Sometimes you just have to bow to the prevailing business model. In pizza, if you are on the DELCO side of things in a market where the franchises operate, that model includes coupons. You can choose to swim upstream and in some markets may be able to do so but walking away from such a large piece of the pie can hold you back.
Nobody pays sticker price for a car and consumers have been taught to expect that. The same is true with the big franchise pizza operations in delivery/carryout. If you want to go after that market at all, you are generally going to have to play the game to some extent. The good news is that you can pretty easily build it into your price model.
I am not suggesting that you have to go after their price point. It is fine to be more expensive than they are as long as your product is better. Ignoring the role of coupons in the market is not the same thing as pricing. If the consumer is motivated by a deal you can have a price structure that puts you higher than they are, give a discount for a desirable order and still be more expensive than they are but motivate a customer to order from you or to add on to their order.
Focus that offer on the orders you want! Multiple pie orders are far more profitable than single pie order. Pies with lots of toppings are more profitable. $5 off when you order 2 named menu combos (our menu combos all have at least 4 toppings and some price out up to 9 toppings) may make more sense than $2 off a single pizza that does not require a large number of toppings.
(BTW, if you are not doing menu combos you a missing a significant opportunity. Customers are just not all that creative. You can give them an attractive combo with 4-5-6-7 toppings that has a name and attractive description and they will order it instead of the 2-3 topping pie they would have thought up themselves. We have about 20 of these on our menu.)
Almost nobody’s delivery charge actually covers the true cost of delivery. I know that in my operation if I take driver wages plus all vehicle/mileage related costs plus delivery insurance and divide it by the number of deliveries we take in a year that our delivery charge ($3.00) covers about 60% of those costs. By my calculation, a carryout order is at least $1.50 more profitable than a delivery just based on that. So yes, an offer that promotes carry-out orders makes sense. If my pricing is based on being able to offer a couple of dollars on a large pizza I can easily offer $3 on one for carryout and still come out ahead. If a promotion adds another 25 delivery orders to the dinner rush I need another driver and another cook. If it adds 25 carryout orders I only need the cook.
Nobody pays sticker price for a car and consumers have been taught to expect that. The same is true with the big franchise pizza operations in delivery/carryout. If you want to go after that market at all, you are generally going to have to play the game to some extent. The good news is that you can pretty easily build it into your price model.
I am not suggesting that you have to go after their price point. It is fine to be more expensive than they are as long as your product is better. Ignoring the role of coupons in the market is not the same thing as pricing. If the consumer is motivated by a deal you can have a price structure that puts you higher than they are, give a discount for a desirable order and still be more expensive than they are but motivate a customer to order from you or to add on to their order.
Focus that offer on the orders you want! Multiple pie orders are far more profitable than single pie order. Pies with lots of toppings are more profitable. $5 off when you order 2 named menu combos (our menu combos all have at least 4 toppings and some price out up to 9 toppings) may make more sense than $2 off a single pizza that does not require a large number of toppings.
(BTW, if you are not doing menu combos you a missing a significant opportunity. Customers are just not all that creative. You can give them an attractive combo with 4-5-6-7 toppings that has a name and attractive description and they will order it instead of the 2-3 topping pie they would have thought up themselves. We have about 20 of these on our menu.)
Almost nobody’s delivery charge actually covers the true cost of delivery. I know that in my operation if I take driver wages plus all vehicle/mileage related costs plus delivery insurance and divide it by the number of deliveries we take in a year that our delivery charge ($3.00) covers about 60% of those costs. By my calculation, a carryout order is at least $1.50 more profitable than a delivery just based on that. So yes, an offer that promotes carry-out orders makes sense. If my pricing is based on being able to offer a couple of dollars on a large pizza I can easily offer $3 on one for carryout and still come out ahead. If a promotion adds another 25 delivery orders to the dinner rush I need another driver and another cook. If it adds 25 carryout orders I only need the cook.
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