Using $2 to increase sales

Pizza Shop Talk The Think Tank
1

Another recent thread that has wandered off topic reminded me of a useful lesson I learned a number of years ago (as Senior VP with responsibility for world-wide sales for a premium brand in the apparel world)

In business we area always looking for ways to increase sales. In general, more sales is a good thing assuming that the cost of goods plus the cost of increasing the sales does not exceed the growth!

In the other post it was questioned whether forgoing a delivery charge might grow sales (putting aside the questions about customer perceptions for the puposes of this thread). Essentially, this is an additional discount from the current state of affairs described by that poster. Whether a discount comes in the form of dropping a delivery charge, lowering menu prices in general, offering free toppings or just a plain old $2 coupon, what interests me here is the choice we make to use $2 to increase sales.

The premis is that if I offer to give $2 to the customer, the customer will order when he/she otherwise would not or would order more when he or she orders. In pizza, we wander away from this concept due to offers being ubiquitous in the business and considered “normal”… but it might be useful to head back to this fundamental principle once in a while when tempted to offer another, larger discount when sales dip.

Here are some other ways to spend $2 per order to grow sales: 1. Increase your marketing reach. 2 Add value.

Let’s say a store averages about 250 delivery orders per week and the delivery charge in question would come to $500 per week. Use the $2, which comes to $2000 per month, to advertise and especially to reach new customers! THAT will increase sales! In my little market, at least, spending another $10,000 over a five month period would blow a hole in the competition and bring me a good number of new customers to incease my base of business!

or

For a period of, say 60 days, bring a free salad or a free side with EVERY order. Your cost would be less than $2 on a salad and the free items will increase the perceived value, and in time build support for your other menu items resulting in a higher ticket average.

or

Offer the $2 to local organizations with large memberships: “For every order we receive during the month of August, we will donate $2.00 to the Boy Scounts” for example…

2

All very interesting ideas.

I believe a lot of those things are market dependent. We are in a market of 500,000 people. The donate the $2 idea sounds good - but no one would care.

We already advertise relentlessly. I’m not exactly sure what I’d spend that $2000/month - as we are already spending multiples of that.

You are correct - the question is would we increase sales if we dropped the delivery charge. Along the lines of your suggestions - what if we “spent” that $2000 per month to get the ability to say “WE DELIVER FOR FREE!!” or “WE ARE THE ONLY PIZZA DELIVERY COMPANY THAT DELIVERS FOR FREE!”. Would that “blow a hole” in the competition?

Keep in mind I currently have no plans to change our delivery charge - but I want to really think about it…

3

i guess the answer there is that would be like “spending” double to do that. the 2000 is actually about 4000 if you drop the delivery charge and “spend” that money marketing it.

4

Well, no - because all we’d do is add that to our existing marketing. We wouldn’t have to spend any additional money to market that.

5

The people who would care about the $2 donation are the members of the organization. That is why you select organizations with a lot of members.

But don’t get hung up on the delivery charge thing. I was not trying to continue the other thread in a new location. That was just the example that created the impulse for this thought processs. The same principle applies to any choice to discount to increase sales…

Does it work?
Is it the best way to use that $2?

BTW, if you are already “spending several multiples” of $2000 per month, then you are also doing more than 250 deliveries per week and amount the $2 per order would represent would be correspondingly larger which increases your choices…

6

I hear ya - but my past experience with that sort of “donation” thing is this - no one cares. Well, maybe 10 people care. But no one cares enough to start buying pizza from me because of it. I’ve conceeded that in my market segment, pizza is a commodity. The “community” is too big, too transient, and too busy to care about those types of promotions - you are just going to have to take my word for it after many years of trying those types of things that seems to work in small markets - like school pizza nights, etc.

I do like your line of thinking - is providing free delivery the best way to make use of that $2 to increase sales. The issue is - who knows? Maybe it is - or maybe it isn’t. But you’ve given me another way to think about it. Thanks!

We are opening a couple of new stores in the next few months - these stores will be in smaller markets a bit away from out other locations. What would be your thoughts if I told you we were going to open those those without a delivery charge? What if we advertised free delivery during our “grand opening month” - giving us the option to either begin charging for delivery the next month, or to continue with free delivery? Just thinking out loud here…

7

I would have to agree it is all dependent on your individual market…very good points to think about

8

I’m 100% on board with bodegahwy. This is the line of thinking that finally made me profitable, even after adding another $1 to my delivery fee.

Will people respond better to me giving them $2 off an XL pizza, or giving them a free side item? Wings are the only side that cost me more than $2 and my most popular item only has a food cost of around $1.00 - $1.25 depending on cheese prices. But, I will gladly give away that item all day if people are going to pay full price for an XL pizza.

9

Hi folks :smiley:

In smaller, poorer communities, people tend to dwell on small things such as delivery charges. Therefore, the best bet would be to eliminate the delivery charge, therefore gaining new customers and larger sales volumes. These people WILL go with the cheapest price before quality. If you have both, you win.

In larger (or affluent) communties, people will go with what they like, regardless of delivery charge or advertisements, so it is not as big of an issue. Quality and taste is key.

Remember, word of mouth is a shop’s best friend.

The above statements are only my opinion from my 13 years experience in all facets of the business.

10

You’re right, but you’re also assuming that we want to grow delivery business. I make very little money off of a delivery, so I’d rather offer that person something extra to come pick it up. Especially in a smaller community where it takes minimal effort to get to the store.

11

bodega I suspect quite a few folks spend far too little on their marketing efforts…The chains spend a pile and get way more bang for their buck because their markets overlap, they buy in quantity, etc…