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"Sorry, no substitutions"

If you have to discount your product to keep a customer happy you have a problem with your pricing or your product. When was the last time you went to a fine dining establishment that offered a discount. Did your local pub give you 20% off that beer?
In my mind it comes down to who you want to market to. If you are going to try and compete on price, give up, you will lose to the big chains every time. Thats their game.
My own sister in law (whom lives in a different town) when asked who she orders from said" I look who has the best coupon/special. ZERO CUSTOMER LOYALTY because there is ZERO LOYALTY GIVEN TO THE CUSTOMER WHO PAYS FULL PRICE .
People WILL PAY for a quality product. Sure, I tell a good customer " That’s on us, thank you for your business" once in a while. That is NOT discounting your product.
In my other life I am the guy who buys the used cars for a large group of 17 automobile dealerships. Our group has everything from Hyundai to Lexus. By far the most sucessfull franchises are our Toyota stores. They have a rigid policy about price on new vehicles… That’s the price, no discount price, no free floormats, no free anything. They can do that because of the quality of the product. ( This policy is in effect throughout all BC Toyota dealers).
Why do some people have a problem accepting this? You don’t get a discount on your electric bill. You don’t get a discount at the gas station. You don’t get a discount when the cashier at Safeway says " That will be $123.76". ( Can you imagine the look you’d get from the cashier AND THE OTHER CUSTOMERS if you said " How about $120 even?, or, “I’ll take these groceries if I can trade this hamburger for a steak?”)
Anybody can “market” a product by offering a discount. That isn’t marketing. Thats discounting.

So I’m the customer, last time I ordered “Jane” took my order. Even though the menu says “BLAH BLAH BLAH” she didn’t charge me for the whatever. Next week “Joe” answers the phone. I ask for the same thing. Joe tells me the price. It is of course higher because Joe charged me as per the menu. I’m pissed off because I don’t get my “special deal”. Joe’s pissed off because he has three lines on hold, two customers in front of him and some a-hole on the phone claiming he got something for free last time and giving him attitude.

QUIT DISCOUNTING YOUR FOOD!!!
 
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Interestingly enough, my grocery prints out store specific coupons, every time I go. Kroger has a discount card, so yes my grocery store does discount items every time I go in, and that helps me decide to go there instead of a Wal-Mart that may have a better on the shelf price. I can use my Shell card at Shell gas stations and get $.05 back on every gallon I purchase…another discount.

The other variable in this mix is simple supply and demand. The "Soup Nazi’ can afford to be the way he is because the demand for his product is greater than the supply. He has customers lined outside the door. The mere fact that you have time to check in on a forum tells me you do not have this kind of demand. If you do, then by all means, charge whatever you want.

A customer does not care about price, they care about VALUE. If 1 in every 10 customers comes in and says, “I think your prices are too high”, it is obvious they are not seeing a value in what you offer. There are so many reasons why this could be the case, I won’t even try to list them all.

Are there people out there that ONLY care about price? Of course there are, but truth be told this is a very, very small population.

I am not advocating you give away the store, but in order to keep people coming back(loyalty) and in order to avoid bad word-of-mouth, it sometimes takes a little extra…maybe you let the customer know…this is not the usual policy and you will likely not get this deal again, but we’d love to have your business today and again in the future, so if $.50 is going to make or break a deal, 1 time a day, then why wouldn’t you do this?

It really comes down to simple math if i sell 20 pizzas at $5 profit each I earn $100
If I sell 10 pizzas at $6 profit each, I earn $60

I’d rather earn the $100
 
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I’ve gotta agree with the above post (nice user name buy the way!).

I’m at the top end of the market in terms of price (and quality) and use coupons and meal deals (both ‘discounts’) to drive the type of business I want.

I offer aggressive coupons to increase order size during the quiet times of the year (i.e. supply/demand). I offer coupons to increase order size by way of additional sales on my menu. I offer discount against my online sales to push business onto that platform (current 30-40% of order by value are online). I offer a great carry out deal (food cost increase is offset by mileage reduction) which also allows me to compete with the lower price competition.

I regularly use offers to encourage people who have used me to (90-120 days) to use me again AND I also give away food to get people to try me.

Overall its a marketing tool which works well for me and allows me and whilst I am ‘expensive’ compared to others I offer my great products at great value.

Re the topping debate - I charge the same for all my toppings and most of my set menu pizza’s. Sure I have pizza’s with higher/lower food cost but overall it works well for me and I don’t need to have arguments over getting someone to pay more because they’ve swapped onion for beef. Do what you feels right for you but make sure the policy is consistent.
 
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Firstly, isn’t it great being an independant and having the ability to market/advertise what YOU want, not what head office allows…
I am aware that I am ,at best, “different”. Probably more like “strange” in some of my thinking.
However, it seems to work for me in my business ventures. I see two kinds of shoppers at the till in my chosen grocery store. The first is the coupon customer. You know the one, gets up to the till, acts surprised they have to pay, finally finds purse, spends four minutes looking for that coupon to save 25c on whatever. Highly likely she/he is heading across the road ,after using that coupon, to get the ground beef that’s on sale over there as that is the way they shop/spend money.
This is my previously mentioned sister in law. Thats right, only buys pizza from whoever has the “best deal” coupon. Only orders the “special deal”. Never returns for that large party order (unless of course you are the cheapest coupon).

Then there are the others kinda like me?. Sure I might buy the New York strip instead of the Rib Eye if it is on sale. Just as likely not to though. I want my Rib Eye. Did I go to that store because steak was on sale? No. Do I use coupons? Extremely rarely. (Closest I come would be using a certain credit card because of the travel rewards). Would I cut a coupon out of a newspaper/flyer and go somewhere because of it? No. Would I use that coupon if it was from somewhere I was going to anyhow?, maybe.Do I have loyalty towards the stores/vendors that I use, yes. I want ME as a customer. I WANT to chase my sister in law and her kind of shopper directly to my competition.
I very rarely have a line up out the door. That said we will hit $400K this year out of 537 sq ft take out/delivery only. Our first quarter was up 22% over last year. I would way prefer to have 10 orders and make $100 than have 20 orders and make $100. Maybe that makes me lazy? Funny thing is we are selling more (after just increasing our prices again).
A direct quote from a review posted on foodpages.ca by one of our customers…( I added the highlight and underline)
“we are regular customers, because they are consistant in the product and provide great delivery service even to us far out otterpoint rd. like every business the standard is usually set by the owner and I belive he has his staff on board with the commitment to the customer…we certainly would not change because of price!..KEEP UP THE GOOD JOB!”
There is no way that this customer would expect, let alone ask for, any kind of “Free” upgrade at our store.
Would all of the above be different if I set up shop surrounded by Dominos etc in a large city? Maybe, I doubt it though.
Customers like the above DO exist. They are NOT attracted to a business because of a flyer/coupon/free toppings.
As to having time to post here… I am lucky? enough to have a few business ventures on the go. I am on location at my pizzeria very rarely. That said I spend a couple of hours every day “working” at it. Like I said, I’m strange. I enjoy reading and learning from others on this site. In fact, it could be said it is my entertainment. I gave away the TV 3 years ago when we rented out the house and moved aboard our boat. Amazing change in how much you can get done in a day without that drivel polluting your mind.
 
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I think I know what the OP means.

Like at PJ, when our large works is $12.99 on sale, and our large 4 topping would be $15.99, we will have customers say “I want a Works, but take off the onion, green peppers, and black olives” which leaves Pepperoni, IT Sausage, Canadian Bacon, and Mushrooms.

These same customers do not ask for this unless the specialty is on sale…otherwise, they just ask for their normal 4 toppings and pay the normal price.

But, I also see what you guys are saying, too…that if it doesn’t happen that often, then why lose a customer over a few dollars?

The customers that “bend” our specials are few and far between…nothing that keeping them happy will break our backs for, KWIM?
 
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We had one pizza on our menu that was our signature pizza and everyone wanted to substitute it. SO we took it off the menu. Now all my customers order what they want from our list of 23 toppings. When they ask us about certain pizzas that our competitors have or advertise I ask them to tell me what they want on their pizza exactly. “No substitutions please” problem gone. I might be missing the boat on signature pizzas but I eliminated a lot of head aches, the only problem is they have to actually figure out what they want on their pizza which can be a problem for some. They want you to tell them what they want by virtue of a signature pizza or special, then they want to change it.

I for one am very happy not having specials or signature pizzas any more.

Good Luck.

Tony
 
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Alternate use of “signature pizzas”: build them and then price at menu price. Problem solved and benefits of pre-designed pizza identity preserved. Just because it is a signature item does not mean it has to be discounted or anything.

The value of branded pizza development is that it strengths the brand and creates unique tastes that customers may not be able to find elsewhere. Generates tastebud loyalty. Demonstrates to customers a certain expertise in the pizza baking world. Differentiates you from the cookie-cutter discount places. Giving that up because one wants to avoid spending 20cents more when customer changes a topping seems an unbalanced, unfortunate business decision. Put a small surcharge on the menu for “bustin up” a predetermined pizza.

We have spent a lot of space batting around ideas. Subtitutions come down to a philosophical business decision. Figure out what message and service impression you want to be part of your brand/identity. Make the decision, be comsistent, advertise anything that would surprise a customer . . . then start working on executing that marketing plan.
 
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Yeah, that would irritate me, too. The customer would never know it by how I’d respond…but I think of subbing a Signature Pie would be akin to going to someone’s house to eat for Thanksgiving and wanting them to alter their Grandma’s beloved Turkey recipe to suit what you want.

I think it’s horribly rude…but today, it’s all about the consumer, not about the store offering the pizza.

I think Signature Pies work better in trendier markets. It wouldn’t fly in Oklahoma. This is definitely a meat and cheese area, so even the local joints know to at least put chicken on a Greek pizza, and breaded chicken at that…YUCK.

Those that have a little more distinguished palates will create their own pizza from your topping list and be perfectly happy.

BUT, again, it’s what the consumer wants, and if their needs aren’t met at your joint, they’ll go elsewhere.
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Tony397:
We had one pizza on our menu that was our signature pizza and everyone wanted to substitute it. SO we took it off the menu. Now all my customers order what they want from our list of 23 toppings. When they ask us about certain pizzas that our competitors have or advertise I ask them to tell me what they want on their pizza exactly. “No substitutions please” problem gone. I might be missing the boat on signature pizzas but I eliminated a lot of head aches, the only problem is they have to actually figure out what they want on their pizza which can be a problem for some. They want you to tell them what they want by virtue of a signature pizza or special, then they want to change it.

I for one am very happy not having specials or signature pizzas any more.

Good Luck.

Tony
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It has been said that one customer is worth $10,000 in business. If you piss one off, you have lost $10,000 in business. If you go to any of the big 3, they trade topping for topping. You don’t need to nickle and dime your customers. Why not service the customer so they know their relationship with you is more important than the money they are giving you? When you are obtaining new customers, you essentially are starting a relationship with them. You better let them be happy (within reason) or they’re going to be making you sleep on the couch while your competitor is sleeping in your bed. If one serving of pepperoni instead of onions is going to break your business, you probably shouldn’t be open anyway.

It only makes sense to price your pizzas by amount of toppings, which means you aren’t going to make your topping price to where you lose money. If I’m taking off a topping, I should be able to add a topping. Also, if I add a 2 half-toppings, I shouldn’t pay full topping price for 2 toppings. Two half-toppings should equal 1 full topping. Your pizzas only cost $2.25 or so to make (before toppings) and most likely you charge anywhere from $10-15 or more for a pizza. An extra $.30 shouldn’t be hurting you that bad.
 
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Nice in theory, however… Try going to McDonalds and saying " hold the lettuce and the tomatoes, give me two extra patties instead". Go out for fish and chips. “I’ll have two pieces of fish instead of fish and chips” etc etc. There isn’t another type of food outlet that I am aware of that allows you to sub a more expensive item at no charge. Re “you shouldn’t be in business if you can’t absorb…”. At a retained profit of approx 10% on an average ticket of $30, I am making $3 per order. Every 30CENTS that I give away represents a 10% reduction in my profit. The difference in cost between topping two large pizzas with ham vs onions could easily remove over 50% of my profit! Two substitutions at no charge and I could be losing money.
On the other side of the coin, price everything as if it was all expensive toppings and watch people scream! Again, I suggest that if you have customers that expect to upgrade for free, LOSE THEM. You will work less for more money.
 
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boatnut:
Nice in theory, however…

On the other side of the coin, price everything as if it was all expensive toppings and watch people scream! Again, I suggest that if you have customers that expect to upgrade for free, LOSE THEM. You will work less for more money.
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To be honest though, your theory is also “nice”. Real world EXAMPLE: I have a weekly customer who wants my 16" signature pizza called Meatlover. He wants to leave off the sausage and substitute bacon. That sub costs me 12 cents (if we put the correct amounts on). I get 17.50 for that pizza, and his order rings up to $28 to $30 weekly all told. I have the option of charging him $1.75 for the topping, or investing 0.12 in the relationship and keep him ordering week after week after week.

After two months (8 weeks), that customer has spent around $240 in my store (actually more), and I have given up around 0.96 for that bacon substitution. If I add a topping charge into the mix, I would make an extra $14 and run the risk of seeming too high priced, lose the HUGE bonus of being accomodating, and losing the word of mouth that we are so willing to make it easy to order from us. He says these things to his neighbors, you see. We tell him we do it “just for our special customers” and he knows we do it for anyone.

We made a business decision that it is worth the price tag of less than $1 to keep his loyalty and goodwill. Each operator should probably look at the pricing structure and actual overall costs and impacts on business . . . and make an informed business decision (rather than an emotional one). Is it important to manage the per pizza price or the customer retention angle? What will be impact on customer satisfaction, staff consistency in making the “stock” pizzas, monthly sales, branding and ideinty you have developed in the marketplace, and perception against competitors?
 
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boatnut:
Nice in theory, however…

On the other side of the coin, price everything as if it was all expensive toppings and watch people scream! Again, I suggest that if you have customers that expect to upgrade for free, LOSE THEM. You will work less for more money.
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Your argument only holds true if EVERY customer replaces a lesser value topping with a more expensive one. In my experience most people don’t do this. As many requests as I get which may cost me a little more I also get as many to swap to a cheaper topping or remove a topping without a replacement i.e. no bacon. For our signature pizza’s I do not drop the charge.

As much as you appear to guard your profitability I (and others) guard our customer services. OK there are limited but as Nick says I’d not want to loose a customer over a few cents.
 
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A fast nickel is better than a slow dime. Take what you can from the customer and give them a value for their dollar.
Don’t lose sight of the roi from the customer for a small amt. of money.

Customer service is our business…we just add pizza to it.

It has been said over and over, here and in other links…Cost out your menu. I mean that you should know your true costs in food for each and every item in your store. Type it up and hang it in front of you in the office.
Choose your selling price for the items based on your food cost goals. Price side items to bundle with pizzas.

The most important step is to figure your f/c and gp on each special you run. You should know what these no.s are on each special or coupon you use. Make it acceptable that if the special is used once or 10k times, you are feeling good about it.

Bubba
 
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Ok guys, you win. My thinking is obviously rather different than the norm. But it works at our store. Our customers get a high quality product, excellent service, quick delivery in heated bags and we charge accordingly. We offer the same special 100% of the time. None. Nada. Full price every single time. Specials are offered at our competition on an ongoing basis. We were up 22% in the first quarter. He was not. (Direct from one of his employees). Maybe my pricing is too low and reflects such good value my customers are all happy? lol… One thing I know for sure, when one of those large chains moves to town, it will not be me that can’t compete on price as I compete with quality and value vs specials and coupons.
My competitions customer base is mostly driven by price. God help him when “they” come.
 
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We do not have problems doing a one for one swap. Some of our toppings are identified in our menu as premium toppings that are charged at a higher rate, for those we add, customers understand.

As far as being better off without the bottom feeders, I had a discount chain open up next to me. At first I lost almost 50% but after a short period of time (although it seemed like forever) about half of those that left came back. I am down now 25-30%. I have had several people tell me that I am better off without those customers since they would go to where the best deal was and had no loyalty. Also complaints are way down. Less people trying to scam us. But, according to our bank account we were better off with those customers, and I am doing this for the money. Just something to think about next time you decide you don’t need a class of customer.

Rick
 
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Just a minute while I climb on my pizza box…

If the “no discount” works for you…congratulations!! Keep it up.

However, the big 3 are where they are for a reason. They sell to the masses, what they want. That is their niche.

The belief that PJ has on discounting is that they should be at about 30% discount rate. If a store is well below that %, then they feel that they are leaving some money on the table by not having attractive price points for those not buying. They encourage them to be more aggressive. If it is well above then they are giving $ away.

If you want to explore the waters without jumping in…you can always pick a slow night and put a size or type of pizza on sale to attract more in. I currently do this and have been for close to 4 yrs. I do it on Tues and it easily doubles my Mon and Wed sales.
If your sales go up on that day but does not cannibilize the other days…you have succeeded in sales increase.

As far as your statement concerning loosing a certain “class” of customers, I read not to long ago, wish I could remember from whom, that we should “fire the bottom 10%” of our customers every year. The bad check writing, discount only, non loyal, always complaining customer will do nothing positive for your bottom line.

3 weeks ago, I had a customer order a “cheap” pizza. He complained and we had to make him another one, 3 times, he even demanded his money back and refused the last one we made. Said it was not what he expected. I politely told him that we apparently are not able to live up to his expectations and suggested he shop elsewhere in the future. He left and called me back 6 days later. Came in, we talked for 45 min, and he now knows what we can do and we know what he wants. I was prepared to lose this type of customer, not wanting to, but was able to salvage his business.

Everyone has their own market…it is our job to know it and try “stuff” until you find a niche. Then exploit it to the lengths of profitability. Try something 2 or 3 times, if it does not work, change it or do something different.

And above all else…continue reading and listening and talking to others in the business.
Off my Pizza box now!!
Bubba
 
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boatnut:
Ok guys, you win. My thinking is obviously rather different than the norm. But it works at our store. Our customers get a high quality product, excellent service, quick delivery in heated bags and we charge accordingly. We offer the same special 100% of the time. None. Nada. Full price every single time. Specials are offered at our competition on an ongoing basis. We were up 22% in the first quarter. He was not. (Direct from one of his employees). Maybe my pricing is too low and reflects such good value my customers are all happy? lol… One thing I know for sure, when one of those large chains moves to town, it will not be me that can’t compete on price as I compete with quality and value vs specials and coupons.
My competitions customer base is mostly driven by price. God help him when “they” come.
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I’ve been meaning to reply, but always get pulled away. We don’t allow substitutions. Don’t want sausage on my all meat, but instead want jalapenos, that’s extra. Don’t want beef on my everything pie, but instead double green peppers, that’s extra. If a guest/customer doesn’t like this, they can go somewhere else. I have many other customers that will gladly pay extra. In my experience the more you give away on things like this, the more these customers tend to expect give aways.
 
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Thank you. I was really starting to think I was the only operator that thought this way. Maybe we are both lucky enough to be in a market that allows us this luxury? I think the post refering to “the masses” says everything. I have zero interest in appealing to them. I CAN NOT COMPETE WITH THE CHAINS ON PRICE. Any time you send out a flyer/coupon/give away a topping you are starting down the slippery slope. My ideal business model would to be half our volume and retain the same level of profitability. Less work, more money.
I recently called our top 200 volume customers and asked them: " Our cost’s have increased to the point I have to make a choice. I can reduce or lower the quality of the toppings/cheese OR I have to increase the prices by approx 8%.
Which would you prefer? "
I had one say pull back on toppings/cheese.

I increased the prices April 15. Volume of orders up approx 12% over last year same time. Dollars up approx 20%. I think that means my customers are happy to pay for our product.
 
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boatnut:
Ok guys, you win. My thinking is obviously rather different than the norm. But it works at our store.
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boatnut

its not a case of winning anything. If it works for you then great - I don’t think anyone has said you’re doing something wrong. If I could get away with charging full price on everything then I sure would but I’m at the top of my market place and have lots of cheaper competition. My comments have only come as I take exception to your statements such as:

‘If you have to discount your product to keep a customer happy you have a problem with your pricing or your product.’

and

‘Nice in theory’

I’m sorry but I think that’s just plain wrong and a pretty cr*ppy comment.

My customers also get a high quality product, excellent service, quick delivery in heated bags and we charge according to our market. I’m also up on last year.

I’m also just coming to the end of a very successful buy one get one free weekend. Is my food cost up - sure is, did we get slammed - sure did. Sales last night - up around 30% by value and 45% in terms of orders count on the same night last year and tonight has already beaten last Sunday’s whole night sales by 7pm. Have we attracted lots of new customer - absolutely. Has it given some of our competitors a bloody nose - must have!

Each to there own, but just because we do things differently to you doesn’t mean we’re wrong or you are either.

Wiz
 
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Gpizza92:
I’ve been meaning to reply, but always get pulled away. We don’t allow substitutions. Don’t want sausage on my all meat, but instead want jalapenos, that’s extra. Don’t want beef on my everything pie, but instead double green peppers, that’s extra. If a guest/customer doesn’t like this, they can go somewhere else. I have many other customers that will gladly pay extra. In my experience the more you give away on things like this, the more these customers tend to expect give aways.
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Hallelujah !!! Some on my wavelenth as well. I always have said the more you give the more they expect hence why we charge for substitutions & delivery.

But as “Wizzle Wassell” said “Each to there own, but just because we do things differently to you doesn’t mean we’re wrong or you are either.”

Horses for courses and here in Australia we do alot of things different to you guys in the US.

Dave
 
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