- WHITE PAPERS
For years pizza operators have swiped, swapped and slashed their competitors' market share with low prices, value and variety. Yet over that time, the pizza segment, as part of the overall quick-service market, hasn't increased much. That fact led Tom Potter to consider growing his business at the expense of non-pizza operators.
How? With drive-thru. Potter, the founder and managing director of Eagle Boys Pizza in Brisbane, Australia, knew of pizzerias with drive-thru pickup windows. But he knew of none that executed a hamburger-chain, instant-service system where customers drive up, order, pay and leave within minutes.
The notion of duplicating such a system in the pizza industry intrigued him, and in 2001, his company began tinkering with Eagle
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Boys Express. The premise is simple: Customers wanting rapid service can drive up between 5:30 p.m. and 8 p.m., order from a limited menu of four pizzas, pay and cruise away in 2 minutes. The quick-service model hinges on pre-baking and holding pizzas in custom warming cabinets; any pizza held for 30 minutes gets trashed.
According to Potter, pizza quality is managed with tight pars, and holding times typically are lower than a delivered pizza might remain in a heated bag.
"About half of our drive-thru customers order straight from the Express system," said Potter, adding that the other customers order off the broader menu. "The rest don't mind waiting."
Currently, 22 of Eagle Boys 160 units are drive-thru Express stores. And while franchisee interest in the concept was tepid in the beginning, it's red-hot now, Potter said. "At first, they didn't understand it. Now we've got a situation where we don't have any lack of interest in drive-thru."
Why the change of heart? Because Eagle Boys drive-thru stores generate an average 35 percent more sales than the chain's traditional stores. Whether that's coming at the expense of non-pizza operators, Potter doesn't know. What's clear to him is a drive-thru option accelerates sales.
Pizza Hut didn't respond to a request to discuss its drive-thru program, but industry sources say it has tested a rapid drive-thru system that turns customers over in 7 minutes. That number falls directly between times claimed by traditional pizzerias with drive-thru windows (about 12 minutes) and big burger chains that run customers through in about 2 minutes. When speaking of truly "fast food," 7 minutes is slow, said Scott Finkle, owner of Business Sound & Communications in Houston. His firm sells and installs wireless headset systems for drive-thru operations.
"The challenge for pizza operators is speed of service," said Finkle. "On the burger side, they stage what they cook. I've not seen the technology to do that in pizza."
Burger companies, Finkle said, use television monitors to track the number of cars in the drive-thru cue. If five cars are waiting, they know passengers inside of each car will order two or three burgers. So the crew begins cooking them before they're ordered. Assembling them per customer preference is all that remains.
Pizza customers, Finkle said, want greater customization of their orders than that, which makes streamlining the drive-thru service model a challenge.
"For lunch, I think customers would be willing to give up some choice to get faster service," he said. "But I don't think that would work at dinnertime. Then, you typically have more than one person in the group, and one person wants sausage on one half, and the other wants mushroom and pepper. You can't do that to order quickly."
Choices and options
Donatos Pizzeria spokesman Tom Santor said the 181-unit company uses drive-thru mostly to give customers options, not speedier service.
"I would tell you that far and away, the occasion is driven more by convenience; they don't want to get out of the car," said Santor, adding that half of Donatos' carryout orders go through the drive-thru window. "And if that's the most convenient way to get food to the customers, then they'll get it that way."
Though dozens of Donatos units have drive-thru windows, he said customers don't expect a Burger King experience when they pull up and order. He said Americans as a whole seem to know fresh pizza takes about 10 to 15 minutes to bake. "We get those people who do just stop and order without calling ahead, but it's not a huge problem for them to wait. They understand."
Same for customers at Flyer's Pizza, which, like Donatos, is based in Columbus, Ohio. Half of Flyer's four units have drive-thrus, and marketing vice president Mark Ulrey said all future units will have them.
"I once heard a speaker at a restaurant hospitality show say, 'Customers want you to do two things: save them money or save them time," Ulrey began. "He said, 'If you can do either of those two things, you'll be in business.' And with the way our price structure is set up, we're not going to save them a lot of money."
Ulrey said the heaviest drive-thru users are busy parents
Doing this it takes our business out of the sand pit and into the main arena. There's no doubt about it: The closer we can get to performing like KFC and McDonald's, the better for our industry.
— Tom Potter,
Drive-thru also saves those families some money. Since Flyer's charges for delivery, drive-thru customers avoid the fee and the driver's tip. Plus, that lowers the need for delivery drivers in Flyer's two drive-thru stores. "We need 5 to 10 percent fewer drivers, and that saves me money," Ulrey said.
Since no company other than Eagle Boys has rapid drive-thru service, Potter said most Aussies also are in the mind-set of waiting for their pizza. Teaching them they can pass through in 2 minutes has been a slow process, he said, but when they finally understand the concept, they use it.
Worth the investment?
Because a drive-thru outlet requires added hardware for the facility, plus a strip-center end-cap or a free-standing building, it costs more to run. The drive-thru upgrade to an Eagle Boys store costs about 14 percent more than a traditional store, but the annual rent is more than 30 percent higher due to the larger lot. Ulrey said his end-caps, especially those located along a street, are more expensive, too. But like Potter, he said the cost is more than justified.
"When you're doing 30 to 40 percent more sales per store, the numbers stack up all day," Potter said. "It's well worth it."
The larger issue, Potter said, still remains: increasing the overall size of the pizza business by taking it away from chicken, burger and taco providers. If the industry's efforts yield only a back-and-forth shifting of customers between pizza companies, the pizza segment won't enjoy real growth. Stealing Burger King's scepter and taking money out of Ronald McDonald's baggy pockets is much more beneficial in the long run, he said. And rapid drive-thru service is the only way to get it.
"Doing this it takes our business out of the sand pit and into the main arena," said Potter. "There's no doubt about it: The closer we can get to performing like KFC and McDonald's, the better for our industry."
Topics: Operations Management