% of business delivery

What percentage of business is delivery for you guys? Have any of you added delivery after being open for some time? How did that impact sales?

Is anyone else in a market with around 5,000ppl, and an average household income of 33k?

I’m at 85% delivery, but my demographics are far from what you’re asking about

70% delivery at our delco location. Ave household income is not very meaningful here as this is a resort. Ave home price is about 750K. 12,000 full time residents, up to about 15,000 tourists and an additional 5,000 part time residents… all sometimes…

20 pizza places of which 8 deliver.

We are going indy from franchise that do only carry out large pizza.
We are going to start doing deliverey from March…
every one states by doing delivery it will increase my sale by 30 to 50 %
Carry out only is tuff…please look in to doing delivery if u dont do it as of now.
You got to get good ins and marketing doine before starting delivery…

Thanks for the input. I would like some help from everyone on ow to boost sales. There was a pizza place in our building for 25 years, and they had approximate sales of 200k/yr. They never delivered. The owner had to sell the building because of health reasons. We purchased the building after a year of it being vacant. We had a deli for a year and a half (sandwiches), and rented about four doors down the street, then purchased the building 2 yeas ago.

We were able to accomplish sales of 260k in our first full year there. We are in a good traffic wise location, have a faithful customer base. We do about 50% lunch 50% dinner monday-thur & sat. Friday is 25% lunch and 75% dinner. We are attempting to add delivery. We live in a very frugal area. Nobody is out after 630 during the week. There is no other delivery in town. There are two other pizza places, both in gas stations that do ok. Each does around $300 a day in pizza. We have marketed ourselves as a better product. We charge about the same as these gas stations do, but many still go there. Habits die hard, and the perception of a cheaper pizza. We have no intention on compromising the quality of our pizza to compete. We own a 50% share of the market, and need to grow that share.

I need to take this from a 5k/week to a 6k/week business. Our costs are as follows.

Food cost 38% including soda and paper goods
labor 11 %
rent (purchasing building) 11%
ele/gas/phone 10% (oil prices are killer)
insurance/tax 10%
trash, misc 7%

87% is the total
My wife and I each work 40 hours a week.

Id love to hear ideas, suggestions. Thanks

Your food cost is on the high side. You should be able to bring that down into the high 20’s or at 30% even with all the paper goods and supplies.

One the best things I ever heard said in business was that when your business controlled more than 50% of the market it was time to re-define the market in such a way that your sales comprise less than 25% of it. Delivery is such a re-definition. When you deliver you are, for the most part, not competing for the other half of the market you do not have as it you currently define it, you are offering something previously not available and that is a COMBINATION of product and service.

Your price does not have to be the same as the other guys because you are not offering the same product. You can express that difference on the menu or in a delivery charge. Considering it costs your customer about $3 to start your car and drive it somewhere and back the value of delivery is not too hard to establish. Honestly, I think the possibility exists to double your sales. It will take some marketing and some up front costs, but it is a well proven business model.

Good luck!

I agree that my food cost is a bit high. New menu’s are overdue and will be redone in the next few weeks. My costs then will be around 33% as opposed to 38%. I would absolutely love to double my business, but If I can raise it 20% and build on that, it will be a success. Do you know of any other deli/Pizzeria in a similar market that has added delivery and come anywhere near doubleing business. Id love to hear. Keep the suggestions rolling!

I do not mean overnight and it will take investment in additional capacity to achieve as well as a solid marketing program, but with a population base of 5000 (all inside a reasonable delivery area?) and no competition doing an additional 5K per week in delivery should be achievable. Can your kitchen handle it?

I have 5k in a 4 mile radius.

If you’re thinking that adding delivery will add only $1k per week to your sales, I would try it only as a last resort. $1,000 minus your 33% food cost leaves $670 margin. Now figure that you will have to have a driver for about 60 hours per week (11-2 & 5-10 7 days & probably a 2nd at least on Friday night). At $7 per hour, that’s an additional $420 per week (plus another $40 in employer paid contributions) in expense, leaving $210 margin per week. Figure at least another $100 for delivery expense, and probably another $100 in extra insurance and workers comp (you definitely need to talk to your insurance guy), and you will (hopefully) see $10.00 out of that extra 1,000 bucks a week. If, as you state, your market is very frugal, they will be very hesitant to pay more than a token delivery charge, which seems to me to be the only way to make delivery (at this level of sales) profitable.

On the other hand, spending $200 in marketing each week to increase business by the same $1k without delivering would net you probably an extra $400 each week. I use to be a DM for Hot Stuff Pizza, and I’m willing to wager that most of the business of at least one of those “gas station” pizza places is coming from the school kids. If you’re close enough to the local school to get these kids over lunchtime, take an ad out in the school paper advertising a giveaway of one Playstation 3 each month for the rest of the school year. Total cost would be around $1,000 over the next 12 weeks, and may very well get you that extra thousand per week just off of that!

Thanks for the excellent input. I plan on paying 6/hr plus 1.25 per delivery plus tips. With taxes it adds up to around $300/week. I will be charging 2.50 per delivery, and splitting that with the driver. If I can net jut 75 deliveries per week, it would offset the above cost by 93.75 leaving 206.25 in additional payroll. My insurance will jump $30 per week (1500/yr). Sales tax and food cost, on the high side, comes to $410/wk. That leaves 410+206.25+25(for anything that I might have forgot). By my calculations, that leaves me with $358.75 additional profit per week. Even if my addition is off by $40-50, it is still a $300 dollar per week profit x 52 weeks = an extra $15600 profit per year. That is a nice piece of money for me in this small market.

On another note. I ALWAYS try to be conservative in my estimates. I fully expect those numbers to be the minimum, and at that rate is still definitely worth doing. Lets try two other scenarios. The first being raising sales by 2k per week (40% increase), and the next 4kper week (80%) increase. The 40% increase seems to be a reasonable one, based upon other pizzerias prior experience, and the 80% is beyond my expectations, although it has been done by pizzerias.

40%: Additional labor 600wk including taxes (some added inside hours also), food costs (high side) including tax 820, misc 100/wk =1520-2000=480 profit/wk 480/wk profit x 52 = 24960/yr

80%: Additional labor 900wk, FC 1640, misc 250= 2790-4000= 1210wk 1210*52= 62920 year

As all of you know, these are just numbers. They mean nothing without some way of backing them up. If we can start off with the 20% increase, and grow to the 40% increase, we would be very happy. Of course we will strive to meet the 80% goal.

Id enjoy more thought and opinions. Thanks!

You have to realize that a lot of your delivery customers would have ordered anyway as carry-out customers. So not all delivery business is new business. Also, do the math. What if 30-40 percednt of your carry out customers start getting deliveries? How much more/less profitable has your business become?

Sorry I’m late to the party :slight_smile: Our market is probably 4000 people in a 5 mile radius. Our town has about 2500 +/- and our median income was last estimated under $30,000. We are a recovering mill town that had mills leave in the 80’s. So, I think we may be a little smaller marketplace than yours. One C-store pizza place, a small Mexican place and a new ‘family restaurant’ last week. Our sales have grown to nearly 200% of the 2003 year-end that the last owners had. We close on our shopping center next month, and we will be struggling to keep up with the new expenses.

That said, we do about 45% deliveries more or less. What we are growing right now is total customer count and dine-in traffic in particular. We owned about 75% of the theoretical market, then redefined the market as was suggested. We now take our dog and pony show to neighboring towns and the county seat . . . trying to attract new potential customers who are willing to drive 10 miles for a darned good pie and dine in.

You should be able to drive new customers and new sales with a decent marketing campaign. Full color, highlighting the brand new service available in town . . . offering a new convenience to tired and busy families on the go . . . hot, delicious, high quality food direct to your door . . . When you’ve been working hard all day, let us do the cooking and give you well-deserved time to spend with your family . . . all that sort of stuff. Sure, you will ‘recycle’ some existing customers to delivery. you will potentially draw dozens more customers each week who are new. Then you can hit up businesses, schools, colleges and other organizations to feed their events at their place.

Or, it could be a total flop and you find out in a month or so if it will work. It seems from my computer monitor side of the world like a low risk proposition with lots of potential up side and high ceiling for growth.

Your insurance estimate seems low - does this include the nonowned auto policy & increased workers comp rates, or is it just the extra liability coverage? Also, don’t forget (as Perfect Pizzas pointed out) a fair chunk of your current business will switch to delivery. I think if you factor in 20-25% of your current sales becoming delivery sales, you’ll find that your labor estimates are on the low side as well. I don’t mean to rain on anyone’s parade, but I just think that you have several other options that you can explore to boost sales that would be much more profitable than adding delivery. Working some of the outlying communities and expanding your dine in business, as Nick suggested, is one good way; targeting your competition’s core market, as I suggested earlier, is another. Nick also mentioned in his post that you can hit up schools, businesses, churches, etc to feed them for their events, concessions at ballgames, whatever. You can do this without going into delivery (call it catering).

If adding delivery can raise your overall sales by $2k per week, it’s a worthwhile proposition; at $1k, I think it’s too marginal. No one else has mentioned any of the hassles that inevitably come with delivery. Over the years I’ve had to fire drivers for: dealing drugs (found that one out because the effing idiot was using my kitchen scale to weigh his product in front of fellow employees), drinking on the job, consistently getting hopelessly lost (I’m talking about a woman who would be gone for 30 minutes trying to find an address 3 freakin’ blocks away from my store!), b*tching out customers for not tipping, one guy whose attitude became insufferable because I wouldn’t give him a raise (I didn’t help myself there - when he told me he just wanted to get paid what he was worth, I told him that the minimum wage law made that impossible), and the list goes on…

Thanks for the info Nick. Our markets do seem similar.

The one constant in this whole process, is that there is no constant. I have no idea how it will be received. I have no idea if anyone will walk through my door and purchase anything tomorrow. We are in this business to maximize the potential of our own unique situation.

I am going to give it a fair shot, and work hard at making it a success. If it bombs, them we will adjust. But, to sit and not attempt to grow the business would just be foolish.

Thanks for everyones input on the matter. Im looking for any other perspectives on this. thanks!