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Gas Prices

Gas is a tiny part of the overall picture. If the math worked before, the price of gas will not change anything.

For example if the price of gas doubled from here to $7.00 per gallon the total increase in cost would be less than a 10 cent increase in the price of cheese.
 
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However, as gas prices continue to escalate, the cost to get goods delivered will also increase, so start looking for a gas surcharge to be added to some of your deliveries. Remember those from the last time??? I think they’re coming back. Yuck!
Tom Lehmann/The Dough Doctor
 
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Tom,
They never went away! It is just like taxes, once in place it is never removed.
 
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Surcharges from our vendors did go away but they are back now… all in all though $5 on a couple thousand in food does not change the overall picture much.
 
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It’s guys like me not getting a couple thousand in deliveries that get a little less happy. A truck with 1200 cases to deliver, and the military base getting 600 cases pays the same $5 I pay for my 25 cases. They had to do it someway, and this way the big guys don’t complain, and the little guys have no other choice. The way things work out sometimes. 😦
 
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It makes sense because the expense is tied to the stop, not the case count. It takes the same amount of gas to get 10 cases to you as it would to get 50 just like for us delivery guys it costs us the same amount of gas to make a delivery whether we bring one pie or 20… hence our delivery charge is the same.
 
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Pull the other one. You put my delivery in the truck and measure gas consumed . . . then put the enormous order in that truck and take it to them. I am closer, have 1/10th the cases and require 1/10 the driver time to collect the load. The tonnage for the huge orders, I contend demands more gas. Maybe not that much more, but more. I am 30 miles from the warehouse, and the guy who gets 1st delivery 2 hours further away, 400 to 500 pieces, probably demands a whole lot more fuel on that whole trip than my delivery does. You want to charge me the same fee for 10 as 50, I get that . . . . but the guy 2+ hours away with half the truckload . . . I’m just not seeing the equal cost for delivery.

The matter does not seem likely to be about actual costs for the delivery . . . it is about the “best” distribution of costs . . . the definition of “best” being decided by the distributor’s executive types. I’m not bitter about it. $5 is small money for 10 cases as well . . . just not as small as for the 400 case guy.
 
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Ok, so I dare to step into the main forum. I just want to make sure I am reading this correctly.

So the companies that deliver product to your shops may either charge a fuel surcharge to account for the increasing gas prices and/or raise prices of the product.

Ok here it comes…ah never mind by now I think my plight is obvious. Just remember that gas prices are increased for everyone, including those that deliver your product to your customers.

Have a great day ladies and gentlemen!
 
I hear ya ppg, I started giving my delivery drivers $2 a run up from $1.5 and if things continue plan to bump it to $2.50. I used to deliver pizzas , and still do sometimes, and remember what its like.
 
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Our drivers drive my cars and burn my gas. I raised our delivery charge from $2.20 to $2.50 about two months ago.

Nick, the food guys have the distances you talk about in the basic pricing model and certrainly the loading labor is in the basic price model. I know we pay more for our food than the Denver stores do because we are three hours away. And yes, a huge load increases fuel use but not by much. Have you ever been able to notice a difference in gas mileage in your car due to the number of people in it? I never have.

I feel odd defending the distributor’s fuel surcharge, (As you know, I am not a fan of our food vendors) but fundamentally I think it is fair. Certainly more so than some of the other pricing nonsense they pull!
 
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How would you guys feel if, instead of charging a fuel surcharge, the vendors simply increased the price of the product by a nominal margin?

One thing is for sure if that happened. Those receiving less product would not be forced to pay the same delivery, er… fuel surcharge as those receiving huge shipments.
 
Gas prices are going to hit cost of goods up and down the distribution line. No way around it. Product prices are going up, and will likely go up again. The vendors are actually quite shrewd at least in our market. They have a published surcharge schedule based on average price of diesel fuel in Atlanta. So, we went down to no surcharge for a good while when prices were down . . . now they have a surcharge, and it just may go up on us if we hit $5 a gallon.

As for the choice between the surcharge or price increases . . . I vote twice for the surcharge. It is a stable, predictable charge, and is on a published schedule to go up and down. Price increases are forever, and the more groceries I buy, the greater the cost impact. Sure, the Big guys would get a fun share, but I see that as fundamentally bad business as well. Not a huge recovering the cost of doing business . . . but if they are gonna do it, the surcharge is the preferred way for me. I can control how many deliveries I get in a week. Usually.

(PS YEs, I can tell a very noticeable difference in my fuel efficiency between going TO Restaurant Depot and coming home FROM their with my Jeep filled with product.)
 
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To reply to the OP . . . I operated delivery several years ago when gas prices got going high, and it worked out okay. Not great, but okay. The the last year or so as prices yo-yoed, we were driving our own car delivering, and it was not a giant impact on our fuel costs over when prices we in high two’s.

On a 4-mile round trip, the added fuel cost in a low efficiency car (20mpg) means that if gas goes up $1, the expense for fuel goes up 20 cents. Bump the fee a quarter with caveat you’ll drop it when fuel gets back to $3.50 or something. Seems like our drivers would log about 120 miles a week . . . /20 mpg = 6 gallons = added $6.00 a week with a $1 increase from $2.90 per gallon to $3.90 per gallon. Our deliveries were less than a 4 miles average per order. So they didn’t get rich, but they didn’t get killed with our fee paid to them.

It is definitely a high cost service to provide. A really high cost compared to pick-up and dine-in. Just the insurance and worker comp costs are high enough for us to leave it alone for a while without deliveries. If the numbers work for you, then keep it going. If not, then have the courage to let it go and market the bejeezus out of dine-in and pickups so you can recover those customers and revenues somehow.
 
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