Raising Prices While Increasing Sales

[tmp]

I’ve been doing research and have been on this forum since 2011, and have received a lot of suggestions, which I greatly appreciate. I’d like to type up a very basic plan based off of feedback on the forum, and just see if you all think it is good enough. Thank you.

1. Sign up for Point of Success as the Point of Sale system.

This will show exact numbers regarding sales and hopefully will be able to help move away from the $5 medium offer since it will show if sales decrease after a price increase. It can also prompt the employee to upsell.

1. Pay $99 online order setup fee for Big Holler. After $800/month in sales, there will then be a $70/month fee. In addition to the online ordering, get into email marketing.
2. Pay approximately $200 for 5,000 box toppers (this would be something new for this pizzeria).

The goals for the box toppers should be to increase the overall ticket average, offer value offers instead of discounts (instead of a percentage off, offer a free food item), and promote online ordering and social media via box toppers.

 

[George_Mills]

Just my take on the situation.

Assuming we are comparing the same item, price is the atom bomb of sales.

In the pizza business everyone is selling a product called pizza but all pizzas are mot the same.

You must choose between selling because of price or selling a top quality pizza.

If you wish to compete in the higher priced market you must produce a superior product.

Many pizza shops try to compete in the higher price market with a product that does not qualify as superior.

Don’t kid yourself , just because you think your pizza is superior does not make it so.

The buyers will decide. If you have a superior product people will buy it and pay a superior price for it.

If you are not getting the sales and price your investment deserves you product is most probably the problem.

George Mills

 

[tguag]

@George Mills is right! there are 2 winners in this game “the cheapest” and “the best”.

 

[tmp]

I greatly appreciate the feedback I’ve received on this forum and plan on making changes based off of the suggestions here very soon.

I still have a few questions, basically wondering if you agree that what is below is worth the investment.

We’re planning on signing up for Point of Success and having Big Holler online ordering (Big Holler is $80/month). Do you believe the online ordering is worth the cost?

EDIT: I forgot an important part… There will most likely need to be another employee hired to work the Point of Sale at a rate of approximately $7.50/hour, since at times there is only one person working at the pizzeria (while someone else is out on a delivery). This person wouldn’t be needed at all times, but it would still be costly. Of course the online ordering wouldn’t require anyone else, but someone would need to use the Point of Sale for phone orders and for people coming in. Do you think Point of Success and Big Holler are still worth the cost even if another person must be hired? (I do plan on using the marketing tools in Point of Success to get the most out of it. Will it be enough to pay for that extra person? I don’t know…)

Also thinking about increasing the menu size from 10.5 x 17 to 10.5 x 21.5 to grab more attention. It would cost $625 more than the current menu (bringing the total of the larger menu to $2,300 for 25,000 from The Mail Shark. Do you think it is worth the extra $625 for the larger size?

Email marketing (free through Mail Chimp)

Text message marketing for $14.99/month through TXT 180 (Do you believe it is worth the cost? They provide a shortcode so that makes it easy to sign up.)

Box Toppers, $200 for 5,000 (Do you believe they’re worth the cost?)

The plan is to promote the online ordering, text message marketing, and email marketing on the new menus and box toppers, and offer an incentive for signing up (as an example, a free slice of pizza). The text marketing should be very easy, since the customer will just need to send a text to a shortcode to sign up and they could receive a promo code via text.

Thank you all very much! I really do appreciate the help you’ve all provided, and I hope others have benefited also by browsing this thread and the entire forum.

 

[pizza2007]

Good to see you hanging in there. Reading the post above gave me a bit of a headache. It caused me to go into a loop of wondering if you had a goal besides checking all the marketing blocks (I did that, I paid that) much like ordering all the toppings available for a pizza, only to be disappointed because it didn’t taste like you expected.

Do you know what you want to achieve? Do you know your target customer? Who are they and what do they want? How do you reach them? How do they find you? Does your competition have your target customer? If so, how did they get them?

Some of the items you mentioned above, improve operational efficiency, and have little to do with marketing.

What works good in one market may well be a complete waste of time and money in a different market.

 

[Diran_A]

Do you know what you want to achieve? Do you know your target customer? Who are they and what do they want? How do you reach them? How do they find you? Does your competition have your target customer? If so, how did they get them?

Best advice one could ever give. Always know what you’re trying to achieve before you try to achieve it. Good answer, pizza2007.

 

[tmp]

Good to see you hanging in there. Reading the post above gave me a bit of a headache. It caused me to go into a loop of wondering if you had a goal besides checking all the marketing blocks (I did that, I paid that) much like ordering all the toppings available for a pizza, only to be disappointed because it didn’t taste like you expected.

Do you know what you want to achieve? Do you know your target customer? Who are they and what do they want? How do you reach them? How do they find you? Does your competition have your target customer? If so, how did they get them?

Some of the items you mentioned above, improve operational efficiency, and have little to do with marketing.

What works good in one market may well be a complete waste of time and money in a different market.

Thank you for your reply.

What we’d like to achieve is to gain more customers, and have our current customers come back more often. (I think that’s what most businesses want to happen.)

The target customer should be those who want food of good quality, but it seems the opposite is happening, those who just want cheap food are coming instead. It’s possible that the wrong crowd is coming because the prices are so low.

The quality of the food is good, but it seems like it isn’t being communicated well. Just as an example, most people don’t know that the dough and sauce is made fresh. For those who haven’t tasted the pizza, they might not even know the difference between it and Little Caesars. (I’m thinking if we do the text and email marketing, we can send an offer for a free slice of pizza when signing up, requiring them to order online. We’ll get their phone number and/or email along with permission to send offers, and they’ll get experience using the online ordering system, while we give a free slice for them to enjoy so they come back.)

You asked what the customers want… Most of the current ones are looking for cheap food. They asked if the prices are the same or if they’ve gone up, they complain if a price is raised just a little bit. There is a lot of competition, but I’ve read here many times that we shouldn’t be competing on price. So, we need to find more unique selling points (which I have some ideas for). The customers are currently reached by sending out menus and word of mouth. There isn’t any other advertising going on.

I do think that the Point of Sale will be more efficient, but what I’m mostly looking forward to are the financial and marketing reports. It will keep track of addresses (both home and email) and phone numbers. We’ll be able to target different groups of customers with different offers. If we have people opt-in to text message and email marketing, we’ll be able to send offers that will be looked at more quickly. I think a lot of people prefer the online ordering. I’ve read that Papa John’s and Pizza Hut either reached or exceeded the 50% mark of online vs call-in orders.

The current menu can be improved and I think a larger one would help. I really like what I’ve been seeing from The Mail Shark so far. I’d like second opinion on this and everything else. Is it worth paying for the extra large menus? I think so, but I might be wrong.

How did the competition get the customers? Well, I’m thinking based off of what I mentioned above. They have a Point of Sale, they have online ordering, they have WiFi in the store, and they have larger and more attractive menus. Some also have very low pricing, but as I mentioned earlier, others have said we shouldn’t compete on price, so the goal is to slowly get away from that and communicate the it is a good quality product and worth paying extra. Of course, the more we can charge, the more that can be improved, such as the appearance of the store.

Please let me know what you suggest.

Thank you.

 

[pizza2007]

those who just want cheap food are coming instead.

Certainly not my target customer, let them graze @ the cheap joints. You’ll never (myself included) do well with that business model.

We’ll get their phone number

Not so important. You want them to have YOUR phone number or website or address.

There is a lot of competition

Competition can be good and bad. Learn your market!! If you’re constantly matched against Jason Day in golf, I’d say your chances of winning are nil. The same is true in this business. The competition for your market slice could be too difficult to overcome. Competition makes you better, but doesn’t guarantee you success. You could compete every day, and get better, but never win. Is the goal you set obtainable?

WiFi in the store

We have WiFi, but 60% of our business is dine-in. If you’re primarily delivery, how does WiFi help you? I don’t think it does, and it’s opposite of pushing customers to call or place orders online. Which one do you want and why? That’s what needs to be asked on a lot of what you’re thinking about. What is the ROI/impact of each endeavor? For example, a newspaper might say, we get 1 million reads, so place an ad with us. But is your target customer reading the newspaper, looking for your ad? Where does your target customer get their information for dining or new trends and fashions? It’s a little like hunting. Where are the deer? duck? fish? etc… Where are your customers? What do they read? What do they wear? Where do they go to school? What are their activities? Where do they shop? What’s their income? Just a few of many questions you should be able to answer about your target customer.

others have said we shouldn’t compete on price

And I would agree with that. However, it doesn’t mean you can’t. CiCi’s pizza and Little Ceasers have always done that. The question is whether or not there’s enough customers and profit for you in that market. Let’s face it, if you worked 350 12hr shifts and earned $12,000, would that be worth it? Would $50,000 be worth it? Would $100,000 be worth it? Play with the numbers and merge that with your goal.

gain more customers

Right! But you “want” more GOOD customers!!

You’re asking all the right questions, and need to find some answers. If you’re right smack in the middle of $5 pizza country, it’s going to be very difficult.

 

[tmp]

Certainly not my target customer, let them graze @ the cheap joints. You’ll never (myself included) do well with that business model.

Not so important. You want them to have YOUR phone number or website or address.

Competition can be good and bad. Learn your market!! If you’re constantly matched against Jason Day in golf, I’d say your chances of winning are nil. The same is true in this business. The competition for your market slice could be too difficult to overcome. Competition makes you better, but doesn’t guarantee you success. You could compete every day, and get better, but never win. Is the goal you set obtainable?

We have WiFi, but 60% of our business is dine-in. If you’re primarily delivery, how does WiFi help you? I don’t think it does, and it’s opposite of pushing customers to call or place orders online. Which one do you want and why? That’s what needs to be asked on a lot of what you’re thinking about. What is the ROI/impact of each endeavor? For example, a newspaper might say, we get 1 million reads, so place an ad with us. But is your target customer reading the newspaper, looking for your ad? Where does your target customer get their information for dining or new trends and fashions? It’s a little like hunting. Where are the deer? duck? fish? etc… Where are your customers? What do they read? What do they wear? Where do they go to school? What are their activities? Where do they shop? What’s their income? Just a few of many questions you should be able to answer about your target customer.

And I would agree with that. However, it doesn’t mean you can’t. CiCi’s pizza and Little Ceasers have always done that. The question is whether or not there’s enough customers and profit for you in that market. Let’s face it, if you worked 350 12hr shifts and earned $12,000, would that be worth it? Would $50,000 be worth it? Would $100,000 be worth it? Play with the numbers and merge that with your goal.

Right! But you “want” more GOOD customers!!

You’re asking all the right questions, and need to find some answers. If you’re right smack in the middle of $5 pizza country, it’s going to be very difficult.

Thank you for your response.

We’re planning on increasing some prices and hopefully will be able to get away from those just looking for cheap food, but we understand it is going to take time. There are several $5 deals nearby, one even will include two toppings on a medium. I’ve read many suggestions in the forum regarding the pricing and hope to implement them.

I’m thinking the phone number is important for text marketing. From what I’ve read, it seems to be successful. When we have their phone number, we can text them offers that can only be redeemed online.

We’d like to increase the Dine-In business. I think what you’re saying with the WiFi is that more people will Dine-In and won’t order online, but in person. Is that correct? With the Dine-In we’re hoping people will order more and also get drinks. In addition to that it saves on the box.

I don’t know the answers to most of your questions. There is a university nearby, and people follow the local sports teams.

Please let me know if you have any more advice.

My main question is, in your opinion, is the plan I mentioned earlier worth the investment? (Point of Success, Big Holler online ordering, larger menus, text marketing, email, social media, larger menus, box toppers)

Thank you very much!

 

[royster13]

Whether one marketing investment or another will work best is a matter of testing…A larger flyer will usually have more impact, however, sometimes distributing more copies of a smaller flyer also works…So then it comes down to tracking your costs…Then you can “tweak” your efforts to maximize your returns…

 

[pizza2007]

I think what you’re saying with the WiFi

What I’m saying, is if you’re pushing everyone to do online ordering, OR delivery (they’re calling you), then what is generating the need for WiFi? Nothing.

A POS is an operational emprovement.

larger menus, text marketing, email, social media, larger menus, box toppers

You mentioned LARGER menus twice. If you think it’s that important, then do it yesterday. But again, if you’re pushing your customers to order online or call for delivery, then why do you need LARGER menus? I’ve never used email or text marketing and don’t have any plans to do so. While one generation emails, another only texts. What’s the age of your target customer and what do they use? How do they prefer to be contacted? Do they “want” you to contact them? Box Toppers have been a no-brainer from the beginning, at around a penny per print, very hard to beat. You just don’t “use” social media (there’s not a magic button). You need a well thought out plan, that targets your customer (yeah, back to that again). If most of your customers are homeless, then social media won’t be that effective. Again, who and where are your customers.

 

[tmp]

Whether one marketing investment or another will work best is a matter of testing…A larger flyer will usually have more impact, however, sometimes distributing more copies of a smaller flyer also works…So then it comes down to tracking your costs…Then you can “tweak” your efforts to maximize your returns…

Thank you.

You mentioned LARGER menus twice. If you think it’s that important, then do it yesterday. But again, if you’re pushing your customers to order online or call for delivery, then why do you need LARGER menus?

I was thinking the larger menus would grab their attention quicker, and direct them to the website, online ordering, social media, and text specials.

What’s the age of your target customer and what do they use? How do they prefer to be contacted? Do they “want” you to contact them?

There are many people in the area with families. I saw a lot of parents with their children going to the competition. Maybe the pizzeria should be more “kid friendly” and have more family specials?

The text specials would be optional, so we’d need to wait and see how many sign up. There might be some that opt-out after getting their free slice of pizza, but I’m hoping most will stay on the list.

Thank you.

 

[Piedad]

If you will indulge me for a minute, I’d like to contribute on a “customer” level. As a customer of almost any kind of product (pizza, donuts, Chinese, cheesesteaks, beer, wine, ribs, you name it) it has never been about the price for me … that’s, of course, within reason. It’s always been about the product. If it’s the best product in my market, I’m going to order and eat it. If they don’t provide delivery for that best product, and I have to drive an additional 5 or 10minutes to get it, no problem. Why should I compromise the pleasure of enjoying the best pizza in my market over a measly $2? Build a reputation for using high quality ingredients, valuing consistency and offering a great product, and the world will beat a path to your door. If price is the determining factor, why is it that those cardboard discs at your grocery store don’t drive you out of business? By the way, I can’t explain perfectly why this is so, but I also lean toward independent business offerings over the nationals. Frankly, I like Domino’s (it’s probably my second choice in my neighborhood), but when I want delivery pizza (our shop doesn’t deliver to my area), I prefer to call my local “go to”, best product, guys … and the price is not part of the equation. Like most folks, if I also have a coupon, I’ll use it with my “go to” guys, but they are always going to get my call, regardless.

 

[tmp]

If you will indulge me for a minute, I’d like to contribute on a “customer” level. As a customer of almost any kind of product (pizza, donuts, Chinese, cheesesteaks, beer, wine, ribs, you name it) it has never been about the price for me … that’s, of course, within reason. It’s always been about the product. If it’s the best product in my market, I’m going to order and eat it. If they don’t provide delivery for that best product, and I have to drive an additional 5 or 10minutes to get it, no problem. Why should I compromise the pleasure of enjoying the best pizza in my market over a measly $2? Build a reputation for using high quality ingredients, valuing consistency and offering a great product, and the world will beat a path to your door. If price is the determining factor, why is it that those cardboard discs at your grocery store don’t drive you out of business? By the way, I can’t explain perfectly why this is so, but I also lean toward independent business offerings over the nationals. Frankly, I like Domino’s (it’s probably my second choice in my neighborhood), but when I want delivery pizza (our shop doesn’t deliver to my area), I prefer to call my local “go to”, best product, guys … and the price is not part of the equation. Like most folks, if I also have a coupon, I’ll use it with my “go to” guys, but they are always going to get my call, regardless.

Great post! Thank you.

That is exactly what I’d like to do (build a reputation for using high quality ingredients, valuing consistency, and offering a great product).

The prices are going to go up on several items. That has been decided. The $5 medium price hasn’t been decided on, but I’d really like to raise that to $5.99 for now.

What I’d like to do is what I mentioned in previous posts the past few days (the Point of Success with Big Holler online ordering, larger menus, box toppers, text, email, and social media) but I’m hesitant (and usually am at making changes).

I’d like the menu completely redesigned, an improved website, and the box toppers all communicating to the customer about the quality of the food, welcoming them to try a slice for free when signing up for texts or emails and ordering online.

I’m thinking all of this at one time will help, but I always like feedback from others first which is why I’m here.

 

[bodegahwy]

EDIT: I forgot an important part… There will most likely need to be another employee hired to work the Point of Sale at a rate of approximately $7.50/hour, since at times there is only one person working at the pizzeria (while someone else is out on a delivery). This person wouldn’t be needed at all times, but it would still be costly. Of course the online ordering wouldn’t require anyone else, but someone would need to use the Point of Sale for phone orders and for people coming in. Do you think Point of Success and Big Holler are still worth the cost even if another person must be hired? (I do plan on using the marketing tools in Point of Success to get the most out of it. Will it be enough to pay for that extra person? I don’t know…)

You seem to think that adding a POS will INCREASE your labor cost when exactly the opposite it true. However you take orders over the phone, someone has to do it and using a POS speeds things up considerably. Your thinking is mistaken when you ask if adding a POS is “worth the cost even if another person must be hired”.

 

[tmp]

You seem to think that adding a POS will INCREASE your labor cost when exactly the opposite it true. However you take orders over the phone, someone has to do it and using a POS speeds things up considerably. Your thinking is mistaken when you ask if adding a POS is “worth the cost even if another person must be hired”.

Thank you.

Our reasoning is that the employees take orders while they’re making a pizza using a phone with a long cord, and that they wouldn’t be able to do that with the Point of Sale. There isn’t a dedicated person for the phone / Point of Sale. So, the employee would need to stop making the pizza to place another order on the Point of Sale. When they’re on the phone they just start to make the next pizza.

What do you suggest?

Thank you again.

 

[bodegahwy]

Our cooks take orders most of the time too. One of our order stations is positioned right at the end of the make line by the dough station.

Taking an order on a POS is faster and more accurate than writing it down. This is especially true for delivery because for repeat customers the address is already in the system and does not need to be re-entered.

BTW, how do they write on tickets and make pizza at the same time?

 

[tmp]

Our cooks take orders most of the time too. One of our order stations is positioned right at the end of the make line by the dough station.

Taking an order on a POS is faster and more accurate than writing it down. This is especially true for delivery because for repeat customers the address is already in the system and does not need to be re-entered.

BTW, how do they write on tickets and make pizza at the same time?

I think I missed your reply earlier. Sorry about that!

There will be two order stations, so one should be able to be nearby the employee making the pizzas.

Thank you for all of your feedback.

 

[bodegahwy]

I think most operators would agree that while it is possible to run even a high volume shop without a POS, once they have tried using one they would never go back. In the end, I think our POS pays for itself over and over again. The time savings on everything from order taking to counting out end of day is just the first savings. Order and price/coupon accuracy is another huge savings. The ability to actually KNOW what is selling and what coupons and offers are performing and who your top customers are is a tremendous benefit as is transparent information about which drivers are most efficient, delivery times, and which order takers have the highest ticket average. And then there are the anti-theft benefits…

While a top line POS can be expensive at first, my estimate of what our Prism (Microworks) 6 station system has cost over the 16.5 years we have had it (includes 2 full rounds of machine replacement) comes to about $3200 per year including online ordering and tech support which is a bargain for all the benefits and savings we receive.

Best of luck with your new system. The more you put into your set-up, the more you will get back out of it.

 

[tmp]

I think most operators would agree that while it is possible to run even a high volume shop without a POS, once they have tried using one they would never go back. In the end, I think our POS pays for itself over and over again. The time savings on everything from order taking to counting out end of day is just the first savings. Order and price/coupon accuracy is another huge savings. The ability to actually KNOW what is selling and what coupons and offers are performing and who your top customers are is a tremendous benefit as is transparent information about which drivers are most efficient, delivery times, and which order takers have the highest ticket average. And then there are the anti-theft benefits…

While a top line POS can be expensive at first, my estimate of what our Prism (Microworks) 6 station system has cost over the 16.5 years we have had it (includes 2 full rounds of machine replacement) comes to about $3200 per year including online ordering and tech support which is a bargain for all the benefits and savings we receive.

Best of luck with your new system. The more you put into your set-up, the more you will get back out of it.

Thank you for the great post!

You’ve made a lot of good points.