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Rising Gas Prices- Fee for Deliveries

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PizzaAl

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Our pizza shop has always been free home deliveries. However, as you all have been effected, gas prices are on the rise.

Do you guys currently charge for deliveries, and how much? Do you think customers will be turned off by adding this fee?

Right now we do offer 10% off for pick ups but may think about changing free deliveries to a fuel surcharge if gas prices continue to rise.

thoughts?
 
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PizzaAl:
Right now we do offer 10% off for pick ups but may think about changing free deliveries to a fuel surcharge if gas prices continue to rise.
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So the way I see it right now you have a 10% delivery fee. If my order is $50 you charge me the whole amount to have it delivered or $45 to pick it up. That is a $5 delivery fee just stated in a different way.
 
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We have had a delivery charge for nearly 10 years. Currently it is $2.50 At first we were the only pizza delivery place in town to have one. Now only one out of the eight delivery places does not have one.

A carry-out discount is not the same as a delivery charge. Especially if it takes the place of any other coupon or discount. My suggestion would be that you not do 10% though. Why give that much on a big order? Just use a flat amount like $2.00 and offer it as the “I forgot my coupon” discount for people who ask whether for delivery or carryout.
 
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sorry this topic really strikes a nerve with me…FREE delivery…REALLY? the way i look at it if you have to market free delivery than there is something missing

charge a fee for the service!..i think any level-headed person can appreciate the convenience of getting their meal delivered to their door and will gladly pay for that service as well as tip the driver.
 
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FREE delivery…REALLY? the way i look at it if you have to market free delivery than there is something missing
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What is wrong with stating you have free deliveries. Many places will place a fuel charge, so by saying free delivery you are saying they aren’t being charged.
So the way I see it right now you have a 10% delivery fee. If my order is $50 you charge me the whole amount to have it delivered or $45 to pick it up. That is a $5 delivery fee just stated in a different way.
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The menu prices are stated and no additional amount is added to the bill other than tax. If you want to save money then come and pick it up and we will give you a discount. You will rarely if ever get a customer think there is a 10% delivery fee. However, if you say we will add an additional $2 to the bill for gas then that’s a delivery fee…this is just my opinion, correct me if I am wrong.

In conclusion, I can see charging a fee for delivery would turn customers off. Majority of customers will understand the economics of things and include a good tip. So I don’t think changes will be made and we will have to accept the high gas prices if we like it or not.

Anyways appreciate all comments and feed back. Cheers
 
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Al, I do not know where you are located and your profile does not say…

For most markets in the USA a delivery charge is now the norm. It allows the business to keep menu prices lower knowing that even a small order will have some delivery costs covered by the fee.

I find that customers understand the difference between a delivery charge and a tip. Our drivers average a little better than $4 tip per delivery. Yes, the occasional customer asks if the delivery charge goes to the driver (in our store it does not) but that is rare and even then does not change tipping practices.

I would rather keep the menu price down and add the fee for the service. In the season when our business is all local we find about 35-40% of orders are picked up. Yes, the customer wants to save the fee and in many cases also the tip. That is fine with me. Delivery costs us about $4.00 $4.50 per delivery so carry out orders save me money too even with the delivery charge taken into account.
 
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No comment - I am FREE Delivery and unless gas actually gets back over $4 I dont see anything derailing my climb to the top in my markets. I love the fact that I am the only one in town with FREE Delivery!

My drivers make so much more money in tips because of it I think they would string me up if I added one again.
 
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I am located in Canada.
If you are not charging for delivery then might as well tell ppl it’s free 314.
 
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Our buddy 314 has a unique situation being a low price/high volume operator located about 3 blocks from 30,000 college kids. Multi-order runs to a severely limited area where a driver can often leave with several orders going to the same building are a luxury most of us do not enjoy.

I respectfully disagree with him on the tips issue. When we added a delivery charge there was no change in tips and I would bet our drivers make better tips per delivery than his do. The key variable in tips is who you deliver to not whether there is a delivery charge.
 
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Not to want to draw it out a long time…I have 3 other stores with no campus in sight and i never route more than a double (and never over 3 in the campus store) but always push for 15 minutes or less out the door.

And yes my drivers tips have skyrocketed since going back to FREE Delivery after having a delivery charge as high as $1.95 (never wanted to cross the $2 threshold).

My small market store with a total of 9000 addresses does 50% delivery of all it’s sales. About 750 total orders a week and it is the only store in my chain with a dining room (seats 45) and I run an all you can eat pizza bar for the business lunch crowd Monday through Friday. My drivers in this store make more now too and often only take singles…but yes I have 4 mile radius in all my stores. And yes I do high volume with I guess value pricing.

Anyway - I know I am the odd one even in my own chain but it also keeps 2 of my stores (Boulder and Longmont, CO) in the top 3 of the entire chain and both do over 1 million in sales per year.
 
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I would guess that most of us (myself included) would love to have those sales numbers. I think that there is likely a correlation between customers interested in low price options and in free delivery. In our town the only store that runs free delivery is also the lowest price place in town. It all ties together. I guess, fortunately for us, they are not the high volume leader.

Years ago when I intituted the delivery charge (2000 or 2001) I worried about the impact. We added 90 cents. I was amazed when virtually no one complained or even commented. We get a few people asking whether there is a delivery charge but even that is uncommon any more. The questions really stopped when Dominos and Pizza Hut added delivery charges. Since then PH has closed.

Every business has to find the combination of pricing, product and service that works for them. The combination needs to mesh with the marketing story, brand position and with the opportunity available in the market they operate in taking into account the competition.

With all that said, to go back to the original post and the headline regarding gas prices, the price of gas just is not that big a part of the expese picture to drive this decision. In a typical store you could cover all the gas expense for the year (all of it, not just an increase) by raising the price of a pizza by 20 cents. A cost increase in the price of gas would be covered by raising prices a nickle. We see fluctuations in the cost of cheese in a pizza of greater magnitude all the time. Even just taking the delivery cost apart (wages, vehicle expenses, repairs, insurance and fuel) the fuel expense is roughly equal to the insurance coverage and again the increase is not enough to drive the decision to have a delivery charge all by itself.
 
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bodegahwy:
the price of gas just is not that big a part of the expese picture to drive this decision. In a typical store you could cover all the gas expense for the year (all of it, not just an increase) by raising the price of a pizza by 20 cents. A cost increase in the price of gas would be covered by raising prices a nickle. We see fluctuations in the cost of cheese in a pizza of greater magnitude all the time. Even just taking the delivery cost apart (wages, vehicle expenses, repairs, insurance and fuel) the fuel expense is roughly equal to the insurance coverage and again the increase is not enough to drive the decision to have a delivery charge all by itself.
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Very much agreed. Unless you start to see a huge price difference from your food supplier because of the gas prices, you really don’t need to do much to cover it now. Cheese prices are way more costly to us than gas will ever be, although flour double or tripling does put a hurt too.
 
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We’ve had free delivery since 2007. I’ve seen no need to add the ‘service’ charge. Drivers make great tips.
 
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bodegahwy:
Even just taking the delivery cost apart (wages, vehicle expenses, repairs, insurance and fuel) the fuel expense is roughly equal to the insurance coverage and again the increase is not enough to drive the decision to have a delivery charge all by itself.
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Unless you have company owned cars,I don’t understand how such items as vehicle expenses,repairs and fuel would figure into everything?

As far as offering free delivery goes,one of the first places we looked was a local beach resort. Nearly all of the places there had free delivery so we would have had to run with that.
 
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“Unless you have company owned cars…”

Exactly. For the last 10 years we have run company owned cars. I control the maintenance, I am sure they are insured. I can hire people who do not own cars. I never get a call that a driver can not work because his car is broken down.

Hired and non-owned coverage costs the same as owned coverage. Really no difference in insurance cost.
 
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bodegahwy:
“Unless you have company owned cars…”

Exactly. For the last 10 years we have run company owned cars. I control the maintenance, I am sure they are insured. I can hire people who do not own cars. I never get a call that a driver can not work because his car is broken down.

Hired and non-owned coverage costs the same as owned coverage. Really no difference in insurance cost.
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That’s an entirely different scenerio then…lol
 
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We increased ours from $1.50 to $2.00
last May. Not one complaint. Our delivery radius is 4 miles.
 
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We have a $2.50 charge. Free delivery over $25. The driver gets $1, the rest goes to cover their wages while they are on the road and insurance costs.
We have not raised delivery charge or commission in the 2 years we have been open (we have one of the higher delivery charges in the area). But we consistently run very fast delivery times (30-35 minutes). As a result, typically 50% of our orders are deliveries which accounts for 65% of our sales. About 25-30% of our customers hit the $25 threshold and get free delivery.
I used to work for a national chain that was one of the first to REQUIRE a delivery charge for their franchisees. So when all the big guys were doing it for free, we were charging. A few customers would grumble about it, but overall it was not an issue.

Dan
 
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