delivery pricing

[system]

I am starting a pizza delivery, carry out, and dine in, operation in Quartzsite, AZ in October.
On pricing, considering charging the extra $1 or $2 in the price of the pizza, and then offerring specials for dine in and carry out customers. No discounts, something like a free drink, or bread sticks, or extra toppings at n/c for dine in and carry out.

Has anyone done anything like this or have any thoughts on this ?

Otis

 

[ADpizzaguy]

a lot of pizza places tack anywhere from a dollar to three dollars onto delivery and call it a delivery charge. They use it to help pay for the labor of the driver and also pay some of that charge to the driver for a gas/mileage compensation

 

[system]

I think doing it that way is a gimmick that isn’t easily explained.

If you say you have “free” delivery, how will you explain that the pizza is cheaper when you pick it up - or that you get something for free if you pick it up?

Just be up front about the costs of delivery. Charge for delivery and be honest about the fact that you do it. 99% of your customers wont care about the delivery charge. .5% will ask about it an accept your explanation. The other .5% won’t order.

 

[system]

Anonymous:

I think doing it that way is a gimmick that isn’t easily explained.

If you say you have “free” delivery, how will you explain that the pizza is cheaper when you pick it up - or that you get something for free if you pick it up?

Just be up front about the costs of delivery. Charge for delivery and be honest about the fact that you do it. 99% of your customers wont care about the delivery charge. .5% will ask about it an accept your explanation. The other .5% won’t order.

Agreed. We have a $2.50 delivery charge. That is well below what it actually costs to deliver a pizza. I’ve never had a complaint.

But don’t do the FREE delivery but 10% off if you pick it up (or whatever you’re thinking of.) That seems dishonest for some reason.

 

[DFW_PizzaMan]

Anonymous:

Anonymous:

I think doing it that way is a gimmick that isn’t easily explained.

If you say you have “free” delivery, how will you explain that the pizza is cheaper when you pick it up - or that you get something for free if you pick it up?

Just be up front about the costs of delivery. Charge for delivery and be honest about the fact that you do it. 99% of your customers wont care about the delivery charge. .5% will ask about it an accept your explanation. The other .5% won’t order.

Agreed. We have a $2.50 delivery charge. That is well below what it actually costs to deliver a pizza. I’ve never had a complaint.

But don’t do the FREE delivery but 10% off if you pick it up (or whatever you’re thinking of.) That seems dishonest for some reason.

If it costs you more than $2.50 to deliver a pizza, there is significant room for operational efficiency.

 

[system]

DFW PizzaMan:

Anonymous:

Anonymous:

I think doing it that way is a gimmick that isn’t easily explained.

If you say you have “free” delivery, how will you explain that the pizza is cheaper when you pick it up - or that you get something for free if you pick it up?

Just be up front about the costs of delivery. Charge for delivery and be honest about the fact that you do it. 99% of your customers wont care about the delivery charge. .5% will ask about it an accept your explanation. The other .5% won’t order.

Agreed. We have a $2.50 delivery charge. That is well below what it actually costs to deliver a pizza. I’ve never had a complaint.

But don’t do the FREE delivery but 10% off if you pick it up (or whatever you’re thinking of.) That seems dishonest for some reason.

If it costs you more than $2.50 to deliver a pizza, there is significant room for operational efficiency.

DFW,

Thank you for the input.   I assume our demographics are different.

2 pizza places in the “area”, mine and one in a bar w/o delivery, bar is expensive and less quality, locals around 5,000, winter visitors average 200,000 during the winter, only time I am open here

what are yours ? …sounds like you are doing the “right” thing in your area…your input is appreciated,
Otis

 

[system]

DFW PizzaMan:

If it costs you more than $2.50 to deliver a pizza, there is significant room for operational efficiency.

Let hear about those improvements. I’m not the one that made the original statement, but I pretty much agree.

So far this year average delivery takes 22 minutes, round trip. At $6.15/hour that alone is $2.225 in wages.

Then I pay the driver $1.00 in compensation for each delivery.

Add liability insurance, payroll taxes, workmans compensation insurance.

You are well over $2.50.

Granted, drivers are not always taking single runs. But that doesn’t really make a huge difference in the numbers.

 

[snowman]

Otis, another thing that hurts by charging more with free delivery is that people are generally stupid. A great example are the people that will pay the same PRICE for an item but buy it online because they don’t pay sales tax (actually, they’re supposed to volunteer it, but we know better), but will pay the same or more in shipping fees.

So, let’s say you charge $10 for the pizza with free delivery. Your competition charges $8 with a $2 delivery. Your competition is 20% cheaper than you. Yeah, $10==$10, but many consumers just don’t “get it”.

 

[DFW_PizzaMan]

Anonymous:

DFW PizzaMan:

If it costs you more than $2.50 to deliver a pizza, there is significant room for operational efficiency.

Let hear about those improvements. I’m not the one that made the original statement, but I pretty much agree.

So far this year average delivery takes 22 minutes, round trip. At $6.15/hour that alone is $2.225 in wages.

Then I pay the driver $1.00 in compensation for each delivery.

Add liability insurance, payroll taxes, workmans compensation insurance.

You are well over $2.50.

Granted, drivers are not always taking single runs. But that doesn’t really make a huge difference in the numbers.

Maybe it’s just a volume issue then. My drivers average more than 3 deliveries per hour. (they average 4) I don’t pay them anywhere near $6.15/hr plus $1 per delivery either. I’ve worked delivery for 4 different places back in the day before I became an owner, I never came anywhere close to getting that kind of pay from the pizza place. I pay $4/hour, under the table. My cost for doing delivery is a little over $1 per delivery.

I can’t discuss most of the country, but I can tell you that I am in line with the Mom and Pops in Chicago as well as DFW. Maybe local market conditions are different in other regions.

 

[Red_Baron]

I recall a PMQ or PT article that said the cost per delivery is somewhere in the $3-$4.50 range (assuming single delivery runs). So charging $2.50 or $3 only serves to recoop some of the cost. The cost above the delivery charges collected are no different than credit card transactions fees- it’s a necessary evil to draw in more sales.

 

[system]

DFW PizzaMan:

I pay $4/hour, under the table. My cost for doing delivery is a little over $1 per delivery.

Wow. Under the table?

You just lost all credibility. What is your phone number? I know someone with the IRS that would like to speak with you.

 

[system]

snowman:

Otis, another thing that hurts by charging more with free delivery is that people are generally stupid. A great example are the people that will pay the same PRICE for an item but buy it online because they don’t pay sales tax (actually, they’re supposed to volunteer it, but we know better), but will pay the same or more in shipping fees.

So, let’s say you charge $10 for the pizza with free delivery. Your competition charges $8 with a $2 delivery. Your competition is 20% cheaper than you. Yeah, $10==$10, but many consumers just don’t “get it”.

Snowman,
Long time, no hear from. I consider you one that has a wider variety of infoirmation than most of us, ie, I am using 2 ovens and 2 mixers, I know about them and only hear-say about the others.
point well taken about the $10 and $8 pizza…
when are you getting started there /
I may be coming through there in my RV in March,
Otis

 

[system]

Could not agree more! DFW talks in here as such a wise and “successful” businessman, and then comes out with the “under the table” statement which explains how he can do EVERYTHING cheaper than anyone else.

 

[DFW_PizzaMan]

Anonymous:

DFW PizzaMan:

I pay $4/hour, under the table. My cost for doing delivery is a little over $1 per delivery.

Wow. Under the table?

You just lost all credibility. What is your phone number? I know someone with the IRS that would like to speak with you.

Oh that’s right, I’m the only one who pays anyone under the table. I forgot. I’m sure I lost a lot of credibility on this board.

That issue aside, even if I add in payroll taxes, I am nowhere near the $2.50 per delivery.

 

[DFW_PizzaMan]

Guest:

Could not agree more! DFW talks in here as such a wise and “successful” businessman, and then comes out with the “under the table” statement which explains how he can do EVERYTHING cheaper than anyone else.

Delivery drivers are the only thing I do that is not 100% legit. And the reason I do it is not to save on taxes. Around here, I could not keep drivers when I paid “above the table” Everyone else paid under, and for the driver that means more cash in their pocket. I was tired of the turnover, so I caved.

Also, I don’t subtract their expense from net income for IRS purposes. So while I am not paying those payroll taxes, I am not taking the expense deduction either. So I am paying more in income taxes than I should be.

So while not the right way of doing things, I am actually giving more to Uncle Sam from this arrangement than you would be. So why don’t you get the facts before you criticize.

 

[DFW_PizzaMan]

Guest:

Could not agree more! DFW talks in here as such a wise and “successful” businessman, and then comes out with the “under the table” statement which explains how he can do EVERYTHING cheaper than anyone else.

Also, please show me the post where I said I was a successful businessman. Or do you not know what quotes mean? I guess it’s easy to make dumb statements when you hide behind a “guest” name.

 

[Daddio]

The term under the table is not what you wanted to use. “I pay my drivers peice work rate of $4” would have been less distasteful. Paying peice work requires the driver to look after their own taxes etc. In the city I am in there is one place that pays the drivers a wage and the rest used the peice work method.

 

[system]

So, what does it cost to deliver a pizza? I have a slightly different point of view. When a pizza is delivered, the only extra variable costs are the food, the box, and the delivery charge you pay your driver. If you try to tie labor cost to each individual sale, you will make false decisions concerning what is profitable and what is not. For example, you have the choice to make a $8.00 sale where food costs are 40% or $3.20, and a half hour labor to deliver will cost you $4.00. Will making the sale increase profitability? If you try to tie the labor, and it’s accompanied taxes to the sale, you will refuse the order…and you will be wrong! Accepting this particular order adds $4.60 to your gross profit. Delivery wages are part of the fixed costs of running a business.

John

 

[Registered_Guest]

Even if you consider a delivery drivers wages a fixed cost - they are in fact part of the cost of providing delivery. So, IMO, it does not make sense to not include that cost into what it costs to deliver.

If you did not deliver, you would not have those costs.

 

[system]

wow!!!such hostility…ha ha
you say there are 5000 in your town,1 competitor,i would start del.i live in a town of 4500.we have 4 pizza del. stores,2 caseys,the supermarket,1 pizza p/u place,all doing pizza+9 other food shops.
b.romano