Looking for some pricing advice...

Pizza Shop Talk The Think Tank
1

I got a visit from a lady tonight who is looking to place a large order for May 8th & 9th. The food is for an employee appreciation night at a nursing home. She is looking to purchase 55 Large Pizzas and 960 Wings. The catch is that she is going around to all of the local pizza establishments and taking bids on this order. She is also going to order from each of our places tomorrow and have her staff sample the food. She’s then going to decide who to order from based on a combination of lowest price and taste quality.

If you were in this situation what kind of price would you submit to her for this order?

My food cost on this order is $388.87
My normal menu price for this order would be: $1175.51

I have to call her tomorrow morning by 10:00 am with my bid.

Thanks in advance for any advice you guys can give me.

2

We have a number of catering orders a lot like that.

We discount the pizza 30% from the menu price.

We serve the wings in large foil pans that we get from Safeway (turkey baking pans) I take the cost on the wings including sauce and containers and double it.

If we deliver and serve the order we add a 10% gratuity, if we only deliver it we add 5%.

We include napkins and packets of parm and red peper as well as paper plates for this price. We buy the $2 tongs from Safeway to serve the wings and attempt to get them back but do not sweat it if we do not.

After that, we depend on our product to make the sale.

One suggestion that I have is that people charged with organizing these things really want them to go smoothly. Assuring them that they will get great food, delivered hot and on time goes a long way. I would tell them straight out that you realize how important this is and that you, as owner, will make it your priority to see that they get the kind of service they deserve.

3

Thanks for the advice.

4

This is very true. I have a caterer that orders $300 to $500 worth of pizza every week from me. My price is the highest that she was quoted but my service is the best she has ever had. If she wants the order there at 11:00 I am there between 10:55 and 11:00 EVERY TIME. That is why she has ordered from me for 2 years and never complained when I need to raise prices.

5

You need to look at how much an order this size will screw up the operations of your store. If you’ll be able to handle this with no problem, offer what you feel will be the cheapest price. If it costs you $389 in food, and you can do it with the labor you are already paying for then quote it at $600 or $700. If you need to bring in extra labor, you need to charge more. I have a hospital that orders 200-300 pizzas a few times per year and pays more per pie than they do when they order 20 pizzas. Reason being is that when they order 200-300 pizzas I have to go and pick up a few more cases of products, plus I have to bring in extra labor to help push them out. Figure out your cost for the order and sell it to them with what you deem a reasonable profit. If they choose someone else, you should not feel you didn’t offer your best deal. If they choose you, you should feel good about sending them this order.

6

I have to agree with Paul here. I would turn down this order if it was Friday night. If it was off-peak times, it would be a piece of cake. There is no way i would be able to provide this on a friday night. Charge exactly what Paul says. If you need more help, make sure you take that into consideration and price accordingly.

7

Yep, Paul’s right. Hope you got the order & made some money. What was your offer?

8

All solid responses. This is where your product “differentiation” comes into being. Unless you are a “low price” place, don’t kill yourself over it. Time of day should play a big roll in your thinking.

9

You could always call the other stores and ask them similar questions and find out what their charge would be.

10

I like the comment “you should feel good about sending this order”.

When I first opened, I took on some big orders & sold some of them (against my better judgement) too cheap. The customers placing the orders kept reminding me of all the exposure I would get, new customers, blah, blah, blah…all the while working me over on the price. Took a beating on one because I had to turn down 2 decent size orders (about $125 apiece, full price) for the same daypart. So that Friday, I am running high labor, high costs & left money on the table with 2 new customers. I was not happy about sending that order out. I don’t like to, but sometimes it’s sure nice nice to say no.

11

This is always a red flag comment to me. It usually means they are just calling around town working people over for the best price and they will do exactly the same thing the next time around. No loyalty.

12

Yep, that was exactly the case. Didn’t hear from them for about a year & then asked for the same deal & that I would need to throw in napkins, plates, cups etc…etc… this time. Quoted them 30% off, paper products at cost and driver tip. Never heard back. Offered a better offer if they would take order right at 10:45am, no good–had to be 12:30.

13

Unless the order is for some period where we are totaly blown out, time or date of order makes no difference to us. There are maybe 15 days a year where this would be an issue and they are all between Dec 26 and Jan 15 and between 5PM and 7PM. During that holiday period, I would have to insist that the delvery time be no later than 5PM

For an order this size, I would add one prep guy a couple of hours early and another cook to help make it. 55 pies is a solid hour for us on a busy night, but we max out at about 100 per hour, so as long as we know about the order a few days in advance we can schedule to cover it it poses no issues. This size order would not cause us to change our food ordering at all.

Since prep and food are already in our prices, I would not charge more for “inconvenience” and I think that it is mistaken thinking to do so. Big orders don’t cost you more, they cost you less than regular orders. With good planning and staffing, you should be able to pull this off and not lose any regular business.

If your ovens/kitchen is stressed to handle this volume in under an hour that is another question alltogether and if this amount represents more than a typical day’s business I would guess that food ordering would have to take it into account.

14

I tend nto agree with bodegahwy on this one.

We get big orders from a big local bank and a local insurance company 2 or 3 times a year normally 50+ pies over a couple of hours. Do we do thema speical deal - of course we do. Whilst having big orders means we have to get extra labour in it also means you work flat out so you rlabour is normally a lower %'ge than normal. we get the order 2 or 3 days in advance and we start making a couple of hours before. We slap, sauce and top the pizza’s and then put back in our dough trays and then back in the walk-in. Then when its time we can load both overs to maximum capacity - one loading and one of cut - works really well.

Yes you need to make money on. But bearing in mind I probably get an extra store crew and extra driver fgor a couple of hours the labour is minimal. I don;t mind an extra 10% on food cost for one order if its over 150-200.

It is also a great way to get new customers if you do the order well - but likewise a great way to loose them if you stuff up the order!

Would I do it if I thought the cost was too low - no

15

Bodega,
I know you do a nice volume, but there are way more days than 15 per year for a few hours when I won’t super-discount orders. Also, I employ my best people full-time & have few part time employees. I have found this the best way to keep good people who are reliable,take their jobs seriously & reduce turn-over. I also pay them well. So, bringing in extra help is at a premium (with overtime) & we are talking about taking these orders when there is no slack production time. Certainly, taking them during the flat part of the day is no problem, or early dinner, late late dinner–no problem. Pushing out big deep discounted orders in prime time, well something ultimately does give.
For example, on a Friday night between 4-8, there is no way I would take on a discounted 50 pie hit. No way. I just don’t like putting out big tickets for short dollars. I get the idea of MR=MC, but the production environment in a pizza shop is much more dynamic than that. We are hand tossing & screening to order, with some racking at dinner running double MMs. There are lots of cheats I could employ (and I do have some tricks up my sleeve), but using pans, pre-saucing beyond 20 minutes or pre-dressing pizzas is not an option I want to engage.

Here’s why: Let’s say I took an order down 40% in price. To use round numbers, a $10 pie, I sell for $6. If my food cost + packaging is 30% normally, I just went to 50% FC and have a $3 contribution margin before labor increases, $150 bucks. The extra labor, most likely in OT, the payroll matches, the time to make an extra batch of dough, sauce, 50 more boxes to fold. Let’s say another $50-easy. So now I am looking at a contribution of $100. Honestly, and I can say this now, not worth it for me.

16

Pizzamaker, if you are already in the super low price business ($10 pizza) I can see why you would not do it. You have nothing left to give up.

We charge about $16 for a typical pizza so giving 30% takes us down to about $11.20. Considering that we run about 15% coupons anyway, the extra discount is not much and is completely offset by the savings on delivery.

We also hand toss and screen to order running stacked MM 40" wide belts. Allthough we will rack skins for the first 40 minutes or so going into dinner, we never pre-sauce.

Handling an additional 50 pies in an hour requires two extra hands in the kitchen so getting a couple of guys in for a total of maybe 4-5 hours combined including prep, even if it is overtime is well worth it. All the prep costs are already in the price structure.

Comparison of 50 pies in one order to 50 pies in 35 orders (typical for our order pattern)

Food cost: No difference

Prep Labor cost: No difference (unless savings becuase it is done during slack time)

Delivery Cost: $90 savings for the large order (We run about $3 cost per delivery so 35 orders is $105, Large order might be $15)

Kitchen Labor: No difference (unless savings for big order)

Selling price: ~$650 for regular 35 orders assuming typical coupons of 15%, ~$550 with the 30% discount… so basically I am giving them back what I saved on delivery cost. If I save on labor (and I expect I would) I come out ahead on a single order for 50 pies at 30% off compared to 50 pies on 35 orders at regular pricing.

If you don’t have the people, that is another story, but I would not like to miss these kinds of things when they come along.

17

I would give too much discount 10% probably… my mom spends too much time prepping everything all day and making dough everyday etc.

We put the best in our product… so i wouldnt do much discount.

18

I ended up submitting a bid for $870. I found out that one of the other shops bid 20% off and 1 free topping per pizza, so I tried offer a similar deal. My food cost will be $388 so I’ll still make a pretty good profit. They want the food delivered at 3 different time slots each day:

Day 1 (Thurs): 9 lg pizzas & 14 dozen wings for 4:15, 9 large pizzas & 14 dozen wings for 6:15, 7 large pizzas and 8 dozen wings for 10:15.

Day 2 (Fri): 13 large pizzas & 18 dozen wings for 10:30am, 11 large pizzas & 18 dozen wings for 11:30am, 6 large pizzas & 8 dozen wings for 12:15pm. (This day will be a breeze since we normally don’t open up until 4:00pm so it won’t disrupt normal business at all.)

With the different delivery times, it should be an easy order to do. We’ll see what happens. I don’t know if I’m even getting the order yet. They’re supposed to make a decision in the next couple of days. Thanks for all of the input, I appreciate it.

19

Hi Bodega,

I like some of your posts, but don’t completely agree.

I menu 14" pies at $11.50 and specialty/gourmet 14” @ $14 Q1 08’ large pies sales averaged about $12.90, this is a blended total inclusive of coup redemption—I’m happy with this. I also serve a big Sicilian that runs up the pie average, but mostly 14s.

I used $10 to keep the figures round & because there are many readers of this board who sell into that price all day long. I’m in a top 20 market, your in a tourist market, I believe—there are plenty here who are not. And by the way, I don’t consider those operators to be in the “super low price business”. Every market is different, you know that.

I have considered moving to the wide body MMs. OT means my guys lose a day-off & I’m at about $18-$20 per hour, 4 hrs with the payroll match is closer to $200 for me. I’m really maxed with the good, steady pizza makers. I try to only higher heavy hitters with a lot of power with families & responsibilities to attend to. I respect the days off more than many.

Don’t like to leave money on the table. I broke my back to get here, open to close 260 days in a row—year one. I still pick change off the floor. I have taken these orders, sold at MC—but something invariably comes up & it hurts the wrong part of my sales—the weekly business. We have all had good/great weeks on the back of big orders. It’s all about great weeks on the backs of weekly joes, dropping $20 at a time. That’s how I see it.

Around the beginning of this month, got a call to match a Dominos order for 70 pies @ $6 each delivered in one hot shot @ 6pm day after tomorrow. Told them would love to, but can’t do it @ $6. All kinds of, half this, half that—forget it. I bet I can pick off a dozen Dominos customers friday night alone & I know how to keep them.

I get your point & if I was just selling water from a hose & someone wanted 100 gallons at a discount, ok no problem. No operational changes other than leaving the spigot & maybe 99 extra buckets. When somebody wants to add 50 or 100 pies to your already busy, busy shift—different story.

As to the delivery savings? I’m not sure how this number is derived, $3 per order. My drivers would rather take 10 or 15 short tickets versus 1 big one. We use a pos & multi-map using zones. Please explain the delivery costs & how it can be rationalized as a savings. Thanks

20

As far as delivery cost, 35 deliveries is about what two drivers do in an average dinner shift at 3-4 hours each… so wages for two drivers plus mileage or however else you pay for delivery vs one driver taking one big run. (2 drivers X 3.5 hours X $7 per hour plus vehicle cost = ~ $100) Even though the loading in and out takes time on the big order, the cost savings is huge.

Regarding days off etc, anytime I offer OT for an short extra shift I have volunteers. On a deal ike this if I could not cover it with the regular schedule the couple of extra guys I would need would sign up to come in for OT on a 2-3 hour shift. Having 7-8 in the kitchen instead of 5-6 is not a operational change for us. We would put another two batches of dough on the prep schudule the day before so the dough guy does 10 batches instead of 8 and stays an extra 30-40 minutes. since he is paid piece rate, he sees that as a plus…

I am 100% with you on the Dominos $6 nonsense. I don’t even enter those discussions. The math I have been talking about is not close to that.

I am not sure that you do get my point; With a pricing model that assumes a 15% coupon factor giving a 30% discount on an order like this I come out as good or better than doing 50 pies in small orders. I am coming out ahead.

If the kitchen can’t handle it or you just don’t have the staff that is a separate issue, but I am not giving up ANY margin doing a deal like this.