Re-Thinking Delivery Charges Off Topic

[paul7979]

Re: Re-Thinking Delivery Charges
PPG2270:

Perhaps the name should be changed to “convenience fee” or “store delivery charge” to clear any association and confusion with the customer as it relates to tips.

You have already stated in this thread that to you, it is irrelevant what the owners costs associated with delivery are. Why should any owner find it relevant whether the name of the charge affects tips?

BTW, quite a few of the drivers over at TTPG feel that the delivery charge has not hurt their tip average. My store added a 99 cent delivery fee a year and a half ago and in that time we have seen tips increase in average over 10%. Seems to me that the delivery charge may actually help the drivers tip average.

 

[Piper]

Re: Re-Thinking Delivery Charges

paul7979:

My store added a 99 cent delivery fee a year and a half ago and in that time we have seen tips increase in average over 10%. Seems to me that the delivery charge may actually help the drivers tip average.

I’m glad you posted this Paul, because it’s something I’ve always wondered about. We charge a $2.50 delivery charge (yes, all goes to driver), have a fairly expensive product and my drivers average over $4.00 per order in tips over the long haul.

Is it possible that the delivery charge acts as an economic filter that deters the cheapskates from getting delivery? Of the people that decide to pick-up in lieu of paying the delivery charge, how many of them would have been stiffers?

Think about a customer that says “I’m not paying a $2.00 delivery charge, I’ll just come pick it up.” Do you think that person would be prone to tipping?

I don’t know and I guess we’d need more statistical evidence to back it up, but I know my drivers only get stiffed (less than a dollar tip) on about 3% of their orders. When I was a driver at a Big 3 with free delivery I got stiffed about 30% of the time.

 

[wa_dave]

I would agree with you Piper.
We have a much larger delivery fee and cost of our pizza plus we live in a country where tipping is mainly only at restuarants, and mainly based on the service given. Tipping is not a given here but it is not unusal for some customers to tip the driver $5 - $10. One driver last week got a $15 tip on a $45 order. Every now and then they pick up the odd $20 tip. A couple of customers order every week on the same night, same order every week and pay by EFTPOS over the phone but always give the driver a $5 note.
I think those who accept the delivery fee are the ones that would tip and those who reluctantly agree to a delivery never do. These are normally the ones who hand over $100 for a $30 order without telling the order person, or pay with heaps of small denomination coins and wait for 20c change for their order.
Most of my drivers do’t give a hoot about tips as their hourly rate is good as is the dlivery re-imbursement we give them. On quiet nights they average about $20 per hour and on weekends about $25 - $30 and hour. Not bad for driving a pizza around the block.

dave

 

[system]

Re: Re-Thinking Delivery Charges

paul7979:

PPG2270:

Perhaps the name should be changed to “convenience fee” or “store delivery charge” to clear any association and confusion with the customer as it relates to tips.

Why should any owner find it relevant whether the name of the charge affects tips?

Typical management attitude.

Seems to me that the delivery charge may actually help the drivers tip average.

Not in my experiences.

 

[Wizzle_Wassell]

Re: Re-Thinking Delivery Charges
PPG2270:

In example two you are charging the price of the pizza needed to cover associated costs. In example one, the customer believes he is getting a $10 pizza, but is charged a “phantom fee” which is apparently used to cover costs. If you charge $12, you are earning the $12. If you charge $10 with a $2 fee, it is deceitful, and you earn $10 for the pizza and $2 for “nothing.” This may sound odd, but coming from someone who has been having pizza delivered long before I ever worked in the industry, please hear me out. I would rather pay $12 and know that is what the pizza costs versus $10 and a mysterious fee. Delivery was generally free since the advent of the service, but now we charge for it? If your pizza is worth $12, charge for $12 for it. If it is worth $10, charge $10 but don’t try to trick the customer with a fee

Side note: Perhaps the name should be changed to “convenience fee” or “store delivery charge” to clear any association and confusion with the customer as it relates to tips.

How is this a ‘phantom fee’; it is an explicit fee charged by the shop to help cover delivery.

Using the same examples if the customer ordered 2 pizza’s then the store with the delivery fee gets less revenue.

If I buy CD’s online some stores charge me for postage and some don’t - is this a ‘phantom’ fee? Does the store that charges for postage make more money??

 

[system]

Re: Re-Thinking Delivery Charges
Wizzle Wassell:

How is this a ‘phantom fee’; it is an explicit fee charged by the shop to help cover delivery.

Using the same examples if the customer ordered 2 pizza’s then the store with the delivery fee gets less revenue.

Less revenue? Is that what you aim to achieve?

Hmm…how about we just agree to disagree? Obviously, we have different perspectives on the matter.

 

[Wizzle_Wassell]

Re: Re-Thinking Delivery Charges
PPG2270:

Wizzle Wassell:

How is this a ‘phantom fee’; it is an explicit fee charged by the shop to help cover delivery.

Using the same examples if the customer ordered 2 pizza’s then the store with the delivery fee gets less revenue.

Less revenue? Is that what you aim to achieve?

Hmm…how about we just agree to disagree? Obviously, we have different perspectives on the matter.

Different perspectives - yep - I understand fully as an owner (who is more than capable of paying his drivers above MW and make a profit) the different way to generate the revenues to cover the costs of the business. I have decided on a route that works for me, which in fact doesn’t use a delivery fee. You however, well lets just say I agree we have different perspectives.

Less revenue - It’s not what I want to achieve but its a possible scenario that’s been highlighted to you several times. I don’t have an explicit charge for delivery.

The answers given to you many times by myself and others is that if you bury the cost of delivery in the product then when you have larger orders the delivery fee is charged multiple times whilst of course there is only one delivery.

So using these figures again with a 5 pie order

example 1(with delivery charge) = 5 * $10 + $2.00 = $52
example 2 (with free delivery) = 5 * $12 = $60

now where is the ‘phantom charge / free and clear money now’?

No one sets out to try and get less revenue - its just that there are different ways for charging for things!

Most shops will price products based on single pies as that’s what the customer will look at so these examples aren’t that hard to find in real life.

Now tell me which driver is likely to get the biggest tip?

If the delivery charge goes then it will simple be added to the price of the core/single products. Still up for removing the delivery charge?

Of course as someone who’s worked at all levels of this business and consumed pies for years you knew all of this already didn’t you.

Its funny how people suggested we ‘agreed to disagree’ when their argument falls to tatters.

Enjoy!

 

[system]

Re: Re-Thinking Delivery Charges

[quote="Wizzle Wassell
Its funny how people suggested we ‘agreed to disagree’ when their argument falls to tatters.

Enjoy![/quote]

Ahhh, I was so going to leave this alone, l but then you said that. I don’t need to go around in circles with you (or any one poster) as this is a sharing of ideas, not a “last man standing” situation. But, since you asked for it…

Example 2 shows a $60 order. At 15% that should be a $9 tip for the driver.

Example 1 shows a $50 order with a $2 delivery charge. 15% of the bill realizes a $7.5 tip, with the possibility of it being reduced to $5.50 with the subtraction of the delivery charge, which the customer thinks is part of/all of the tip.

Now, you tell me which example is better? :roll:

My argument did not fall to tatters, I was trying to give you the benefit of walking away. Don’t worry, it won’t happen again.

As far my management experience, no need to go there. I was a GM for PML pizza (Domino’s -now split and called CEL pizza) back in the early 2000’s. There were no delivery charges and the drivers (of which I was one before managing) got more than minimum as a base pay. I have also mangaged/ran the kitchen for indies. The ONE thing I ask is please do not discredit my experience in the field. Attack my message if need be, but do NOT make it personal.

 

[NicksPizza]

Your message is inherently flawed in that no market (very definitely where I have lived, worked or heard discussed)has ever shown to have a tip rate for delivery drivers of 15% across the board. Never seen it. There may be pockets here and there . . . but then we wouldn’t be having this discussion about hurting tips and poor tip rates if the 15% rule actually existed. Another flaw is the automatic assumption that every customer will always cut their tip because they always think that every delivery fee is part of the tip. A third flaw is a fundamental inclusion of all business models into your conceptualization of the argument. A DELCO doing 85% of gross sales in delivery is a radically different world from a Full Service Restaurant doing 35%-35%-30% dinein/pickup/delivery.

WizWaz is talking about “real world”, “on the ground”, “ding-dong . . . . pizza is here” world. Today, when he bakes and delivers a pizza to his real-world customers. My servers don’t get tipped 15% on every ticket they work . . . neither do the servers in my colleagues’ places around the market I work in. It appears that tipping is inconsistent, at best, for the food service industry.

While several owner/operators here have suggested that there are several strategies to accomplish the business goals of profitability, customer satisfaction and employee compensation . . . . your position seems to be that there can be only one. I accept that I may have misunderstood your position. I hear you saying that every pizza business should give free delivery to everyone and increase pricing on the product line to cover the cost of that free delivery. The primary season seems to be that delivery drivers deserve every opportunity to maximize their tips since they get 15% on the food amount, and the “fee” gets deducted from the customers’ tips. I also hear that you find an itemized, specifically mentioned and printed delivery fee is deceptive practice . . . while increasing all menu prices to offer a “free” service is a straight-forward and honest practice.

Please, someone let me know if I am missing the whole boat on this conversation.

 

[Daddio]

Nick has the last word here. I am locking this thread.