Deal or No Deal?

[pizzasam]

I’m interested to know how pizzerias in the US sell pizza. Here in the UK it’s deal after deal wherever you go, I can’t remember when we sold a pizza at the list price.

I instigated the BOGO in our town and now every place does it, and everyone has put there prices up to cope with it. Food costs on BOGO are about 30-35%, and I have had enough and going to get rid of the deal. We are going through a rebrand next month anyway and recently thought put sensible price on are menu that I can make a food cost of 20-25% and undercut the competitors by 30% on their menu price.

As expected staff seem against change, but my feeling is that the majority of the time people don’t want two pizzas. As long as our menu looks smart, customers will see the value instantly rather than doing the math with all the deals going around. Therefore we will appear cheaper but actually make more cash.

I feel the only deals we will have will be to upsell or to encourage collection, what are the food costs on your deals?

 

[royster13]

More important than food cost is how much you carry to the bottom line…There is a risk to be out of step with your competitors so you have to out market them or out service them or out quality them…

 

[system]

Sam it’s like auto sales. My pickup had a msrp of $53210.00. With rebates and discounts…I paid $38k. WTF! 30% off list for as truck. Why not ask a FAIR price and let people pick their cars based on the vehicle or dealer or brand and not the $10k+ in rebates! Pricing is all screwed up. :roll:

 

[pizzasam]

Royster, every post is bottom line with you, but keep drumming it in as it is SO important . Your right, I have just checked and we would make slightly more money on the BOGO provided that’s what people want.

When I worked in a grocery store, the manager had a deal on a 24pack of yoghurts on a BOGO deal because they we running out of date. Who wants 48 yoghurts in their fridge going out of date, a half price deal would have been far better.

My point is, my USP would be value seen instantly. Those who want just one pizza get a fair price, those who want more than one will get a deal price for sure, just not the BOGO.

 

[wa_dave]

We did a coupon for September of buy one get the second half price and I won’t be doing this again. We found it not profitable to do as most people buy multiples anyway on our regular 2 or 3 of for a certain price point. Cost of Food is running at 27.3%, or 28.9% including drinks and packaging so this is fairly good considering we do a lot of multi pizza deal orders where the discount is around 8 - 9%.
My recommendation is that you look at a similar promotiion with 2 Large for $XXX and 3 Large for $YYY with the latter only a 50c saving on the 2 deal. You will maintain profit margins and sell more multiple orders and if no-one else is doing it in your area have a point of difference. You also have the option of a bundle of 2 Large pizzas and garlic Bread and drink where either the drink or bread is at cost or slightly over e.g we do a drink bread combo for $6.60 where to buy both separately would cost $8. We sell the multi deal and ask if they want the combo added and most sau yes thinking they are getting a great deal.
Foo for thought for some changes. Just glad to see you are getting out of the BOGO.

Dave

 

[pizzasam]

Thanks Dave, that is reassuring. We are going to do offers that upsell like multiple pizza/food combos.

I just double checking food calculations, so far looking at 25% food cost that will mean our menu prices are 30% lower than our competitors who are still pushing BOGO. Although we will math wise we will look cheaper, our store, menu and website look good and without having discount this/bargain banners everywhere I don’t think we will come across as cheap but rather better value.

Having deals costs money, not just in the discount but also in the promo of it. You got be mailing and promoting the deals out regularly. Its certainly a new angle for us but very excited about it.

Its gonna work, best prices and sorry to disappoint you guys, but we are the ones making the worlds best pizza :mrgreen: