I was surprised to find this on PMQ I have not had personal experience with this company however I have with another. even at the 50% to 60% profit sharing it does not add up.
A potential customer buys a gift certificate for your restuarant for $10.00 that gets the customer $20.00 worth of food at your restuarant. As the pizzeria you get 50% of the $10.00 that pizzeria.com got for advertising you. So we are getting 25%.
I don’t want to fill my tables at 75% off
If I want to give my food away I can do that myself!
The sales pitch they "will spend more money because they have the certificate’
Uhm no most will get as close to the $20.00 as they can and everytime they come into your pizzeria they will have another certificate.
Its a Groupon with another name.
Here is what was stated
How will I benefit by partnering with Pizzerias.com?
1.Get FREE advertising on Pizzerias.com
2.Revenue sharing
(We’ll pay you 50% on all validated $10 and $20 gift certificates.
We’ll pay you 60% on all validated $40 gift certificates.
You’ll receive a check quarterly - January, April, July, October)
3.More customers
4.Fill empty tables
5.Increase your sales
6.Get your own customized web page (includes store name, address, phone, website link, menu, map, hours, and more)
7.Find out what your customers think of you through email surveys
8.Free email marketing campaigns
9.24/7 account access to your Pizzeria Management Center
10.You set the limitations on the gift certificates (minimum purchase, lunch or dinner only, etc.)
11.You pay us NOTHING!
I don’t know about the other owners but this is defineatly not for me.
For 75% of your sales I can guaranty you an additional 40-45 years of life (for years after the age of 86) or I will pay you $100,000 in cash…on a quarterly basis, maybe. Small Print : you must continue to honor this sales sharing concept until at least your 126th year (86, plus 40 years). You may contact me through my Nigerian website ineedthacash.fleece. Grupon stupon. NO THANKS!!!
Sorry for the sarcasm, but I get incensed when I see scam artists trying to outwit hard working honest people.
I am still waiting for that dang Nigerian royal family member to send me my share of his billions of dollars that he had to sneak out of the country. I sent my $10,000.00 to him to cover insured shipping via DHL!!! It’s been a while…should I call? He said not too…I am just confused! :?
Hi guys. We’ve been following the discussion and we wanted to make a few comments.
When this concept was started, one of our first steps was to talk to as many pizzeria owners as possible in order to determine what our company could do to help them benefit. We weren’t interested in “scamming” small business but instead were looking for a long lasting relationship that was mutually beneficial.
We give each pizzeria a tremendous amount of flexibility (with regards to minimum purchase amounts, days valid and other limitations including which denomination they can choose.) This was done because ultimately only the pizzeria knows their bottom line.
We are also not a daily deal site. If you want to say that we’re a groupon clone, then you should make that comparison about any site that sells coupons.
Pizzeria owners that have partnered with us have benefited by saving on costly upfront advertising. We have partnered with pizzerias that are part of larger regional pizzeria chains.
Also just for clarification, we actually pay the pizzerias on a monthly basis, not quarterly. This was done specifically because some of our pizzeria partners requested it.
I hope we’ve clarified some points about our company. As always, we welcome any comments or questions. Thank you.
Specifally to Pizzerias.com when you break down the math no matter how you try to sugar coat it what it comes down to is this. Even if as a pizzeria our food cost is at 25%(which by the way for most of us it is not) that is all we would be getting in “profit sharing” (that quotation is meant to be facetious!)
We are doing the work maybe covering our food cost the only profit is the one you (pizzerias.com) put in your pocket. Maybe you think you have good intentions but if that is the case you should do a bit more research on this subject. Like I said in my very first post if I want to give my food away at 75% off which is exactly what I or any other pizzeria would be doing by joining forces with you, then I would simply put a sign up outside my business that stated such. Trust me that would as much advertisement as I would need.
By the way just for clarification it is your site that states quarterly as I just copied and pasted what it said on your site!!!
Maybe there are some people this works for, but I am running over 30% on food cost and around 18-20% on labor, depending onthe week. So if I get $5.00 for a $20.00 order, on average I will be losing $5.00 on that order even before I start taking into account rent and utilities and insurance and all the little things. I have never taken an accounting course but I can see this would not be a good thing for me. Back in the day I used to run the pit crew on an asphalt modified stock car. Our business ran that way. We would spend between 200 and 400 a week to get on the track and if we were lucky we would win a couple of hundred bucks. The IRS calls that a hobby.
Now if there was a limit of one per customer/household per lifetime I could see it enticing people to try us over the $5.00 pizza and then it would be up to them to decide if they want to come back at regular price or go back to the $5.00 cookie cutter stuff.
Everyone understands that advertising can cost a lot…but personally I think this type of discount is not a great benefit for a restaurant. First you get the customer that is only looking for a big discount most of the time and then they expect the same discounts later and will, in their impression of your costs, believe that if you can sell you food for 50-75% off then you are really over-charging them at regular prices! This just reinforces cheap pizza from the big 3. The problem is that the indie needs to profit off of their 100-300 pies a night and the big guys can do just fine making pennies on the dollar because they put out 1000+ that same night.
I got to thinking about what this type of marketing really costs the pizzeria. Here is how I figured the math:
[list]30% food costs
25% labor costs
15% lease
20% utilities
10% profit[/list]
This means that for every $1 worth of product I sell I get to keep 10 cents.
Now if I am selling for 25% of my regular price I would need to subsidise the other 65% of the sale from 10% I make off of other sales. Let’s take $20 for the average sale of which I would keep $2. Now if I were to get 25% of the sale I would only have $5 of the $18 it cost me for that order. This means I need to make up $13 from other sales. It would take 6.5 $20 orders to break even on the one order that was discounted. Assume that I do 50 orders a day and 4 of those orders are discounted orders. Over half the orders I do in a day would be just to make up the loss on the 4 discounted orders. This would mean that instead of making a $100 profit for the day I would make less than $50 in profit. If I were hit with 8 or more discounted orders I would be in the hole.
I see this type of marketing as a fast track to bankruptcy.
The way I look at this is:
Pizzeria’s spend 2%-8% on advertising. 75% is just plain crazy. We could hire the best advertising agency around for a lot less than that.
Sometimes discounted sales should be considered marginal sales. You’ve already paid your rent, utilities and you’ve got the ability to add some sales without needing to add any labor. In these situations, most revenue you take in above food cost goes straight to your bottom line.
Don’t get me wrong, recouping only 25% of every certificate sold when your food cost is 30% presents some obvious math problems. But when you can dial in/target marginal sales you can offer steeper-than-normal discounts. I’m thinking along the lines of shouting out deals with a Facebook post, Tweet or Text-blast to generate immediate business when you’ve got employees and ovens working below capacity.
I do not think you can look at the number 75% in abstract…If you spent that on an ongoing basis it would be a bad idea…But on a 1 off basis, if the investment resulted in a client that would stick around for a while, it would still be worthwhile…
I have no comment on this particular promotion because I do not know what kind of client it would bring you…
As far as setting a specific marketing % I think this is a bad idea…You need to keep spending so long as your investments keep driving profitable sales…Marketing expenses can not be looked at the same way as other expenses…How much you spend on door mats, rents, etc. does not affect sales but how much you spend on marketing does…
Marketing–You Want Marketing. How bout you just put up a ginormous sign out front that says Pizza, 75% Off. Customers then would get pies for a 75% discount instead of the 50% discount suggested by this coupon company. Your cost of the promotion would be unchanged, but the customer would get a much better deal. And you would still go broke. Marketing Schmarketing, the best marketing has always been, and will probably always be, word of mouth…from satisfied customers. If you want to offer a “First Order” discount of 25%-50% off to NEW customers to get your foot in their door, great. But to compromise sound business fundamentals by falling for the coupon mirage is unthinkable.
Maybe the coupon companies have figured out a better way to make dough…pun intended.
Thanks for all the comments. A few additional points from our end:
When pizzerias sign up, they have the option of setting a minimum purchase (example: minimum purchase of $35 on a $20 gift certificate or minimum purchase of $25 on a $10 gift certificate).
They also have the option of choosing which days to accept them. For example, if they’re slow Monday and Tuesday and want to get more customers in, they’ll choose those days only. They can also choose lunch only, dinner only, and/or dine in only. These options can be changed at any time by the pizzeria owner in their Pizzeria Management Center.
Pizzeria owners can also choose to accept a certain number of gift certificates per month (example 5/month or 50/month). It’s totally up to them.
Some pizzeria owners we speak with don’t want to shell out $500+ for marketing/advertising on local radio/newspaper or printing coupons (when most of these are either forgotten or thrown away by the customer). They would rather absorb the cost of marketing as customers come in. When a customer buys a gift certificate to your pizzeria, they have made a commitment to walk through your door and dine.
We offer a one-stop shop for your pizzeria with your menu (which you can change at any time if you have a seasonal menu), your logo, address, local map, store hours, and a write up.
We pay for advertising to promote our pizzeria partners on Facebook, Twitter, Email marketing, Google Ads, banner ads, in game ads, local ads, etc.
Once a gift certificate is used by the customer, the pizzeria owner gets the customer’s name, email address and zip code. Many pizzeria owners use this information to add to their own mailing list.
We had a booth at the International Pizza Expo earlier this year and the response from pizzeria owners was positive.
We don’t have a long-term contract. So, if you don’t see a benefit then let us know. We’ll remove your pizzeria from our site. Even if you don’t get any customers from us, you’re still receiving free advertising on multiple levels.
We’ve been endorsed by one of the World Pizza Champions in California along with a marketing expert in the pizza industry (also a writer for a major pizza publication).
We do pay monthly (please refer to our Learn More section for Pizzeria Owners). Our pizzerias have been receiving checks in a timely manner.
There are thousands of pizzerias that have partnered with another company based in Chicago that promotes all types of restaurants. This company does not have a revenue sharing program and pays their pizzeria partners nothing. They sell their certificates for $2 for a $25 face value. We think this is unfair to pizzeria owners and thus established 50% to the owner on the $10 and $20 certificates and 60% to the owner on the $40 certificates.
We are not out to scam anyone. Our company is composed of two family guys that love pizza and saving money. This may not be right for you, but has been beneficial to our pizzeria partners.
Thanks.
As we’re writing this, another pizzeria has signed up from New Jersey.
I couldn’t agree more. For awhile I was doing $5 pizza weekends once every 3 months as a customer appreciation. What I learned was they didn’t understand why I could do it then and stay open but not every day like the other guys. The last time I did it, I had a radio station “sponsor” it. I got a little extra free advertising and designed the event to look like they were somehow picking up the tab for the discount instead of me making a deep discount on my own.
They really do seem to be popping up everywhere. I’ve noticed less and less attractive deals on Groupon and Living Social. They seem to be mostly offers that don’t require an inventory or high overheads (tanning, massage, yoga, etc.). I see how these deals would benefit those types of businesses, but not mine.
I’ve been mulling this around in my now-retired brain for the week. If we were coupon type shop in a large enough market, we would try it out in a very limited window. Given all the restrictions that we can make, it would be worth a shot. We can limit the number of certificates we can sell? or accept? And we can put a minimum purchase on it.
Ultimately, all the restrictions on coupons make me, as a consumer, walk away from an online coupon. But for a place I want try anyway, and appears worth the expense anyway, I would do it. That’s the key in evaluating a service like this, I think . . . . as ONE ELEMENT of a comprehensive marketing plan. Maybe for those really slow months/periods when nearly any sale that rolls the inventory is a good sale, couponing like this will score for you. This appears a very low volume exposure sort of thing left to itself . . . but with a little effort to drive traffic, you could get more views. It seems no cost unless someone buys the certificates, so no risk there. Then you do some involved math and figure out how to set up the offer to make it a reasonable marginal sale for you. Then it really could be worth a short trial to see what response comes.
In a larger market with more kinds of exposure to getting ancillary messages out, this might be a worthwhile experiment to consider after all. In my market, it most likely would be a complete waste of effort . . . we are a very specific market type that is rural, tiny, <4000 people with limited internet permeation, even more limited drive to seek us out beyond our effective range. We are a very fringe style of marketplace.
We’ve actually partnered with pizzerias in small towns/cities (example: Niceville, FL, Punxsutawney, PA, Plumsteadville, PA).
Most customers that purchase from us don’t mind the restrictions. They understand that vendors will place limitations on coupons.
The key to our company is flexibility. You choose your variables and see what works for you. You can change/play with/experiment with these variables at your convenience through your Pizzeria Management Center without telling us. You can also email us and we can post on our Twitter and Facebook pages if you’re running a specific promo.
Looking forward to any additional comments or questions.
Thanks.
P.S. We were recently named a finalist on the Forbes’ America’s Most Promising Companies list.
I was thinking about this as I walked by the river this morning…Would a fund raising effort give you better potential clients than this…Get a local sports team or school to sell 20.00 or 30.00 gift certificates for 50% off and let them keep 50% of the sale price…I am thinking some of the buyers will not be the typical “bargain hunter” and end up as a better type of client…