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Just Pizza: Four ways to beat rising cost and make more money

Four ways to beat rising cost and make more money


November 10, 2008
By Wayne Rempel

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I don’t know if you folks are in the same boat as me, but over the last year I have had to watch every penny to keep ahead of rising costs.

I don’t know if you folks are in the same boat as me, but over the last year I have had to watch every penny to keep ahead of rising costs.

I have poured over my invoices and everywhere I look everything is going up. If it isn’t the price of flour then it’s fuel surcharges, if it isn’t fuel surcharges it’s chicken. I think you get what I am saying here – it’s getting harder to make a profit.

So what have I done to offset the rising cost?

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I have figured out four ways to make more money:

1. Raise prices.
Sooner or later this has to be done. I truly believe that even the $5 pizza franchises will have to look at charging more.

I know these places make their money only on volume but eventually the margin will be so thin the price is going to have to go up. I am fortunate I don’t have to compete with $5 pizzas but even so, I still have to look at what my competitor is doing and price my pizzas competitively.

My pizzas are not the most expensive in town but they are not the cheapest. I have priced them so I still make money and it is still affordable for a family to eat at my pizzeria.

2. Get more customers.
I have a very aggressive marketing campaign, which I will talk more about in issues to come, but the basic idea is to get my menu in every house at least four times a year.

I send unaddressed direct ad mail through Canada Post and hit a different area of town every week. I break it up so that when my menu comes out it isn’t sent to more people then I can handle. This way I can still give excellent service even with the increased business.

3. Increase ticket amount.
I do this by getting my staff to up-sell. This is probably the hardest part for me to implement because most kids just don’t get it.

To help me out and get them on my side we make it fun. Giving out cash prizes, movie passes, and gift certificates for movie rentals does help but even with those incentives it is still the one that I have to constantly remind them to do. This is probably the one I need to work on the most because it should be something we do on every order and trust me when I say I am lucky if we do it on 10 per cent of the orders.

4. Get customers to order more often.
One of the best ways to do this is to work your database. I know a lot of people who will send out postcards and letters but I do it a bit differently. I print off a list of my lazy customers and phone them. The response we get from this is amazing; most customers are very surprised to get a phone call and are happy to hear from us.

The customers are grouped into 30-, 60- and 90-day lazy customers the 30-day customers are offered free breadsticks and a 2-litre pop with the next order. The perceived value of this is over $5 but the cost is less than $2, so it is easily affordable and this will be the biggest group of lazy customers. The 60-day customers are offered $5 off the next order. I normally don’t offer “dollars off” as I like to give away free items, but for these people I need something that will make them want to come back.

For the 90-day customers we offer them a free 12-inch pizza. It has a value of up to $16 – if they order one loaded with chicken and premium toppings – but I don’t think I have had more than four or five people not take advantage of it. Most order another pizza anyway, so I will usually still make some money off of them.

Remember these things will take some work and time to implement but as long as you do a little bit every day you will see results. Watch for more information in upcoming columns, as I will go into more detail on how to implement a marketing plan that could easily increase your revenue by 15-25 per cent each year. I know those results may seem high but I have done it and after three years it’s still working.

Wayne Rempel owns and operates JP’s in Lacombe, Alta. He has been in the foodservice business for 20 years. Wayne also consults and does seminars for the hospitality industry. Have any questions or comments? E-mail Wayne at waynejustpizza@shaw.ca.


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