Want to start delivery. Need help.

I am currently a carryout and dine in pizza restaurant. We just opened about 3 weeks ago and I wanted to make sure everything at the store ran ok before I started delivery. We are now ready to delivery. However, I have no idea where to start, and I need some help.

Some of my questions include:

What do you do about insurance? My current insurance company will not cover deliveries so I have been looking for a new company. The cost is about $2k extra. Does anyone have a good insurance company that has reasonable rates (I am in Michigan)?

What type of mapping system do you use? Could I set up an extra computer with google maps to assist drivers? Is there software that people use that makes the delivery process easier? Do you give your drivers a cheap gps unit?

How much do you pay drivers? Are they like wait staff who work on tips and are paid a lower hourly or must they meet the minimum wage requirements (here in MI its $7.40)?

Do you charge an extra delivery fee?

How far out should I deliver? 3 miles? 5 miles? 10 miles?

Are there other factors that I am not considering?

Thanks

I’ll answer this one for you. That’s the best solution you could have for mapping. Google is far superior for mapping to any POS system I’ve ever seen.

I’ll let the others answer the other questions. I’m a driver who commands more than minimum wage and plays by his own rules, so anything I post on the subject is sure to draw fire.

Wage laws can vary by state, and sometimes by municipality. Do some research, and possibly consult a labor attorney to have a legal opinion. As a quick impression, you could ask other professionals or your state restaurant association what the general rule of thumb is in your state.

I charge a delivery fee. the cost of providing delivery ervice far outweighs the cost of carry-out and dine-in. The difference is not even close. I charge $1.50 for delivery, and give the driver most of it. I carry the rest of the costs.

Many suggest that the range of delivery should be TIME related and not distance. I agree. I aim for no more than a 15 minute round-trip.

I’d second the notion that delivery range should be time based, spend some time driving different directions away from your store at different times on different days, and shoot for no more than 10 minutes one way at any given time. This may give you a lopsided looking range area, but will payoff big time in the long run when you don’t “lose” drivers during a rush to traffic and overly long runs. You should purchase a blown up map of the area, and use a highlighter to clearly mark the delivery area, and post it where your phone people have easy access, this will help minimize accidental out of range orders and make everyone’s life easier.

Googlemaps does work well if you have net access in your shop, the Prism POS that I used to work with had Microsoft Streets built in and could automatically map an order, but it was far from reliable. Buying a few local street atlases also is a good investment for drivers to take on unfamiliar runs, just in case they get turned around, and much cheaper than a GPS.

I personally don’t like delivery charges, I find them deceptive in the way that they are often used. I think that a better technique is to build the cost of delivery into the menu price and offer free delivery, both of my local gourmet chains (Mad Pizza and Pagliacci) do this, and it works just fine for them. If delivery is 1/2 of your business, rather than adding a $1.50 delivery charge, you can simply build an extra $.75 into the cost of each pie, even less if delivery is a smaller portion of your business. Customers don’t like extra fees, and your drivers will love you for not implementing the hated delivery charge.

Pay is a contentious issue here, the law varies from area to area and we can’t seem to agree on what the law actually says. All I’m going to say on the matter is that you get what you pay for, long term the lower turnover and increased quality of employees attracted by a decent wage will outweigh the short term payoff of lowered payroll expense, at least in my experience.

Finally, as a new shop, you should take a look at my thread on this forum; Rethinking the Uniform for some interesting discussion on how your drivers should dress. You’re not married to a uniform yet, so you might find some of the info there quite useful.

But is this fair to the customers that only dine-in or use carryout?

If I could simply add .75 to each pizza, I would have already done that. Really, I would have.

The balance of costs between the delivery customers (who generate enormous added costs) and the carry-out/dine-in segment is a real tricky concept. There is a consideration of branding and business model to consider in that one needs to consider where the most value/revenue/profit is being generated and drive sales to that segment. Proffering free delivery at the same price as dining in, then people will possibly just get delivery or carry out and take sales from that really nice dining room you built. Delivery may attract a whole different segment of the market that would be otherwise unattracted to your store.

However, if delivery is seen as an additional service that should be paid for only by those demanding that service, and not everyone who buys food, then the strategy is different. Dine-in customers demand less in terms of disposables, less labor costs, and less general overhead as compared to delivery customers. Both are useful customer sources, and you gotta decide how each fit into your business plan and pricing model. Make a business decision and then find the labor resources that will enable you to meet the goals you set in your business plan for each service segment.

Depends on how much side work the drivers are doing. I’ve seen whole shops staffed almost exclusively by “drivers” who were rotating through the different insider duties as the orders came up, and since the DC is supposedly to offset the cost of employing drivers, charging it to everyone was fair. I’d say that “fair” is irrelevant in this situation anyway though, there is no extra charge that is visible to the customer, and I just can’t see a pick up customer protesting that delivery customers aren’t charged any more than he is. Labor is a cost of doing business, and factoring that cost into the price of the product is the way things are done. No one is saying that it’s unfair to pass the cost of the franchise bureaucracy on to the customer because they aren’t directly using it, so the same should be true of the drivers. Like I said before, I think most customers would prefer a slightly higher menu price than the perceived nickel and diming of the tacked on delivery charge anyway, so it’s a win/win all around.

Here are a few bits of advice from all of my experiences and pitfalls over the last 12 years -

  1. Don’t even think about delivery without the proper non-owned auto insurance to cover your drivers. One accident could cost you everything. $2000 for delivery insurance is dirt cheap. Conklin insurance out of IL I think is a good one, Scottsdale is another.

  2. At your very first opportunity - buy your own delivery cars. It was the best thing I ever did.

  3. I would never consider not having a delivery charge. At least $2.00 - $3.00 per delivery if the drivers use their own cars and maybe a little less if you use your own. It costs roughly $4 each time a driver takes a delivery. Keep that in mind. Fuel plays only a small part in the cost of delivering a pizza, most of it is wages, insurance, taxes, workers comp and driver reimbursement.

  4. Cross train your drivers. When they aren’t driving they should be washing dishes, sweeping, mopping answering phones, folding boxes, and so forth. Never hire a driver who just drives.

  5. Cross train your inside people to deliver when needed. It is easy and they will enjoy the tips and change of pace.

  6. Have maps of all the apartment complexes, trailer parks, and so on posted for all the drivers.

  7. Equip each driver with a map, flashlight, and consider pepper spray.

Hope this helps.

Excellent advice, thepizza.

I have been using a GPS lately. Very nice. I don’t have to really pay attention to where I am going anymore. Just enjoy the radio. Sometimes the routes that are suggested are not the way I would go, so I head off on the way that I know is a bit faster and the map recalculates. With two touches, I can also plan the way back to the store, often it comes up with a little better way.

My goal is during a rush to have few drivers dawdling with orders in the store. So I may get several GPS units that I program the delivery address in to. Give the driver the bagged order with the GPS on top. They swap out with the one they just used on their run. Just an idea.

thepizza has great points. Include these considerations in your plan.

Mike

questions include:

What do you do about insurance? My current insurance company will not cover deliveries so I have been looking for a new company. The cost is about $2k extra. Does anyone have a good insurance company that has reasonable rates (I am in Michigan)?

A) Gallagher might be an option. $2k extra is cheap for many companies. They will also have policies as to who delivers for you.

What type of mapping system do you use? Could I set up an extra computer with google maps to assist drivers? Do you give your drivers a cheap gps unit?

A) There was delivery before computers / GPS. :slight_smile: The purpose is to provide tools for your staff to maximize the speed of service and minimize the learning curves of the staff. There are POS systems who provide and your idea for Google maps is a good one as well. Personally? I would invest in GPS and have photos of a driver with one claiming “We Never Get Lost! Our Drivers Have GPS!” :slight_smile: Mapping systems alone will not help you maintain control of cash and delivery drivers, they are just maps.

Is there software that people use that makes the delivery process easier?

A) There are many companies out there who have mapping / delivery driver management / cash management built in. 10 people will give you 10 answers as to which is best. Fortunately for you the Pizza Expo is right around the corner. You can personally see many in action in the same setting and compare. Speedline is considered top notch. There are others as well.

How much do you pay drivers? Are they like wait staff who work on tips and are paid a lower hourly or must they meet the minimum wage requirements (here in MI its $7.40)?

A) In my many years, I have never seen a company take a chance with paying drivers like wait staff (even with tip laws). The IRS definitions would also play into it. Every market is determined by supply and demand. Every operation has a different level of delivery sales volume.

Do you charge an extra delivery fee?

A) This is a chess game. Determine your identity first and make decisions accordingly. Free delivery with higher menu price or charge a delivery fee as an extra charge. I have seen success both ways. FIRST: Know your competitors. Know your customers. That will help you decide more than what others are doing. Market survey should be an action item if not yet done.

How far out should I deliver? 3 miles? 5 miles? 10 miles?

A) Again. This depends on your identity, your community and the competitors. A rule of thumb for years has been “10 minutes”. Time on the road is costly for all concerned. I believe it is better to offer premium / timely service within 10 minutes vs. serving more farther out. It is not miles… it is TIME that is the factor.

Are there other factors that I am not considering?

A) You are asking great questions. You might consider downloading my spreadsheet “breakeven analysis”. You can input the number pre-delivery and then post delivery to determine what the new breakeven will be and how margins change with delivery. http://rejuvenateyourrestaurant.com/Res … Forms.html

How to manage the day to day operations, cash, driver in and out, tickets, etc. The POS system choice will determine this. (or you can do it the old way with triplicate tickets, etc.) :slight_smile:

Once you get it in place, letting people know you are ready to serve… that will be the constant challenge. But then, that is where magic comes in. :slight_smile:

Go to the Pizza Expo! For the investment you have, having access to the workshops, the vendors, the samples… I think you will find it worth the trip. (just go for 1 or 2 days with a list in hand)

Hope this helps your new adventure!

Mike

If customers shouldn’t pay for services they don’t use (such as dine in customers not subsidizing delivery through higher prices) then why not take the concept all the way?

Why are carry out customers paying for the extra cost of waitresses and the rent on the dining room?

Why are customers who walk to the establishment paying for the extra rent you must pay to have a parking lot?

Why are customers who only ordering salads and sodas, paying more for all that expensive gas and fancy ovens?

If all of that sounds absurd to you, then that’s how drivers (and customers) see the delivery charge. Customers are paying more for something they expect is included in the price and until recently has been.

Delivery charges hurt drivers tips (why should owners care?) while padding profit margins. Delivery charges were not “necessary” until gas prices and then food costs spiked up. Until then (and as you still do now) when the costs of operating go up, you just raise prices. Don’t tell me none of you have not raised prices since you have had a delivery charge! Many if not most places raise prices every year. Guess what? The customers keep coming back if your product is good.

How many of you have been upset to be charged a ‘delivery’ fee for your piped in gas? Or a ‘billing charge’ for your monthly bill? Delivery charges in pizza delivery are the same thing, a hidden but unavoidable cost, and a profit center.

For those of you who say delivery charges are NOT hidden fees, are those charges in ALL of your advertisements? Not just “*delivery charges may apply” somewhere in the add, I mean is the actual cost of the delivery in you ads? On your price lists? In many if not most places you’d be hard pressed to find the delivery charges displayed ANYWHERE but on the customers receipt. That is what I call a hidden charge.

Customers don’t like it and your employees (drivers) don’t like it. Yet the practice continues to ignore two of the most important people in you business, neither of which you can survive without. If you can’t understand why there is some animosity generated, well, then these pleas have fallen on deaf ears anyway.

:roll: Stick to copying and pasting employment law. You understand nothing of running a business and have only derision for those of us who take the risk.

Thanks for sharing your opinion, the same as I just did. You have no idea what I do or do not understand, or who I have derision for. I have derision for anyone who feels like it is too much to ask to comply with minimum wage laws that apply to them. :roll:

YOU ARE NOT HELPING
Please stick to the topic at hand. I really am getting tire of the shots being taken on this board. We are supposed to be professionals here how about conducting ourselves like we are?

Best of luck on expanding your business!

If federal or state minimum wage laws apply to you, here is what the DOL has to say on minimum wage and mileage reimbursement:

From page 31 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

Car expenses - employee’s use personal car on employer’s business.

In some cases it is necessary to determine the costs involved when employees use their cars on their employer’s business in order to determine MW compliance. For example, car expenses are frequently an issue for delivery drivers employed by pizza or other carry-out type restaurants.
(a) As an enforcement policy, the Internal Revenue Service (IRS) standard business mileage rate found in IRS Publication 917, “Business Use of a Car” may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer’s wage payment practices for FLSA purposes. The IRS standard business mileage rate (currently 28 cents per mile)(EDIT: Now it is 55 cents per mile as of Jan 1 2009) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rata basis.
(b) The IRS standard business mileage rate may be used in lieu of actual costs for FLSA purposes whether or not the employee will be able to take a deduction on his or her tax return for the business use of the employee’s car.

From page 38 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

“Tips in excess of statutory tip credit may not be credited against uniform purchase and maintenance costs”

From: Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA)

https://www.dol.gov/esa/whd/regs/compliance/whdfs16.pdf

Other Items: Employers at times require employees to pay or reimburse the employer for other items. The cost of any items which are considered primarily for the benefit or convenience of the employer would have the same restrictions as apply to reimbursement for uniforms. In other words, no deduction may be made from an employee’s wages which would reduce the employee’s earnings below the required minimum wage or overtime compensation.
Some examples of items which would be considered to be for the benefit or convenience of the employer are tools used in the employee’s work, damages to the employer’s property by the employee or any other individuals, financial losses due to clients/customers not paying bills, and theft of the employer’s property by the employee or other individuals. Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s negligence.

Also make sure the required posters are where employees can see them, such as this one:

http://i211.photobucket.com/albums/bb237/gregsters_pics/minwage1.jpg

Start moderating these yahoos instead of sending me email to “Not feed the trolls”. They have migrated over here from their dead forum which was nothing more than a place to slam the “greedy” owners and “cheap” customers. I am sick of the non-moderation you mods practice.

I don’t like them copying my posts over to TTPG. I don’t like that PMQ is practicing some sort of pacifist theory that they will eventually go away. “Eventually” means that they will keep crapping in here in the meantime. Kick my a$$ off if you want. This forum has gotten significantly worse as you guys tolerate these guys while blaming those of us who respond.

Yeah, I am pissed. They are ruining this place.

I suggest that anyone who has issues here contact the webmaster, Liz and/or Tim as I have no ability to do anything but edit or lock a thread. I am with you on this one Charles. I have tried to keep the peace here but seem to be fighting a losing battle. I am thinking of leaving myself.

The topic at hand seems to be about how to implement delivery, and what it entails. I do believe that discussion about the delivery charge is appropriate in such a thread, is it not? I see other posters have discussed the delivery charge and whether or not to implement it, why have you not told them to “stick to the topic at hand”?

I am a “professional” as I am paid to be a delivery driver. I gave my ‘professional opinion’ about delivery charges and then gave examples to support my reasoning. If you disagree with my opinions on the matter, that’s fine, but I have as much right as anyone else here to express my opinions on the topic.

While in your opinion I am “not helping”, other people may value the input from a long time and knowledgeable employee in the pizza delivery business. It is my hope that ALL employers would be willing to listen to their employees opinions on matters that they have experience with. Perhaps that is an alien concept in some places. I wouldn’t want to work at one of those.

Profit margin = jobs.

As long as the driver is getting a good wage and fair compensation for mileage, I could really care less about them getting tips. I think the whole idea of tipping is totally absurd. I have never liked it as I don’t think I should have to pay that “hidden charge” .I also will never pay my drivers a tipped wage, I have more respect for them than that, nor would I pay my servers (if I had any) sub-min wage either.

I will only tip in two instances

  1. Only when I get absolutely outstanding service.

  2. I tip the delivery driver a few $ because I know it can be a dangerous job and I can relate. But only if I get great service.