Shop owned delivery vehicles - Insurance / Gas / Pay

Hi guys,

We’ve been open about 7 months and are averaging 22,000 a month in product sales. We have great reviews see: here … So far my biggest regret is the location. I humbly believe that if we were in a more visible location we would be doing 50 - 75% more sales with our current marketing (very little).

Recently we started delivering, I (the owner) have taken every delivery in my personal vehicle because I don’t want to deal with increased insurance and or more staff.

I’ve been debating on whether to hire drivers with cars or to have shop owned cars. I’ve decided on doing shop owned cars as I believe it will be a great marketing tool. I plan on getting a 2004ish Scion XB and wrapping it/decals everywhere… Here is what one looks like : 2004 Scion XB

A couple questions if anyone would humor me:

  1. What type of insurance coverage do I need for Shop-Owned vehicles? I’ve read that insurance is more affordable if the vehicle is shop owned. Any specific companies to look for?

  2. I’m thinking the shop keeps 100% of the delivery fee (2.65) and pays for gas for the vehicle. Is that typical?

  3. If I have the vehicle insurance as shop owned, what do they drivers need to have in the way of insurance?

  4. If I’m providing the vehicle, I pay the drivers the “Tipped Minimum wage”? For my city that would be 5.25 an hour… On busy nights I’ve averaged approximately 12-20 per hour just from tips. Since we just started delivery, how would you handle a full days wage for a tipped employee where they might only get 1 or 2 deliveries all day? For example, if their pay + tips does not equal the minimum wage, do you have to supplement?

Appreciate all responses!

Last I knew where I live, if wages plus tips don’t reach hourly minimum wage, you have to supplement to get them there…

Personally, my opinion is if they’re working in the shop as well doing jobs other staff would be getting paid normal minimum wage for, then they need to be paid normal minimum wage as well and not tipped hourly wage

1 - commercial auto…from my experience anything commercial means more expensive so I do not agree that it will be cheaper than a regular auto policy…I had 4 honda elements that ran $200/mo each plus I had an umbrella policy…after 10 yrs with no major incidents my carrier dropped me. My cars all had approx 200K miles and were beaten to death so I got rid of the cars and now just have hired/non-owned. I kept one of my cars and have it my name and now pay only $500/yr vs $2400 when the business owned it. My business policy always included hired/non-owned coverage so there was no extra expense for me.
2 - yup
3 - i do not think they would need anything other than a license
4 - do not assume that you can pay drivers the tipped minimum…my wonderful state of CT only considers waitstaff & bartenders only as eligible to be tipped employees so I have to pay drivers the regular minimum of $9.15 as opposed to $5.65. If your state does allow them then I am pretty sure you would have to pay them at least the regular minimum if the tips do not cover the gap.

i have tracked my expenses and even with a $3 delivery charge you barely break even when you take into account gas, repairs, insurance, ETC …it was very effective to capture our market, but it’s a very expensive marketing tool…be prepared for drivers to beat the living crap out of the cars especially if you are getting a scion…here was my fleet…the thing I will miss most is winter deliveries were a piece of cake

Insurance for us with company owned cars is the same price as having just hired and non-owned. No savings there either way except that if they drive my car I don’t pay mileage. All in all, in a year with low repairs I save money owning the cars. I am in control of the cars being safe and maintained and even more immportant, I can hire drivers who do not own a car which probably doubles the pool of potential employees.

We pay drivers a tipped wage.
We have to report all driver hires to the insurance company.