 3 large pizzas. His are all gourmet pizzas ranging from $17 - $22, plus he has just come 3rd in the world pizza plate championships so he can call the shots somewhat.

We are boxtopping with an explanation of our new delivery fee increase and minimum order value outling that we haven’t increased the price of delivery for 2 years, while petrol has increased 40% plus wages and other costs have increased.

I anticipate in the short term we will lose some single pizza customers who want delivery but that’s a fact of life. It’s taken me a while to accept that you can’t be everything to everyone and you can’t please all of the customers all of the time. Just like last night where we didn’t have a driver available and one guy abused our phone girl saying that “thanks to us he would f…ken starve tonight because we can’t deliver to him. Thanks you f…ing a$$holes”


I am with you on this one. I have also made ALL promotions for fundraisers etc PICK UP ONLY. There is a contract delivery service here that now charges $8 for a 1.5 mile radius of their (office which is in the center of town) to the delivery address. The next mile adds another $4 and the next mile adds an additional $4.

You really have 2 options. Which one you use depends on your target market. If you plan to feed the masses, so to speak, you need to appeal to the lowest common denominator. There is a group of customers out there who like it when your pepperoni cups up and creates an oil pond, and I hate to say it, but your customers sound more like them than the ones ordering $50 worth of pizza from the guys across town.

Lower the quality of your flour, sauce and cheese. Beat the competitor on price and add in a $2-4 delivery fee for anything under $20. Anything over that and you are making your money back on the labor. Every newspaper on the earth is talking about $4 gas in the US (even though it is $6 a gal here and $7.25 there). It is not like people don’t know that delivery had gotten more expensive. Keep prices low and promote yourself as a value leader in the pizza business.

Quantity over quality DOES work.

I believe staying true to quality is what makes pizzerias good and the only reason i would go to one. so if we start thinking about cutting down prices at the cost of quality then you will have something that resembles the McDonald’s case. As a consumer i wouldn’t go to a McDonald’s because the quality that i am looking for, they don’t have. This also depends on your vision and where you want to be. That’s my opinion anyways.

Sorry but no way will I lower my quality. We built the business from $7700 per week to $12,000 in 2 1/2 years on quality, quality, quality and unsurpassed service. We have people lining up for an hour to get their pizzas on a Friday and Saturday night knowing that they will get the absolutely best pizza for miles around us.

I will leave the crumbing for little dollar sales for those who take no pride in what they put out.

And talking about $2 - $4 for delivery … get real. We charge between $5 - $7.50 now and these are going up on Sunday, and even at that rate we still just about break even.

For those who want to go the low dollar sales with crap quality feel free to go broke at your expense. No way will I go there. Give me a break.

I do believe that high volume sales at economy pricing is a valid business model. I also believe that it is a crowded pool with significant competition from the “Big3”.

Dave continues to amaze us by overcoming his ugly mug with high end food and service. :shock: I am just now admitting that my horrific face on everything may be working against me . . . gotta keep that food quality up. In reality, my semi-rural area will not support the volume/economy model. I just cannot sell enough pies to cover costs. So, we use the bet ingredients we can afford and treat people real decent. We may one day hit a 12K week like Dave, but not this week . . . next week isn’t looking so good either.

You are making my point for me, although I have to disagree on your take. MacDonald’s makes a very high quality product. Without quality there is no way they could serve the millions of fries a day from Moscow to Minnesota. That is pretty much an indisputable fact. Sure fries and sodas are high in empty calories, and I know pizza doesn’t have any of those.

If you aren’t interested in MacDonald’s, there are 100 other people who are, and they more than make up for it.

To the other posters: I am not saying go out and scrape the flour droppings off the floor of a factory. The fact of the matter is that there are some very effective ways to reduce your food cost. In many cases, a lower quality flour will make a better pizza. Switching to grande might seem to be the opposite, but you can use less of it, also reducing the food cost. This is low hanging fruit man.

This isn’t a personal attack, but you can’t take pride to the bank, and lowering your food cost by making educated decisions on purchasing really has nothing to do with pride. I am sorry to say that you aren’t the one coming in 3rd in the world pizza competition. Can I make my point any harder?


I’m pretty much an ignorant American so help me out. When ever you post about your pricing I don’t know what to make of it…

I know our dollars are roughly equivalent, but do they have the equivalent purchasing power as well?

My delivery charge is going up next week. I’m at $2.50 and going to $3.00. I raised my drivers reimbursements already, but held off a bit on the delivery charge. Delivery charges going up can sometimes mean tips go down and I want to be careful not to do that.


I understand how you query our pricing etc.

Your purchasing power does seem to be a lot better than ours. My daughter arrived in your fine country a few days ago and is blown away on how cheap everything is there. I guess it comes down to economy of scale - your population of 310mil vs ours of 20mil.

To give you some sort of indication of our purchasing power etc :

Min adult wage $14.50 hr Average $24 hr Average annual salary across all $70k p.a. = 10 days paid sick leave + 9% Super Annuation + 4 weeks annual leave + 11 days paid Public Holidays. Peanlty rates of between time and a half to double time and a half for weekends and Public holidays

Average cost to get a plumber, electrician or repairman out $90 - $100 hr ( add 20% if it is a coomercial job)

Average home price $425,000 Average mortgage repayments to wages 38%
Average rentals (3bdr $385 per week, 4bdr $475 per week)

Petrol $1.60 ltr ($7.25 gal)

MacDonalds burger deal (fries, burger, soda) $6.95+
Domino’s 11.5" large pizza $8.95

Everything except food that you have to prepare yourself has a 10% Goods and Services Tax applied (included in prices quoted).

Our recently promoted 19 year old manager gets $575 per week for 38 hours plus incentives with a review in 3 months which will take her wage to $625. Drivers get $12 per hour and $13 on Fri, Sat, Sun plus $2.50, $3, or $4 per delivery drop. Deliveries range from $5.50 to $8 depending on area.

Our wages are much higher but we are one of the highest taxing countries in the world.

On the whole everything is much more expensive here.


McDonalds may have a very tight Quality Control program, but “high quality”, it ain’t. They use economy products in nearly every phase . . . and live on the economy of enormous buying scale that we cannot imagine. They’re selling really low cost foods at a somewhat thin margin, and racking in the volume sales. High Quality burger houses would be Fuddruckers, Red Robin, 5 Guys Burgers, and the like. Higher grade products at higher prices, doing fewer person-meals per year. If McDonalds used USDA Choice Beef ground in-house, and/or fresh cut russet potatoes, they’d go broke JUST ON LABOR.

Just to play Devil’s Advocate . . . you aren’t the one operating a pizzeria in a depressed economy of 2200 people in a rural GA county. Can I make MY point any harder? Pride, I do take to the bank in dollars. Here;s the thing: so many people make blanket statements and proclaim them “fact”, then the reality is that each store in each marketplace is almost a living entity with its own sentience. Sure, there are general guidelines that are truisms that can improve or decline business in each place. The single most important factor in the success of my store in my location at this time is the success my wife and I have of expressing our collective personality through the business model we execute.

For example: Door hangers have had some limited value . . . but they aren’t the silver marketing bullet that it is in places with an apartment complex, a college, an office building, etc. We have none of these resources within 15 miles to door hang. So, it has a very specific use that isn’t as great as other have found.

Another example: Grande cheese is touted by some as the “End All Arguments” about what cheese to use. Seems that the sauce/flavor profile, the oven, the customer taste preferences all make more difference than listening to a guy typing on a computer. Our customers preferred current cheese 3 to 1 over Grande. I ain’t switching, even if it saves me 7 cents on a pie. I love the cheese on its own, but less so on my pizzas.

I don’t have to come in third at a world competition . . . just 1st in West Georgia. I am doing that one month at a time.

Excellent points Nicko.

I’m doing great sales and increases well above the current eating out of home food index of -2%. We are at +21.7% so we must be doing something right. PH are closing stores left right and centre and have 80% of their stores up for franchising. Their sales are down something like 40%. Our other “cheap” franchise outside of Domino’s is Eagle Boys and just about all of their franchised stores in our state are for sale. One was doing $20K per week 5 years ago and now struggles to hit $10K .

It is obvious that they are struggling with the “cheap” concept.

I’m like Nick about being 3rd in the world. I am happy to be tops in my area and that is what I am aiming for. But saying this we are entered in this years “Best of the Best” pizza championships for the first time. I will be rapped if we get past the preliminary stage and get to the finals for the state. The exposure will be great for business.

I am also proud of my product and I bank nice dollars, thank you very much. I would rather sell 200 pizzas on a Friday night with a $10 profit than 500 with a $3 profit, and that is why we are in the process to expanding our Gourmet range where we can sell them for $20 and make $15 a pizza. Less work, less labour and much more profit. You bank dollars not volume pizzas.

What Nick siad about operating in specific markets is true in the fact that what you do to drive your business deterines the outcome and he and Kym have done a remarkable job down in hicktown central (sorry Nick but I couldn’t resist ahving a go at you. It’s been a long time since I’ve done it :lol: ). He has built his business from scratch with service and product whilst involving his business in the community. We have done similar, as have most or all of the successful and budding operators on this site. If I went down the “cheap” road I would be living in a tent now as the bank would own my house. I would have been one of the 85% of b=small business that go belly up in the first two years.


I also have to agree with dave and Nick. If you’re changing your ingredients every week, the customer will go somewhere else due to the fact they want consistency. And as stated, pride can be taken to the bank, as we’re finding out. We’re also in a small town with chain pizza places around, and we’re constantly aquiring their customers. Word of mouth and figuring out what advertising works in our has been they key.

I may change suppliers, but regardless, I will consistently order the same products regardless of price. We’ll adjust the menu accordingly. Pride in the work we do is why we get up every morning to make the best product possible. If people want cheap food, so be it. But if they want good food at a good price, I’ll be there to accomodate.

As for the orginal post, we’ll be raising our delivery charge, we can’t decide to do it by area or do a flat fee for everyone. We don’t want to make it too confusing for employees and customers. we’re also adjusting our menu prices to reflect the higher food costs. That’s why we don’t print 10,000 menus at a time, you never know what going to happen throughout the year.

i to have raised the del charge…2nd time this year…from $1.50-2.00,now $2.50
i would like to get more but i only del 2 miles out.

I find it surprising that you would label someone who only wants one pizza delivered a lazy slob who wants to sit on their a$$. Do you offer delivery service or not? Just because this ladys husband is away with one of the kids today does that mean you don’t want to sell her a single pizza? Obviously, smaller ticket prices tip less on average than larger tickets but I am always happy to take either ones money. Maybe if you run her off today because she only needs one pizza, next week when she is ordering three pizzas she will order them from your competitor as well. If it irks you so much to make less profit on a delivery order maybe you should consider a carry-out special? I don’t know how it is in your side of the world but over here it costs money to deliver. YOU DO NOT MAKE THE SAME MARGIN ON A DELIVERY ORDER THAT YOU DO ON A CARRY OUT ORDER! However, I am in the pizza delivery business and My second largest expense is my delivery labor.(behind food cost of course)

I guess I was a bit harsh calling them all lazy slobs but I was really peed by the guy who abused our 16 year old phone girl because we couldn’t deliver due to not having a driver on that night.

On the whole where we are a lot of people who want delivery are the ones who are cashed up from our booming economy and now have more money than they ever expected they would and think they are part of the “money establishment”. You hear it in the way they talk when ordering and these are the ones who want just one pizza delivered.

I am glad that your business plan of being in the pizza delivery business works for you and you are happy with it. I am in the pizza business to make money and not to subsise my profits so someone can sit at home and get delivery vs those who come and pick up.

We still maintain a delivery service but we are constantly re-evaluating the costs and effectiveness. Since haing my shop we have reduced deliveries from 50% of the business down to about 30% while increasing sales by 50%. Wages for driveres is not the biggest part of my bills but getting delivery drivers, the amount we have to pay them and the expectations some customers have on deliveries make this part of running the business the most time consuming and problem causing.

Yes over here it costs money to deliver as well, A HELL OF A LOT MORE THAN WHERE YOU ARE. Our drivers get $13 an hour plus a minimum of $2.50 per delivery up to $4. An average delivery costs me $5.50 - $6.00 with hourly rate and delivery fee and we get $5 for the delivery. Daddio understand where we are at with delivery drivers costs and availability as his part of Canada is experiencing similar labour shortages as us with the mining / resources booms.

And to sum up about “lazy slobs”. We get a number of callers who ask for delivery and at times we don’t have a driver available, times are blown out because we are busy or if we are down drivers delivery areas are reduced to close proximity, these customers will say that if we can’t deliver or get it too them when THEY want it then they will go without. If they really wanted a pizza then they would come down and pick it up. And in the main these are the ones who order the single pizza, never multiple orders.

In the end of the day as I have said many times if I could do away with delivery then I would do it today. I think within the next 2 years the way fuel cost are increasing deliveries will be almost non existent as the delivery fee will start getting to be 50%+ of the cost of the pizza and driver availability will be almost non existent. Already many Indies have dropped delivery due to the costs of supplying this service and the almost impossible task of finding staff. Others have put really high order values so that deliveries are really only for functions and parties.


We have increased the delivery charge twice this year, from $1.25 to $1.50, then $1.50 to $2.00. If gas goes to $4, which will likely occur within 2 weeks, we will increase to $2.50. We are currently paying our drivers $1.75 per delivery and still have trouble finding drivers.

I see where you are coming from, and agree whole-heartedly . . . until I read the part about the lout using the F-bomb yelling at Dave’s staff. Dave can be an insensitive wombat at times, but he hit the head with the nail on that group of people. I have had a very few experiences like this where we get brutally cussed out for not delivering 5 miles out in a desolate part of the county where no one else orders, and would take my driver in excess of 30 minutes to make the trip . . . costing me actually $5 to get that $1.50 delivery charge.

Some are customers hoping against hope that we’ll bring them dinner . . . and others see my delivery as a freakin’ constitutional right that deserves verbal abuse over a store policy. I’m all for helping out the first group, and often do. The second group gets no love from our staff.

Here in the great white north we have no addressing in the rural area(ya I know real last century) and my store is closer to some of the customers that have no address than to some of the areas that we deliver to. Tonight I had a guy from such an area cuss out one of my girls cause he is closer than where we deliver. I expalined that it is hard enough to find a numbered house on a numbered street for the rocket scientists that drive for me let alone trying to find the white house with the black Dodge parked by the shed(in the dark). I told him I was not going to argue with him, we do not deliver there and that is my final answer. He said he was going to come and smash out my windows. So he can get off his fat a$$ to smash windows but not to get his pizza.

Like many things, it seems that for delivery to work well, it must be a specialty all it’s own. The cost structures really are pretty equivalent to sit-down, but they are different. What the delivery specialist spends on drivers, extra advertising, mileage (or vehicles) and insurance, the sit-down spends on extra rent, floor staff, dishwashing, carpet replacement, tables and chairs, higher utilities etc etc. Of the sit down places in my market that deliver (5 of them) only Pizza Hut does a credible job providing delivery service. The rest would be better off with less complexity as the incremental sales they do does not justify the expense and the added process.

I looked at taking over the space next door to add sit-down a few years ago. It would have worked but the costs would have been high. An extra 30K per year in rent, about another 6K in utilities, another 60-80K in wages, about 10K in maintainance and replacement all not to mention the 50-80K to build the place out for seating. None of those expenses would help me with my delivery business. In the end I pursued other unrelated investments. I decided that the complexity combined with the expense was not for me.

Whatever business model you choose, you have keep the base set of resources/infrastructure investment busy to make the model pay. Delcos can not afford to keep drivers sitting around waiting for orders any more than a sitdown place can afford and empty dining room. In my business, we do not really turn money generator until we are running three drivers.

In the discussion about margin comparisons, it is disingenous to call the rent, utilities and wages for the seating area a fixed cost and the expense for delivery an add-on. In classic accounting they are fixed, but in a broader sense, they are choices. The delivery sale does not use those resources and those resources cost just as much as delivery. You can’t deliver without drivers and hot bags any more than you can offer sit-down without tables and chairs. The true sense in which a delivery costs extra is if it comes IN PLACE of a sit-down sale. If a delivery or carryout comes in addition to sales you would otherwise get in the dining room it makes sense to look at the margin contribution differently.

On the other hand, if you are running close to capacity in the kitchen there is a lot to be said for staying focused on the task at hand and dropping delivery. I have certainly hoped that some of the sit-down places in my town would. Of course, with the exception of PH not a single one of them carries hired and non-owned insurance, that expense would probably get them to drop delivery if they truely understood how much they are at risk for this little add on piece of business!

Our delivery charge is $2 and the average tip is $4. The main reason many people pick-up is to save the $6. I don’t blame them but so far at least, only about 25-30% of our customers want to pick up. The rest of the business is about the convenience of having hot food delivered to the door. They choose us over competition for various reasons, but in the end they are going have food delivered. If one of the strores delivering stopped doing it, the customer would simply order from someone else. I don’t see them switching to carry-out.

If your business model and cost structure is not set up to handle delivery then don’t do it. Having inconsistent, on-again-off-again service and changing delivery areas will just piss people off. Having less complexity to manage will help you focus on what you do best and you will save on some important cost areas like insurance… (you do carry hired and non-owned right?) If you are going to do delivery and want it to be profitable and not create frustration and confusion in both staff and customers, choose hours and a delivery area that you can commit to service reliably and move on. Don’t get fascinated with the missed business from those other hours or more distant addresses.