Thanks, Paul… awesome information.
This is definitely a problem for us. Our average frequency on our current customers is .61 times per month (and we work for it with database marketing.) Granted, the average ticket is about $30.00. I would be happy to obtain some customers that order twice per week at a $15.00 average ticket in my “lower end” market.
PJ’s is currently running a $12.00 large with up to 5-toppings here. I wouldn’t do a five topping, but I would match that price on a 3-topping. The menu cost of that would be $18.09 at my my store. My cost with the average toppings would be $3.56 so just a touch under 30% food cost. Call it 32% with waste. Marginal labor would be about 11%, credit card discount about 2%. All in cost is 45%… 55% contribution margin. Seems like a no-brainer for incremental sales.
If I could grab 50 extra orders per week at $15 I’d be dropping over $20,000 extra to the bottom line in a year… and all for a market I already deliver to but don’t pay much attention to. I can see the south end of the zip code from my front windows.
I am concerned for my drivers that are used to averaging $4.20 per drop. I under-staff my driver schedule so they make more money. I may need to send a cook out on 1 or 2 deliveries per night, but I’ve always thought that was better than adding a driver and splitting all of the deliveries again. We’ve never taken delivery super seriously; we’re over 50% dine-in. Our normal quote time is 45 minutes to an hour. We have areas up in the hills that will really take that long, but if I’m properly staffed this new target market is very close. I could reasonably run 30 minutes to them if we aren’t slammed.
I assume I need to take delivery and delivery times more seriously if I’m going after this market? I would almost certainly need to add a driver to each night, and I assume the average tip will not be $4.20 on this $12 pizza market. I’ll probably have to bump my driver’s pay rates to keep them at the same hourly. There’s no way I would make this a carry-out special thing. Actually, the last thing I need on Friday or Saturday nights is more people in line.
Any advice on advertising in a market like this? I’m considering a Red Plum or Advo drop to start things up. I will probably fire some self-printed black and white postcards to test things out first, but it seems like PH and PJ rely on married mail.
Darn, the more I look at the numbers the more I think these lower markets could make me a lot of money. I have pockets of carrier routes throughout my delivery zone… even in the higher end markets… that I have very little penetration in. We’ve built a great restaurant here, but I have to wonder if there’s a lot of money in just being a “pizza joint” for some markets…
Would love to hear any comments from anybody on this strategy. What am I missing in my thought process?