in these days of $3 and $4 gasoline in the US, unless the delivery is just around the corner, a delivery charge probably can’t offset the full cost. We’ll be doing a $1 charge in the town, a $2 charge to all other areas within our set delivery range, about a 7 mile max radius from the store. Gotta deliver to in-laws!
I haven’t gotten that totally laid out yet.
FREE Delivery is the way to go! 2006 we added a 50 cent fee. By May 2010 it was $1.95
I dropped it in February 2011 and added a hard core minimum for delivery of $8.99.
Order counts shifted from carry out to delivery.
Average price per carry out order is $10 less than the average price per delivery. So even if it is $4 per delivery in costs associated you still make $6 more per order.
Order counts are same as last year and I but sales are up 12%
On average I have only converted 100 orders a week from carry out to delivery.
It is working in the struggling store I just took over. Average weekly sales prior to us taking it on January 2nd - $6800. 4th week in and we should be over $8,000. I have only mailed 2000 postcards so far. The area is 26,000 addresses.
I know I am in the minority and I am a franchisee in a chain that is in direct competition with Dominos. It was a leap of faith to drop it and I could not be happier today.
I wish I would have never added it back then as I was the last franchisee to do so.
We were one of the last places offering FREE delivery in our markets and we hammered away with that fact for a while in our marketing. It did not result in any increase in sales for us while we did it and we figured it just wasn’t a deciding factor for most people. After adding a delivery fee, we did see a drop in volume but our bottom line increased to more than compensate.
To help out your drivers, put a disclaimer on your ads saying “Delivery Fee extra - gratuity not included.” That not only says that the fee doesn’t cover the tip, it also puts an expectation for tipping out there. Also, try and price any specials so that the advertised price + delivery + tax adds up to be $xx.01ish instead of closer to $xx.99 as (at least in my market) few people that tip ever ask for the coins back and that can boost your driver’s earnings… I forgot about that last time I raised prices on specials.
I honestly don’t believe that customers see any value in delivery. Domino’s did this to the industry, we’ll have it there in 30 mins or less or the food that were sending you has no value to us at that point. so why should a customer picking up a pizza pay the same price as someone getting it delivered?
My 4 stores are the only ones in the chain that have gone back to FREE Delivery. I know customers “accept” delivery charges but it does not mean they “LIKE” them. And when all things are equal I am winning the battle with quick honest service and no hidden charges so if I put out a coupon it is that price!
So I am not only fighting normal competition I am also fighting my own chain. I have my own website for my 4 stores as my menu is more extensive than the normal store in my chain…but again my trade is different too. Boulder County is the most affluent county in Colorado outside of the MOUNTAIN TOWNS. Being a “coupon” type company and my direct competition is Dominos I am seeing my bottom line rise every month since dropping the delivery fee. The delivery fee amounted to about $6000 a month at one of my stores and I walked away from it.
I am not here to change anyone’s mind - your minds are already made up. But when it comes time to do something different you may think back to this as a point of difference…oh wait thats my line about the government and why we need Ron Paul elected.
I can see where in a market or marketing plan where PRICE is the driving factor that FREE might make a big difference. I can also see where a campus shop doing high volume to a limited number of nearby addresses has different dynamics than I do.
When we added a delivery charge (Many years ago) there was no change at all in order volume. We were able to forgo a price increase for some time as a result and the income was better aligned with the cost.
We have one competitor who does not charge for delivery (out of 8 stores that deliver pizza here) They are also the least expensive place in town. They have “cheap” pizza in every sense of the word. They also do not pay drivers particularly well. (Very much like the issues raised on the driver forum). I have zero interest in going there.
I am not interested in converting carry-out to delivery. I make more money on the carrryout even though there is no delivery charge. I like having customers come in and see the operation. I HOPE they go see my competitor’s operations!
I also do not have a ticket average difference between carryout and delivery once I take lunch out of the picture. (We do not do slices in the evening)
PizzaSam…not sure I’d want to switch up delivery concept after 100 deliveries…since we were in the market until just recently, we still have a 7,500+ customer database, of which I reckon 40% is still good…
And our new concept is a bit more like Uncle Maddio’s or Pie Five than our lat traditional DelCo, I’d rather not switch and confuse the masses anymore than I’ll already be…lol…
In my eyes, delivery is a service and adds value to your product since the customer does not have to spend any of their time to get their order. It is a convenience for them all while incurring costs on your end, why not recoup at least a portion of these costs? Just my 2 cents…
Once again, everyone’s local market is what it is. Customers are not so stupid that they don’t figure out which place has the better deal, delivery charge included or separate.
I wouldn’t put too much importance to gasoline or other costs because the customer sure doesn’t care about your costs. Where I live, gasoline is $6.80 per gallon and delivery for pizza is included in the price – it’s the ingrained culture with the customer. It would be business suicide to charge separately.
Maybe it’s time to stop delivering with a gas-guzzling car and move to a something with less wheels and much higher mileage like we do to save costs? It doesn’t matter what the business is, driving lower costs without sacrificing quality is our job.
I agree with the marketing around a college town or similar is its own monster…and that if you are going against the big 3 directly that you have to fight this one head on. All that said… sorry, but from strictly a business standpoint some of the ideas I hear can be just outright crazy at times. You establish a business with a price structure that offers you a return of $xx per dollar brought in. Why should the person requesting a product be delivered get a better deal than the one picking up? You all talk about how it is unfair to the pickup customer to pay a higher overall food cost that is there to offset the delivery ones…but all you are doing is now giving the delivery customer a discount that the pickup does not get…and also takes the profit out of the bottom line of the business. The idea is too make a decent profit all the while not having to do so by putting out 1000 pies an hour at $1 profit per! Work smarter not harder! The sooner the pizza industry adjusts the idea of cheap and free being associated with itself the better off we all will be. I know this will go against almost all of the business plans currently out there is the pizza world but it is time to make pizza a real meal option once again and not a groupon without the coupon! Offer a great product and put a fair price on it. Make a decent profit off that sale. The same price to those that pickup, eat-in, or have it delivered. Then charge for the service of having it delivered. In reality there are 3 prices for foodservice these days. The baseline is pickup. A $20 meal is $20. No additional fees. The second is dine-in. That same $20 now turns into $24 with tip…but the establishment is out a little more with additional overhead for the inhouse service. The third is delivery. Same food cost as pickup but now with additional overhead of driver, insurance, etc. Not wanting to get into the driver wage debate…not where I am going with this… but what is fair to charge for this same $20 meal? The driver is due something as they work off of tips but the house also should be compensated for offering this service. The base price of the food should cover the hourly pay of either a server or a driver so that is covered for the most part. Personally, and again not going into the wage war, but a 10% tip for a delivery should be acceptable, more if it was an out of the norm but otherwise should do. So we are now at $22 for this meal plus the actual cost of delivery. Again, just my thoughts on things… but it seems that on average delivery costs around $3-4 per run. Half being in house expenses and the other being driver costs of gas and vehicle out of pocket expenses. I know that when we base this off a $20 ticket that we are at $25-26 for this same $20 meal but we are getting a service provided at a fair price. As the ticket price goes up the delivery cost is a constant and only the tip should rise at this point. So how to cover something that is so straight forward when explained but has since been warped out of reality by “free” and cheap"??? I know most would not but I would charge it like I stated it here. Pay my drivers a base wage on par with the servers. Charge a delivery fee of $xx per order with a minimum order charge. Then split the delivery charge with the drivers to cover the actual costs they incur but also cover my expenses as the business. This is fair and not out of line to all parties involved. Yes the cheapest of customers will not like or probably pay this route…but then they are not your desired customer base anyways… Other food based businesses that deliver…ie: delis, etc… in larger and more competitive markets all charge or use separate delivery services and the orders keep coming in. Why should this be different in a smaller market or one dealing in pizza? The industry needs to retrain the general public to understand that this costs the business money and that it is only fair to be charged for it. :idea:
Delivery charges are absurd. I realize that costs associated with delivery have gone up, but so have costs associated with every aspect of the business.
“Sir, l realize that cheese has always been a part of the pizza, but because cheese prices have gone up customers must now pay a cheese charge.”
The cheese is a part of the regular price the customer pays (i.e. built into the price structure); so too should the costs for delivery. You are not “penalizing” carry out customers, but rather are encouraging them to use a service that you already have in place (and are paying for via insurance, having drivers on duty, etc.) Eliminating (or not starting) delivery charges will keep both you and your drivers busy (and happy.)