Can high gas prices help the pizza industry?

April 17, 2005

I never thought I'd write these words, but here goes: High gas prices are a good thing for the pizza business.

There, I wrote it.

And I mean it.

Before you brand me totally insane, hear me out. The high gas prices that are decimating your

Steve Coomes, Senior Editor

delivery drivers' wallets, sending them screaming to you for better reimbursements and costing more to have food shipped to your store, can benefit the pizza industry — if its players make the best of it.

No, I don't mean "survive it," I sincerely mean grow from it, learn from it and change as a result of it. Here's how:

1. Do everything you can to encourage customers to use carryout instead of delivery.

Since 1993, Australian pizza operators have waged the industry's bloodiest-ever price war. One way operators have remained profitable amid the battle is to charge extra for delivery and promote the fact that carryout costs less.

The result is that an industry once dominated by delivery is now dominated by carryout. (Read also Aussie delivery runs second to carry out.) Compared to America, where about 75 percent of pizzas are delivered, only 30 percent arrives at the door in Australia.

The Eagle Boys Pizza chain has dealt cleverly with the shift to carryout by spending the last three years revolutionizing its carryout experience. The 155-unit company has a 2-minute guarantee "or it's free" time limit on all carryout transactions when customers order from a limited menu. Plus, it is adding drive-through windows to every new unit and retrofitting existing stores where possible.

The goal, its officers say, is to compete not just with pizza operations, but with quick-service drive-through specialists like McDonald's and KFC. (Read also Instant pizza system boosting Eagle Boys' sales by 40%, chain claims.)

* "Carside" and/or "curbside" services offered by casual dining chains such as Applebee's Neighborhood Grill and Outback Steakhouse have been a tremendous success. Both chains always offered carryout, but until the last couple of years, the service, or more accurately, the lack thereof, was cumbersome and slow. Now carryout customers phone in their orders, park in specially designated spots near the front door, and stay in their cars and until the food is brought to their vehicles.

My question is this: What's keeping pizza operations from doing the same? The cost of keeping a "car hop" on the clock? Talk about an opportunity to differentiate your brand at the point of service.

What do you think would happen if you advertised your operation as "carryout service without leaving your car"? Think people would like that on a rainy night? Any night?

* If they have to come inside your store, do something to occupy/entertain/make them comfortable while they wait. Have a self-serve soda fountain with small, disposable cups. (If you're service is fast, they'll only get one drink.) Toss gumballs or cheap trinkets to kids who come in with their parents. And always have product samples for waiting customers to taste. There is no better or cheaper way to merchandise your menu.

Lastly, consider giveaways of inexpensive food. If a carryout customer has two or three pizzas, chances are she's feeding a family. Toss in a gratis 2-liter, or an order of breadsticks or a few side salads. Not only does getting something for free leave an indelible impression on customers' minds, the appearance of a spontaneous gesture that says, "Hey, you might enjoy this," makes customers like you and your operation, not just your products.

2. Charge a permanent flat rate for delivery.

The combination of rising costs for operator insurance and food all but mandate this; add in the need to reimburse drivers more for their gas and it's a necessity.

Side note: Admit it, operators, anything less than 2 bucks a run won't even begin to cover gas and wear and tear on your employees' cars. And quit relying on customers' tips to cover the cost of vehicles used for shipping your products. Any operator unwilling to increase driver compensation deserves the turnover he gets.

Just to see what my coworkers thought about being charged for delivery, I conducted an unscientific e-mail poll asking them the following questions. (Thirteen of 29 responded. I'd call the non-respondents "slackers" if it weren't for the fact that four members of that group are my superiors.)

* Would you still use delivery if charged a $2 to $3 per order?

61 percent said "yes"
39 percent said "no"

* Would you use carryout more often if charged for delivery?

39 percent said "yes"
61 percent said "no"

* Would you buy less pizza if charged for delivery?

24 percent said "yes"
76 percent said "no"

How 'bout those numbers? Three-fourths of the staff — all of whom pull down middle class incomes — said a delivery charge would not reduce their pizza consumption, and three-fifths said they'd still get delivery despite a charge.

And though this is just a hunch, I'd bet that the bulk of that 24 percent would eventually become carryout customers. It's exactly what happened at Domino's Pizza and Eagle Boys in Australia. People didn't eat less pizza, they simply changed how they purchased it.

* Since everyone hates high gas prices, position your delivery operation as gas-saving for your customers with some taglines like these:

"Gas is expensive, so use ours."

"Gas gauge on "E"? Our tanks are full."

"Tired of 'pain at the pump'? A delivered pizza will make it go away."

* Look like a hero by promising in your print materials and advertisements that you give 100 percent of your delivery charges to your drivers. I've seen multiple TV news and newspaper stories about how pizza drivers are suffering from high gas prices because their bosses aren't paying them more to offset the increase. And, interestingly, several respondents to my impromptu e-mail poll said they'd be wary of paying a delivery charge without clear assurance the driver gets the full fee.

Like it or not, right or wrong, people's hearts go out to the underdog, and in this situation drivers are perceived as the underdogs. Some of the respondents to my survey said they'd have no problem paying an extra fee if they knew it went to someone who needed it.

Again, add the fee, promise in print and advertising it'll go to your drivers and look like a hero instead of a heel.

It's the right thing to do anyway.

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