Continue to Site

delivery fee

W

wjcraig2003

New member
In the black book, it says to make sure you have a unique selling point. It mentions several ideas, but the one that caught my eye was free delivery. We have an extremely saturated market, so I’ve found it difficult to find something that makes us unique. Normally, we charge $2 delivery charge. I went around and collected menus from our competitors. It turns out that our prices are about $2 (give or take 50 cents) lower than a lot of our competitors. I was thinking about raising pizza prices by 2 dollars and making delivery free. We would still help compensate our driver with the $2 that they normally would have received, but that would give us an a unique selling point. Any Suggestions?
 
Last edited:
Over the years my opinion on this topic has done a 180* turn. I started out with free delivery and now charge for delivery. The reason for the change is simple. Everyone knows there is a cost involved in delivering a pizza order. Customers that pick up their pizza are going to want a discount because they are not causing you to incur this cost.

I have change my business model to the concept of user pay. You get only what you pay for and you only pay for what you get.

As far as a unique selling point: I buy everything I can from local independent businesses, supporting the local economy.
 
Last edited:
Thank you for your response. When you started charging for delivery, did you see a difference in your numbers?
 
Last edited:
There was a complete change in how I operated. I had been a BOGO shop and decided that was not the market I wanted to be in. I change the complete price structure including the delivery fee. My order count went up and the average dollar amount per order also went up. There was also an increase to the bottom line.

I have royster13 to thank for opening my eyes to what the customer really wants.
 
Last edited:
Craig,
  1. Do you pay your delivery driver or is independent and gets the full delivery charge?
    What i would do is, calculate how many deliveries you have a night and week,then see if the increase would justify the cost. If its your cost (payroll, insurance and Gas). If its his revenue, he would also have to justifie his time,gas,insurance and wear and tear.
  2. I agree with Daddio. Charging customers who pick up, the same price as the one who get delivery would be bad business and might cost you customers especially if your competitors pick up on it.
  3. If you do decide to change to increase the pizza price just to advertise free delivery, Then you should offer free rolls or a soda for pick up customers. That way everyone is getting what they are paying for.
 
Last edited:
I am part of a small regional chain and compete directly with Big 3. I was last to add a delivery fee back in 2004 and it was only 50 cents. In 2011 I was looking for a competitive advantage and thought the same thing you are currently. I dropped my delivery fee which at the time was $1.95 (I was very hesitant to go over $2). It seemed to have turned my delivery order counts way up. But I was not making more money and my sales were flat.

18 months later (a little over a year ago) I added it back. Dominos is at $1.50 in my 3 stores areas so I matched them. Have not looked back since and i did find a new way to separate from the herd.

Now just last week in a store that does a million dollars a year already I posted a 49.6% increase in sales vs the same week last year!!!

These days nobody gives a damn if you have FREE delivery or not.
 
Last edited:
48.png
314:
I am part of a small regional chain and compete directly with Big 3. I was last to add a delivery fee back in 2004 and it was only 50 cents. In 2011 I was looking for a competitive advantage and thought the same thing you are currently. I dropped my delivery fee which at the time was $1.95 (I was very hesitant to go over $2). It seemed to have turned my delivery order counts way up. But I was not making more money and my sales were flat.

18 months later (a little over a year ago) I added it back. Dominos is at $1.50 in my 3 stores areas so I matched them. Have not looked back since and i did find a new way to separate from the herd.

Now just last week in a store that does a million dollars a year already I posted a 49.6% increase in sales vs the same week last year!!!

These days nobody gives a d**n if you have FREE delivery or not.
Click to expand...
50% up. Your new specialty pizza menu is kicking in. Its a slow process but once it gets rolling it really takes off

David
 
Last edited:
Daddio said:
There was a complete change in how I operated. I had been a BOGO shop and decided that was not the market I wanted to be in. I change the complete price structure including the delivery fee. My order count went up and the average dollar amount per order also went up. There was also an increase to the bottom line.

I have royster13 to thank for opening my eyes to what the customer really wants.
Click to expand...
One of the shops I am looking at to purchase is one with quite a few coupons. That doesn’t match my particular business philosophy and judging by what I’ve read on the TT most here I would hazard a guess aren’t too thrilled with the big chain discounting philosophy. If I did go forward with this shop and did away with them and instituted rewards program and smaller coupons (free breadsticks with large 2 or more topping pizza or 2 liter soda etc.) would the hit be devastating or a smaller hit over just a few months?
 
Last edited:
My guess is that if you go cold turkey you would loose the customers that are most motivated by the the deals they have been getting.

I would suggest a slow backing away on the deals while you seek new customers with a different message.

Also note: there is a world of difference between regular couponing and the big chain discount mentality. We ALWAYS have coupons out there. The customer expects them in the pizza business, but we are not pricing in competition with the big chain model.
 
Last edited:
Thanks Bodega, I’ll have to brush up on the coupon threads. I’ve read quite a few here already.
 
Last edited:
I plan on doing free delivery when we get to that point, (been running 5 years without it) but I am going to follow “Jimmy Johns” strategy and price the delivery menu items higher to cover my packaging costs.
Point Of Success has the option to automatically add a specified dollar amount onto each item being delivered. We will make it known that there is a higher cost for delivery, and it is to account for packaging.
The only other place by me that delivers is the Big D,
 
Last edited:
Packaging is a minor cost, maybe a $1.00-$1.50 on an average order and has some offsets compared to dine-in that save you some money. It is the cost of actual delivery that bleeds you.
Delivery insurance $4000 - $6000 per year, driver wages, mileage or vehicle expenses… When we opened we had no delivery charge too. Delivery now costs us over $5 per delivery (expenses described above / number of deliveries per year).

We charge a 2.90 delivery charge. We choose to use a delivery charge because the cost of delivery is tied to the number of deliveries, not how expensive they are… i.e., if you build delivery into your menu you will be charging your best customers more for delivery than the ones who order small orders. i.e. If you order a 12" cheese pizza it costs us $5 to deliver it and we charge you $2.90 and if you order five 16" high end combos for over $100 it costs us $5 to deliver it and we charge you $2.90. If we chose instead to build a couple of bucks into the menu price we would be charging the small order $2.00 and and large order $10… makes no sense to me. Besides… pretty much EVERYBODY does delivery charges now, customers expect it.

I don’t see the drawback. We had zero negative feedback when we added the delivery charge and not one comment ever when we have have raised it. We started with .90 cent delivery charge about 12-13 years ago and have raised it several times over the years to the current level of $2.90. I plan to raise it again before December.

Do yourself a favor and run the math: (Delivery Insurance + Driver wages + Vehicle expenses / the number of deliveries). You will be shocked.
 
Last edited:
bodegahwy said:
Packaging is a minor cost, maybe a $1.00-$1.50 on an average order and has some offsets compared to dine-in that save you some money. It is the cost of actual delivery that bleeds you.
.
Click to expand...
Our foam ToGo boxes are running us $0.72/each (10x9x3 , single compartment) Then figure cardboard pizza boxes, circles, and everything else involved. We would easily exceed $1.50 per menu item,
 
Last edited:
GotRocks said:
I plan on doing free delivery when we get to that point, (been running 5 years without it) but I am going to follow “Jimmy Johns” strategy and price the delivery menu items higher to cover my packaging costs.
Point Of Success has the option to automatically add a specified dollar amount onto each item being delivered. We will make it known that there is a higher cost for delivery, and it is to account for packaging.
The only other place by me that delivers is the Big D,
Click to expand...
I once had “Free Delivery” and was constantly asked if there was a discount for picking up the order. Customers know there is a cost associated with delivery and they are rightfully reluctant to subsidize other customers when they are not using the “free” service. I use a contract delivery service and 100% of the cost to deliver the order is paid by the customer.
 
Last edited:
At first i had the same thoughts as you. In my previous location I too offered free delivery as a marketing tool. After looking back I don’t believe that my customers ordered from me because we didnt charge for delivery. The only person that benefits from free delivery is your driver because they might be getting a bigger tip since there is no delivery fee but you are eating all the costs of delivery service. The busier you get the more that service is going to cost you ie more drivers which means more insurance etc. At my current location we charge 2.50 for delivery. It is a service you should charge for it. Your customer is saving time and gas money by you bringing them food to their door. There should be a charge for this.
 
Last edited:
Yup, Foam boxes, pizza box, souffle cups/lids, circles (if you choose to use them) etc come to about $1.50 per order. I guess if you serve mostly non-pizza entrees it could run a bit more and it is more on a bigger order. Then when you get an order for a single pizza it runs more like 50 cents. Also, in comparison to dine-in you have no dish washing expense or wear and tear on plates and glasses, reduced condiment use plus how many dine-in customers end up asking for a to-go box anyway… so the net cost for packaging is less with regard to incremental costs.

Even if packaging nets out at $2.00 per order my point stands, it is the delivery expense not the packaging that will eat you alive with delivery and is why most operators have gone with a delivery charge.
 
Last edited:
When I worked at a steakhouse, the breakage and loss of small wares was considerable…They were counted every night and tracked…If the number of forks, knives, etc., was too high, all the garbage bags were broken open and checked with a metal detector to see if the dishwashers and/or bus staff were being careless…
 
Last edited:
wjcraig2003 said:
I went around and collected menus from our competitors.
Click to expand...
If you lay your menu with “Free Delivery” plastered all across it next to those menus, is that a compelling enough point of differentiation to entice someone to choose your product/service over the others? Remember that most places don’t actively advertise their delivery fee, so the customer won’t be readily able to compare and know that you’re even saving them $2.

What are you competitor’s U.S.P.s? Let’s figure out a way to compete on something other than price.
 
Last edited:
royster13 said:
When I worked at a steakhouse, the breakage and loss of small wares was considerable…They were counted every night and tracked…If the number of forks, knives, etc., was too high, all the garbage bags were broken open and checked with a metal detector to see if the dishwashers and/or bus staff were being careless…
Click to expand...
That warrants a garbage can insert with strong magnets, the initial cost is really freaking high, but they do pay for themselves quickly.

I’ve had my Henckel knives show up in garbage cans, hence the use of clear can liners too.
 
Last edited:
You must log in or register to reply here.
Back
Top