Pricing, Costs, changes (looks like the recent thread on this topic vanished)

Looks like the recent discussion on pricing was a casualty of the Sept TT data loss.

With food costs (especially cheese) where it is, we are biting the bullet and putting in the single largest price increase we have ever done. Most apps and sides are going up either 50 cents or a dollar. Our base pizza prices are going up 75 cents on 12" $1.00 on 14" and $1.25 on 16" and toppings are rising 5-15 cents depending on size. For our best selling combo in 16" it means an increase of $1.50. Also raised our delivery charge 20 cents and 20 oz bottled drinks by 20 cents.

We did the delivery charge, apps, salads, & drinks this week. The pizza increase will happen about week from now just ahead of a local coupon mailer we participate in.

Our new 14" pepperoni price is $16 before coupons.

That might have been the thread I created, since I do not see that thread anymore. In the thread I posted a link to an article about the record high dairy prices here…

The part that really gets my goat is the main reason for these high prices are the record high amounts that we export…taxpayer subsidized exports. Were basically paying China to send them our cheese.

I am looking at a rate increase as well. The question that is in my mind is: where should my prices be in comparison to the high end franchise (BP) and PJ? Right now both are higher than I am. PJ by 5% and BP by 30%. I am thinking I need to be at least 10% higher than PJ but not as high as BP.

I do not spend much time on prices at places that sell pizza in a different business model. i.e., I am a delco, I do not compare myself to Italian fine dining or sports bars that sell pizza as I think that the prices we each charge are based on the combined package of product, service and experience. I DO keep the other delivery outfits on my radar though. It is not always easy to get to an apples to apples comparison though. I can’t use the menu price alone as I have to take into consideration the typical coupons/discounts offered by each as well as delivery charges in addition to my estimation of the relative worth of the product itself.

Being a couple of dollars higher than PJ’s would not bother me, especially if it gave me some additional $$ to drive sales with a marketing message about the differences.

I’ve historically have set my prices around 15% to 20% below the local delco operations. Currently they are around $16 for a 14 inch specialty. We are at $13 and going to $14 next week. I am going to need to go to $15 in the very near future, so the chains are going to need to go to $18 for me to keep that structure. Part of me says I should be charging at least as much as them or even more. What do you guys think? We do very little marketing. Only about .5% of our budget goes towards advertising. I started following the " Purple Cow" marketing model (where you let your product do your marketing for you) about 10 years ago. It has worked great. But now we are is a spot where we need to raise prices and sales dramatically to offset expenses. I need ideas!

PP how do your prices compare to theirs after taking into account whatever deals/coupons you typically offer vs their typical deal? Also what is the delivery charge picture where you are? In my area the typical chain ticket is actually as much as 20-25% below menu price due to the coupons they run. For example, the 14" one top that comes to $14.50 on their menu is often sold for $10.

Our coupon prices are also about 10 to 20 percent below their coupon prices with a couple of exceptions. Dominoes does the medium 2 topping pizzas for 5.99 ea. All the places charge $3 for delivery. We charge 2.50

I seem to do things differently than most here,no coupons, no advertising, no marketing, no pos, no “deals”,years ago i was spinning my wheels selling lots of pizza without much profit bouncing a few checks almost going broke,Raised Prices !!! was i scared ? sure,was going broke anyway so nothing left to lose, patched all the leaky holes in the bottom of the boat (advertising, lead cook, SYSCO, printers, accountants, delivery drivers, hosts )Result,wife and i working a lot,34% net profit,16"-23.95,went for quality,bare bones crew off season, i get slammed so bad now and then but its worth it,

My belief is differentiate, market and charge what you need to. Your local competitors will, for the most part, have similar cost models to you. They exist in the same labor and leasing market. Advertising costs, utilities and insurance costs are local.

Nationals enjoy leverage in marketing and cost of goods even though they share rent, utilities and labor costs with local indys. Unless you have some serious volume like our friend PP it is very difficult to be priced under the nationals due to this difference. For a small indy like us it simply does not work to price under Domino’s even though in our town we do similar volume or better than they do. I am comfortable when we are 50 cents to $1.50 higher than Domino’s on a basic pizza because we offer a different product and we are better at selling higher-end combos with 4-8 toppings making our ticket average probably 50% higher than theirs.

In our market with high rents, high labor costs and two off-seasons per year we simply cannot be a low price operation and survive. We need to drive a certain amount of sales and because our visitor traffic comes to town not knowing the local choices, reaching out to them with a message of differentiation is not optional. Additionally, they are in their hotels and condos and looking for food to be brought to them… So delivery with marketing reach is the model. Pricing allows the power to afford those things. POS makes us efficient enough to get the job done.

John, our of curiosity, how was Sysco a “leaky hole”? Where they priced higher than some other supplier you located?

I switched from Sysco to Saladinos and saved at least 10 to 20k per year. Sysco jerked me around a lot by raising and lowering prices pretending to be working with me in my best interest. example 150.00 for 5 gal hi temp dishwasher soap ,i was told how concentrated and efficient it was,so i asked “should i recalibrate my dishwasher to a more concentrated setting?” no, but, shopped around got it for 29.00 5 gal hi temp,we are a ski town also, with a high mortality rate for restaurants, learned to survive the hard way,with a name like Mofo’s,one reason i have an attitude towards marketing,had a ex wife with a degree in marketing who spent 42k on advertising (12%) and put me down for being uneducated and stupid the last year she was with the business, i added 42K plus our small net and wow i was making a living ! So now i continue with pinching pennies and it works great for me. Trying to pull my head out of the sand and learn HERE, working on new location. Last night got a great compliment,wife and i had the floor, no buser, was waiting on a couple i,ve seen a lot lately, love our pizza , i asked him what kind of work he did,professional chef,personal chef for one of the local billionairs,woweee !!! we must be doing something right !

I’m going to take your advice on the pricing model. We really only have one location that does the super high volume. The other 2 stores do decent volume 16 to 19k a week. But that isn’t going to cut it in 2 years. The absolute minimum is going to be 20k a week. I’m devising a plan to slowly up prices over the next 2 years. A little here and a little there.

I would be thrilled with 16-19K per week if it was all the time! We do more than that (up to 25-30) a few weeks a year but during our off season (just heading there now) our sales will dip down to 5K per week or even a bit less during the end of Oct/Early Nov. A real roller coaster.

John, I agree about Sysco, both about the prices and hot air about partnership… but I have not found any other vendor we have access to to be any different. Solution: we buy from two and relentlessly price shop them every week.

(BTW, if you run into Sandy Evans Hall from your Chamber, tell her hi from me. Steve from Steamboat Springs, Soda Creek Pizza.

also i go to costco once a week for a big load with good savings,i also would be thrilled with 16-19k per week , would NOT be thrilled with your payroll ! nobody ever mentions raising prices AND cutting ALL possible costs of doing business , examples : i use Menu Pro and print my own menus , use Go Daddy and did my own website , ride my mt bike to work, do our business laundry, snag a few big delivery orders and deliver them myself , use quickbooks and a tax preparer and save big over an accountant , take to go orders when closed and cook them myself when prepping salad bar , keeping employees off the clock…
Hurry up DAD!!! I want to use the computer!!!

John - What items have you found that work well from Costco for you?

broccoli, carrots, celery, garlic, spinach, wings, olive oil, sugar, salt, milk, heavy whipping cream, to go cups, tin foil, salad to go 8", artichoke hearts, kalamata olives, peppercini, canola oil, butter, franks hot sauce

I can add Dole Pineapple to this list. I did a price/yield comparison a while back and was floored by the difference. I would have to pay 26% more for house brand over Dole.

What is your coupon price for a large pepperoni? We just opened and have no real plans for coupons and our 14" pepperoni is $12.95. We are primarily dine in though and since I’m new I figured I could raise prices a bit later.

We put our price increase in place two weeks ago. Menu price for a 14" Pepperoni is $16.00 plus delivery charge (remember we are in a resort market) Typical coupon available for that pizza would be $2 off a delivery or $3 off a carryout. We have some better offers from time to time in the off season where that pie sells for $11.00. Our average ticket in the off-season is about $28-30 with an average coupon value of $4. In-season the average rises to $36-40 and the average coupon value is $5.

Side note: I have asked all the managers about any customer comments on the price increase… Zero, zip, nada. Lesson learned… again. After more than 15 years, every price increase makes me nervous and EVERY time it is a non-issue. Bite the bullet.

People pay for quality.
Adair, Iowa here and we get $14.25 for a 14" pep. NO COUPONS offered . I won’t discount my food. They want cheap. Go to Caseys or Kum & Go.