How wise is it to change pricing structure?

[Daddio]

After looking at my food costs I am thinking about changing my price structure. I currently have buy any pizza at regular price and add a second pizza of equal or less value for half the price of my signature pizza. Of course there is a built in buffer in all of the regular prices to account for the second pizza.

Now making this would save some of my customers but it would cost others. So what do you think?

 

[j_r0kk]

Daddio,

I raised my prices quietly. Here’s how my menu was layed out:

1 Large 1 topping = $10.99. Additional toppings = $1.25

New menu pricing looks like this:

1 Large Cheese = $10.99. Additional toppings = $1.25

That’s how I changed my pricing and nobody even batted an eye. Maybe it’ll help.

-J_r0kk

 

[wa_dave]

I think with all the price rises going on that we have to raise prices and altersome of the deals we do otherwise we will all end up going out the door backwards.

Maccas have upped their prices at least 3 times in the last half year and reduced sizing accordingly, as have many other outlets. Grocery stores continue to increase their prices and manufactures reduce pack sizes and put up prices.

The pizza industry seems loathe to increase prices and continue to cut each others throats. Prices are cheaper now than what they were 10 years ago.

I’m in the process of increasing mine at the moment and reducing the number of deals available. We are also streamlining some variants in pastas and re-adjusting the amount of toppings on our pizzas.

Sorry, but I’m not in the business to sell a heap for no profit. I would rather sell less and make money even if it means a turn down in sales and staff numbers.

I’m not being greedy, silly or irrational. I’m providing for my future and paying my debts, and there is no way I’m going to be known as the great pizzas shop that went broke because they didn’t raise prices.

By the way Daddio can you confirm your email address. I’ve been trying to send you somethings but they keep coming back. I’ve been sending to [email protected].

Dave

 

[Daddio]

j_r0kk:

Daddio,

I raised my prices quietly. Here’s how my menu was layed out:

1 Large 1 topping = $10.99. Additional toppings = $1.25

New menu pricing looks like this:

1 Large Cheese = $10.99. Additional toppings = $1.25

That’s how I changed my pricing and nobody even batted an eye. Maybe it’ll help.

-J_r0kk

So rather than doing a complete change maybe change to a second pizza up to 3 toppings?

 

[Daddio]

Dave
check your PM

 

[j_r0kk]

I kept my marketing the same. I just raised the base price of all pizzas by $1. Worked fine for me.

-J_r0kk

 

[Daddio]

Here is where I run into problems. I have a pizza that I am running 29% food costs on at regular price (because of the increase in chicken and cheese prices). With the priceing structure I have right now, if a customer wants 2 of these pizzas my food costs for that sale go to 36%. If a customer buys the same first pizza and a cheese pizza for the second pizza my food costs are now at 24% for the sale.

 

[wa_dave]

Maybe have the second pizza from a limited range that has a lower costs?

I ran a $10 large special but limited it to 10 variants of signature pizzas up to a certain price point, thus removing the higher costs items. Had no complaints and it worked well while I ran it.

Dave

 

[j_r0kk]

Daddio, I understand what you’re saying but you can’t look at it that way. Firstly, if you’re food cost is at 29% for a chicken pizza, raising your base price $1 will reduce your cost to 26%. Secondly, just as you told me a few months back about the school lunch program: don’t look at it as increased food cost but rather additional revenue that you never would have had. Don’t try to limit your customers to just one topping or your promotion won’t give you the same return it is now. The last thing you want to do is handcuff yourself.

-J_r0kk

 

[Daddio]

Ok, so maybe I should look at this from a different angle. If I were to create a Premium Pizza class on my menu and put the price for that class higher and keep the Specialty and Deluxe classes with a modest increase, it would take care of the high price of the premium toppings.

Just a point of clarity to have my chicken for a 14" at 25% food costs the topping would be priced at $7.73 or food cost of $1.93.

 

[wa_dave]

Daddio:

Ok, so maybe I should look at this from a different angle. If I were to create a Premium Pizza class on my menu and put the price for that class higher and keep the Specialty and Deluxe classes with a modest increase, it would take care of the high price of the premium toppings.

Just a point of clarity to have my chicken for a 14" at 25% food costs the topping would be priced at $7.73 or food cost of $1.93.

Daddio

Have a look at our menu I sent you.

We have Favourites (Everyday) and Gourmet (Premium) and our deals are based on Favourites with extra charges for The Works or Gourmets.

Takes care of higher cost items.

Dave

 

[Daddio]

j_r0kk:

Daddio, I understand what you’re saying but you can’t look at it that way. Firstly, if you’re food cost is at 29% for a chicken pizza, raising your base price $1 will reduce your cost to 26%. Secondly, just as you told me a few months back about the school lunch program: don’t look at it as increased food cost but rather additional revenue that you never would have had. Don’t try to limit your customers to just one topping or your promotion won’t give you the same return it is now. The last thing you want to do is handcuff yourself.

-J_r0kk

You know I really hate it when my advice comes around and bites me in th rear.

 

[Daddio]

Dave
How much of an extra charge do you tack on to your specials and meal deals?

 

[wa_dave]

Daddio:

Dave
How much of an extra charge do you tack on to your specials and meal deals?

Daddio

On the $23.90 2 large deal we charge per pizza extra for those not in the “favourites” range as follows…

Works $2.00
Italian Stallion, Meat Eater Special, Satay Chicken, Sils Special $1.50
Vics Special $4.50
Steak Deluxe $3.00
Garden Harvest $6.00

These are based on $1.50 per gormet topping on each pizza, except the Garden Harvest where in reality it should be $10 extra.

We charge $1.00 on smalls, $2 on each topping on Family and $2.50 on Jumbo

Works would be $1.50, $2.00, $2.50 & $3.00
Italian Stallion, Meat Eater, Satay, & Sils would be $1.00, $1.50, $2.00, $2.50
Vics would be $3, $4.50, $6.00, $7.50
Steak would be $2.00, $3.00, $4.50 & $6.00
Garden Harvest would be $4.50, $6.00, $8.00, & $10.00

On our new priced menu soon coming out these will change to
Works, Marinara Supreme and Meat Eaters Special $1.50 (s) $2.00 (lg) $3.00 (f) and $4 (j) extra.
All Gourmets $2.00 (sm) $2.50 (lg) $3.50 (f) & $4.50 (j) extra, except Garden Harvest which will remain at $6.00

Hope you follow this OK. I will try and find our printed format the staff use and send it to you. It is easier to understand.

To the others who don’t have our menu it all probably seems double dutch to you (no smart ass comments from you, thanks Nick :lol: ) but as I have said in the past our menu is based solely on “signature” pizzas.

Dave

 

[NicksPizza]

wa dave:

To the others who don’t have our menu it all probably seems double dutch to you (no smart ass comments from you, thanks Nick :lol: ) but as I have said in the past our menu is based solely on “signature” pizzas.

Wha’d I do :shock: I took the little pink/green capsule this morning, so it all makes perfect sense . . . . . I just don’t see where the half toppings come in. Besides, I wanna see your staff manage that menu WITHOUT a POS . . . they’ll run for mines, too.

Daddio:

Just a point of clarity to have my chicken for a 14" at 25% food costs the topping would be priced at $7.73 or food cost of $1.93.

Darn, Daddio! How much chicken you putting on that pizza? Am I reading right that you’d need to charge $7+ to put chicken as a topping? I get 9.65 oz of mixed, diced precooked chicken for $1.93 USD . . . what are you paying for an ounce/pound and how much are you putting on a pie? We put 4oz on a 16" pie for $3.00 (27% cost) and 2.5 oz on a 14" for $2.00 (25% cost). I know the exchange into CAD will make a difference, so I thought I’d ask.

Changing your portioning for a single topping purchase may be the way to go.

 

[Daddio]

Nick
I put 4 oz on a 14 and pay about $7 a lb for precooked juliene breast.

 

[wa_dave]

NicksPizza:

wa dave:

To the others who don’t have our menu it all probably seems double dutch to you (no smart ass comments from you, thanks Nick :lol: ) but as I have said in the past our menu is based solely on “signature” pizzas.

Wha’d I do :shock: I took the little pink/green capsule this morning, so it all makes perfect sense . . . . . I just don’t see where the half toppings come in. Besides, I wanna see your staff manage that menu WITHOUT a POS . . . they’ll run for mines, too.

Nick you hit on the head.

We give all the staff the pink/green capsules before they start their shift and they just “float” through the night.

We have a order form with all the signature pizzas on them in “favourites” and the individual toppings under them, and same for the “gourmets”. Everything is a tick the box. Tick for the 1st pizza, x for the 2nd, o for the 3rd, * for the 4th and so on. Once they have had the capsule they have no troble doing it.

A POS will make it a lot easier for sure but they do a great job with the cheat sheets they use. Good staff, well trained and “juiced up” on pink/green capsules can do it on their ear without POS.

And none of our drivers get their horse and buggies bogged on the raods around here.

Dave

 

[goomba]

NicksPizza:

wa dave:

To the others who don’t have our menu it all probably seems double dutch to you (no smart ass comments from you, thanks Nick :lol: ) but as I have said in the past our menu is based solely on “signature” pizzas.

Wha’d I do :shock: I took the little pink/green capsule this morning, so it all makes perfect sense . . . . . I just don’t see where the half toppings come in. Besides, I wanna see your staff manage that menu WITHOUT a POS . . . they’ll run for mines, too.

Daddio:

Just a point of clarity to have my chicken for a 14" at 25% food costs the topping would be priced at $7.73 or food cost of $1.93.

Darn, Daddio! How much chicken you putting on that pizza? Am I reading right that you’d need to charge $7+ to put chicken as a topping? I get 9.65 oz of mixed, diced precooked chicken for $1.93 USD . . . what are you paying for an ounce/pound and how much are you putting on a pie? We put 4oz on a 16" pie for $3.00 (27% cost) and 2.5 oz on a 14" for $2.00 (25% cost). I know the exchange into CAD will make a difference, so I thought I’d ask.

Changing your portioning for a single topping purchase may be the way to go.

Wow Nick how do you manage to spread just 4 oz chix. over a 16’’ pie?I use 1 llb on an 18’’ and it seems lite.It cost me 1.99 llb and I get 14.95 for an 18’’ w/ chx.I guess I’m still doing a decent food cost.

           Niccademo

 

[NicksPizza]

goomba:

Wow Nick how do you manage to spread just 4 oz chix. over a 16’’ pie?I use 1 llb on an 18’’ and it seems lite.It cost me 1.99 llb and I get 14.95 for an 18’’ w/ chx.I guess I’m still doing a decent food cost. Niccademo

Well, we use a fairly small dice, and use it similar to our sausage and beef. It is no means a hefty topping, but it deos get the job done for our pies. At your ratio, I would be putting 12 oz on a 16" pie at my cost of $2.21, and make my just chicken pizza cost me almost 4.87 to send out the door today. At 14.95, I would run a 33% food cost, which isn’t too terrible . . . I might have to think about it. At least for some of our signature pies, increasing to around 8oz on 16" pie would “fill them out” some, and just a slight price increase would make my food cost come close to 31%. Margin contribution would be enough that I could sell them at those prices.

Still thinking.

 

[Daddio]

I input a days worth of orders in the tutorial with the base price raised by $1 for each pizza and it brought down the food costs by about 2 1/2 %. I guess this would be the least tramatic for my customers.