References for sales increase due to FREE DELIVERY

Hello all,

Can anyone provide me with some data/evidence that switching to a “free delivery” system actually helps to increase sales overall?

Thanks in advance.

Bill

No. Because it does not.

There is no such thing as free delivery. You either charge for delivery or you build delivery cost into your pricing. Customers understand that delivery costs money and that gas is getting more expensive.

We started with free delivery and started charging for it some years later. There was NO impact what-so-ever on order volume when we started charging.

We have been charging for delivery now for close to 10 years. We now charge a $2.50 delivery fee. The store keeps it. Any advertising we do for price on a special includes the statement that the “price does not include sales tax or delivery” Since we added that statement, the calls about how a $14 pizza ended up costing $17.77 have pretty much gone away.

Our average tip is about $4.00. Despite opinions to the contrary posted elsewhere, we do not see any correlation between delivery charge and tipping. On a busy night a driver might take 20-25 deliveries and make $80-100 in tips in a 4-5 hour shift.

Our drivers make $6.00 hour plus tips. We do about 90% of our deliveries in company owned cars burning gas that I pay for. In the rare event a driver is in his or her own car they get 5.5% of the value delivered. Our drivers average about $14 hour on slow days and up to $30 per hour when we are busy (not including the 5.5%).

As a friendly reminder, the store always keeps the delivery charge. At least the poster above me admitted it.

The correlation between the delivery charge and tipping (or the amount of the tip) is debatable, but should not simply be written off.

Pizza delivery existed before the delivery charge. The only reason for such a charge seems to be an unwillingess to raise prices. Some may argue that it is “unfair” to carry-out customers to take on the burden of delivery costs, but it should be realized by ALL customers that delivery is part of the operation. Should a customer choose to pick up, that is certainly within their rights (and may save a few minutes until the food is on their table) but customers should not be penalized for utilizing a service that has been around for decades.

Eliminate the delivery charge, price the items fairly for all, and there would be no need for debate as to how the charge “messes” with a driver’s income.

PPG2270:

… customers should not be penalized for utilizing a service that has been around for decades.

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Should we apply this logic to other industries? How about Air Travel? Once you were given a meal and had very little restrictions on checked baggage. Or Service Stations that once pumped your gas, washed your windshield, checked your oil and the air pressure in your tires. Or the grocery store where you had the cashier bag you groceries in a bag they provided and had a person take the groceries to your car.

The point is every part of life has been segmented into the costs of doing business and it is going to stay that way. Customers are being conditioned to accept the costs for the extra little things, including service.

There’s not one of my suppliers that does NOT place a “fuel-surcharge” on the bill. It’s the norm.

PPG, perhaps you noticed that I also own the cars and buy the gas? Of course I keep the delivery charge!

bodegahwy:

PPG, perhaps you noticed that I also own the cars and buy the gas? Of course I keep the delivery charge!

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Of course I noticed. I’m not debating who keeps the delivery charge (all delivery charges are kept by the stores regardless of who owns the vehicles/buys the gas.) What I am debating is the necessity of the delivery charge. A small increase in prices (thereby making the prices equal to all customers) would eliminate the need for the charge. It is clearly my opinion (a tested opinion) that delivery charges do indeed lower or eliminate tips for drivers.

Daddio:

PPG2270:

… customers should not be penalized for utilizing a service that has been around for decades.

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Should we apply this logic to other industries? How about Air Travel? Once you were given a meal and had very little restrictions on checked baggage. Or Service Stations that once pumped your gas, washed your windshield, checked your oil and the air pressure in your tires. Or the grocery store where you had the cashier bag you groceries in a bag they provided and had a person take the groceries to your car.

The point is every part of life has been segmented into the costs of doing business and it is going to stay that way. Customers are being conditioned to accept the costs for the extra little things, including service.

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Interesting. But in your scenarios no one is losing income because of the fees. Let’s try it from a different angle.

Drivers should not be penalized because stores have greedily implemented delivery charges in lieu of raising prices. Customers “conditioned” to pay an extra delivery charge will now be “conditioned” to believe that the driver receives the money or will lower or eliminate the tip based on the added fee.

Delivery charge = screw the driver while smoke screening the customer into believing they are still paying 1980’s prices for pizza just to find out it is actually $2 or so more than the menu price. Yeah, that’s “awesome”

Having been a delivery driver since the mid 1980s I have worked for places that had free delivery as well as places with delivery fees as high as $5. Guess where I received the largest tips. If you guessed the place that charged $5 you would be right on the button. The places that had free delivery were the cheapest pizza in town and therefore attracted the cheapest customers in town. Conversely the place that charged the $5 had the most expensive pizza in town. In 1998 the $5 place charged $25 for a 14" 5 topping pizza making the bill $30 for one pizza. My average tip was $4. During the same year I delivered for a place that had free delivery and you could get two 14" 2 topping pizza for $19. My average tip was $2.

How does this fit in PPG’s theory of fees reducing tips?

PPG2270
Until you have the balls to put your home and all your assests on the line to own and run a business PLEASE DO NOT INFUR THAT PIZZA OWNERS “GREEDILY IMPLEMENT DELIVERY CHARGES”.
If you haven’t walked in some ones shoes then you have no right to pass judgement.
In the end of the day there will be some outlets that charge delivery fees and others that don’t.
The delivery fee is in place one way or another for what ever reason that particular store owner has and as he / she pays the bills it is their right to do so.
It seems your problem is that you work for an outlet that charges a delivery fee and you find that a hinderence to you getting tips. If this is the case why don’t you just get a job where they don’t charge delivery fee and you can get all the tips you need.

wa dave:

PPG2270
Until you have the balls to put your home and all your assests on the line to own and run a business PLEASE DO NOT INFUR THAT PIZZA OWNERS “GREEDILY IMPLEMENT DELIVERY CHARGES”.
If you haven’t walked in some ones shoes then you have no right to pass judgement.
In the end of the day there will be some outlets that charge delivery fees and others that don’t.
The delivery fee is in place one way or another for what ever reason that particular store owner has and as he / she pays the bills it is their right to do so.
It seems your problem is that you work for an outlet that charges a delivery fee and you find that a hinderence to you getting tips. If this is the case why don’t you just get a job where they don’t charge delivery fee and you can get all the tips you need.

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Two points for posterity.

1. I have watched “owners” greedily implement delivery charges to avoid raising prices firsthand. My position on the matter remains intact. It is not about competition. It is about getting as much money into the pockets as possible while tricking the customers into believing they are paying lower menu prices.
2. I suppose you missed the part (although I have stated it over and over again) where I left the business because of things such as tip credit, low mileage, and asinine delivery charges. Any intelligent driver will realize that the combination of ALL THREE in a business will not only hurt the driver’s base earnings, but will force customers to pay their wages (in lieu of tips being a gift or “bonus”). They talk about the “dumbing down” of America. Tip credit laws and the like have gone a long way to the general dumbing down of pizza drivers because only an idiot would work in such conditions.

PPG, we all understand your point of drivers making tip-credit wages and trust me when I say we understand your support for the end of this practice…but we are not the route too that change. Yes there are a very small percentage of indies that pay this way but the vast majority do not and do take good care of their employees. (Not saying those that pay sub-min do not!) The big 3 sell cheap crap pizzas. In doing so they must keep their overhead down to as little as possible. This is just a way for them to make more money. The problem with this practice is the long line of people that will work for them at minimum wage in the kitchen or at sub-min wages as a driver. Until the workers take a stand or the laws change… this practice will not change. Making the same points to the TT is not helping your fight. Just think about what would happen if the big 3 drivers all got together and had a one-day walkout? No deliveries today!!! That would make a point…because they all just ate millions in profits!!! Maybe then they would have to sell pizzas at a normal price instead of trying to underprice their products so that it is only profitable at high-volume sales levels. This would level the playing field with the indies and take a bite out of their business plans. This would also allow indies to pay better and offer better employment packages for everyone. This would mean less profit for the big 3 and make a better work environment for everyone else. Wait… would someone pass this on to Washington!!! Sounds like a capitalistic way to improve the economy!!! :!: :idea: :x No wait… lets just give the delivery drivers food stamps…

PGG
You keep inferring that it is greedy to have a delivery fee in lieu of raising prices. Well raise the price a $1.50 and remove the fee and the price is still the same, so where does GREED come into it???
In your Socialistic approach by saying “GREED” infers that no business has a right to charge for a service.
You make a lot of inferences always putting owners as the “greedy” ones and not having any idea why prices increase, charges are levied or anything else. Most operators here, and I would love to say all, are honest in their dealings and any rises in prices or added charges are only there to cover costs. Many, many operators are only scrapping a living, especially over the past 2 1/2 years from the blowout from the GFC.
Some operators build in a delivery component in their price and do not charge delivery fee, whilst others have a lower price point due to competitive pressures or their marketing stance and charge a fee, while others have a higher price (and quality) and their market accepts their is a cost to delivery and happily pay a fee. It’s called horses for courses and no one fit will meet every market.
Maybe it is time that customers accept that what was free in 1970 has changed and in the 21st century there is no such thing as a free lunch.
Ask yourself why FedEx, DHL and all the other delivery companies make their businesses work. It is because they offer a delivery service and charge a delivery fee. Somewhere some business has sold something that needs delivery and the customer has agreed to pay for this service. Does the seller say to the transport company you get to keep the tip for delivering our item?
Today people are conditioned to paying for delivery and the miniscule amount charged by pizza shops for this service doesn’t even cover costs of supplying delivery.
What law is there that says pizza delivery drivers must get paid tips? If you work under the tipped regulations then the owner must make your hourly rate to the minimum if you don’t get tips to cover it and that is what you accept when you take on a drivers job. Nowhere does it say you must get $2, $3, $4 or $5 tip per delivery. Drivers need to decide if they want to work under these conditions or not and not blame owners for having a delivery fee that so called “reduces” your tips.
Not paying a fair and reasonable car allowance to drivers is another matter and I support drivers to be paid accordingly.
As I said earlier you need to walk in some ones elses shoes before you can comment on how they charge for anything. You have no idea of the hidden or open costs of running a business yet you want to infer that owners are greedy because they charge for a service that costs money to do.
Dave

wa dave:

As I said earlier you need to walk in some ones elses shoes before you can comment on how they charge for anything. You have no idea of the hidden or open costs of running a business yet you want to infer that owners are greedy because they charge for a service that costs money to do.
Dave

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First let’s debunk some myths right from the beginning. As a former GM of Domino’s (#4434) and as a former “right hand man” of an indie operator for almost 5 years I DO INDEED know and understand the ins and outs of daily/monthly/yearly operations. This is part of the reason I have chosen (thus far) not to tackle the role of “independent operator.”

Now that we have finally taken care of that issue (as to whether I am “worthy” to post) let’s move on.

While there are certainly “hidden costs” involved with operating a store, imagine how your customers now feel with the “hidden cost” of the delivery charge. Indeed most customers are shrewd and know about the charge before ordering, but some do not. In either case, the cost may be viewed as an “extra” for the driver while we all know that is NOT the case as it is an extra for the store.

The reason why I use the term greed is that a simple and small increase in prices could eliminate the need for delivery charges which may lower or eliminate tips for drivers. Instead some stores already paying drivers the bare minimum as a base wage turn around and knowingly add delivery charges. This is a double-edged sword for the customer that entails not only the burden of supplementing the stores’ payment of minimum wage through tips, but also now lays the burden of the cost of delivery operations onto the customer. If a store cannot manage at least a minimum wage base pay and offer free delivery through menu pricing, the management is poor and such practices are shortcuts to fill the pocketbooks at the expense of the drivers, i.e. greed.

Daddio:

Having been a delivery driver since the mid 1980s I have worked for places that had free delivery as well as places with delivery fees as high as $5. Guess where I received the largest tips. If you guessed the place that charged $5 you would be right on the button. The places that had free delivery were the cheapest pizza in town and therefore attracted the cheapest customers in town. Conversely the place that charged the $5 had the most expensive pizza in town. In 1998 the $5 place charged $25 for a 14" 5 topping pizza making the bill $30 for one pizza. My average tip was $4. During the same year I delivered for a place that had free delivery and you could get two 14" 2 topping pizza for $19. My average tip was $2.

How does this fit in PPG’s theory of fees reducing tips?

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Generally speaking, the higher-end places will attract a “better” clientele. Currently, places such as Domino’s, Papa John’s, and the like are attracting the type of customers drivers hate (the low-end, cheap food quick type.) In my experiences, the cheaper the place of business, the lower the tips.

As I have mentioned, delivery charges may lower or eliminate tips for drivers. While homies in the ghetto will more often than not stiff the driver, so too will the doctor in the mansion on the hill if the “cheap food quick” mentality is in place and/or if they believe the delivery charge goes to the driver (which it never does.)

People deciding to order from a non-fast food pizza establishment have an increased chance of tipping regardless of the delivery charge as they have chosen to receive a good product despite the increased price. That’s good news for the operator as well as the driver. However, the chance still exists that the customer will reduce the tip (or eliminate it) based on the charge. Now, as most of the operators here likely have a better quality product than the large chains, they would fit into this category. But here is the kicker. If you claim “better quality for a better product” you are already going to have a higher price than the Domino’s of the world. But that is ok because your target base is those who want better quality. Are you with me so far? Great.

Now, as the target customer knows that the prices will be higher for better quality, go ahead and make that change to a slightly higher menu price for all and eliminate the delivery charge. You are thereby eliminating the drivers’ burden and offering something that the large chains do not - free delivery. You may be surprised at the reaction. Your prices are already higher than the Big 3 (and nothing will change that) but you are offering something they are not (free delivery) “Wow this store’s food is so much better than Pizza Hut and they don’t charge us for delivery. When they quote a price that is the actual price and none of that hidden fee mumbo-jumbo.” In my not so humble opinion, it is a win-win for everyone. I don’t get why more people don’t understand this.

When I did not charge a delivery fee I would get the How much discount for pick up? question on ever other call. The customers know there is a cost to deliver to them so why not be honest with ALL your customers and charge for the products buy and services they utilize?

The best pizza place in my current town and the 2 I liked most growing up in Chicago do not deliver! Now there’s a plan. :idea: :arrow: :!:

Daddio:

When I did not charge a delivery fee I would get the How much discount for pick up? question on ever other call. The customers know there is a cost to deliver to them so why not be honest with ALL your customers and charge for the products buy and services they utilize?

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“Well, all our menu prices are the same but feel free to use our free delivery service if you are within our delivery area.”

I guess it’s just point of view.

qcfmike:

The best pizza place in my current town and the 2 I liked most growing up in Chicago do not deliver! Now there’s a plan. :idea: :arrow: :!:

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There are quite a number of places in my metro area that do not deliver. They can do this because they have the volume to have carry out (or in a few cases eat in as well) only. On most nights (especially the weekends of course) people are lined up out the door. There is no written law that says a shop has to deliver, but the ones that do need to do so fairly to the customers and employees (drivers).

PPG2270:

Daddio:

When I did not charge a delivery fee I would get the How much discount for pick up? question on ever other call. The customers know there is a cost to deliver to them so why not be honest with ALL your customers and charge for the products buy and services they utilize?

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“Well, all our menu prices are the same but feel free to use our free delivery service if you are within our delivery area.”

I guess it’s just point of view.

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You did not answer the question!

Customers are not stupid so your response will not satisfy them. They want to be treated fairly by not paying for a service they are not using.

I feel confident your point of view will not change the business practices of anyone here.

As posted before cheap customers will stiff drivers with or without a delivery fee. I think you would have more luck in campaigning for a mandatory gratuity like some places have in their dining establishments, but I doubt you will be successful there either.