Business and Operations
Marketing Insights: Ordering In
Do you ever wonder who delivered the first pizza?
Do you ever wonder who delivered the first pizza? I do. Apparently, the first documented pizza delivery was in 1889 by pizzeria owner Raffaele Esposito. The king and queen of Italy were visiting Naples and the queen wanted to try the faddish new dish but she didn’t want to be bothered visiting a pizza joint, so she ordered in.
Bill Clinton mentioned pizza delivery in his deposition on the Monica Lewinsky scandal. When asked if he was ever alone in the hallway between the Oval Office and the kitchen area with Ms. Lewinsky, he responded: “I don’t believe so, unless we were walking back to the back dining room with the pizza.”
With pizza delivery playing such an important role in these historical moments – you would think today’s busy culture would make it the preferred ordering channel. Food delivery is proving to be a complex issue, not everyone succeeds at a delivery program and trend reports show that delivery is down. When it comes to offering a delivery service to your customers … is it really worth the drive?
Pizza delivery became mainstream in the late 1960s when Tom Monaghan of Domino’s Pizza introduced the service to his small chain of pizzerias. Monaghan had attended a franchise seminar at Boston College and met Ray Kroc and John Y. Brown from KFC, and became inspired to take a chance on his idea for pizza delivery. The 30-minutes-or-free guarantee was introduced in the 80s and is credited by Monaghan for being responsible for much of Domino’s growth. Delivery times improved, and that was the whole key to success. It was also a great management tool, because it put the emphasis where it should be – on handling the rush.
Tom Monaghan says, “Delivering pizzas fast is not a matter of driving fast; it’s a matter of getting the pizzas in the oven fast. That’s where you get behind.” Unfortunately, when there is a backlog at the oven, driving fast is the only way to meet the time guarantee.
A lawsuit in 1993 forced Domino’s to pay $79 million to a woman struck by one of its drivers who ran a red light. Subsequently, Domino’s stopped making the guarantee. As Tom Monaghan discovered, getting into the delivery business can have its challenges. Insurance issues, driver safety, labour supply and cost have caused many operators to pass on offering delivery.
Recent foodservice statistics show that telephone delivery has decreased from 6 per cent of all meal occasions in 2001 to 5 per cent of all meal occasions in 2003. Even mavericks like Grocery Gateway have had their challenges in finding a cost effective way to deliver groceries to consumers – they’ve recently sold to Longos, recognizing that to be effective, the delivery arm needs to be part of a traditional retail environment. With all of this doom and gloom, why would anyone want to get into the delivery business? Indications are that a successful delivery program may simply be a matter of timing and focus.
Consumers want food delivered when they can’t go out to get food or don’t want to go out. Delivery works for the operator when demand is stable and there are many consumers wanting the service in a fairly compact geographical area. A busy consumer doesn’t necessarily translate into a need to have food delivered. In fact, a busy consumer is on the run and often can’t predict when they will be home to receive the delivery. This could explain why drive-through has increased at the expense of home delivery. Canadian baby boomers are in their 40s and 50s and many have teenagers at home. A consumer who’s in their peak earning years running from business meetings to hockey practice needs to be handed their meal much like a relay runner is handed a baton from another runner. If this food-service trend is related to life stage, then what’s ahead for delivery? Will consumers finally slow down? If you consider the fact that society is getting older then the answer is “yes.”
Entrepreneur Magazine lists senior meal delivery as one of the hot business trends for 2005. Tom Murphy, owner of Murphy’s restaurant in Atlanta Georgia started Good Measure meal delivery in 2003. When his own mother was ill, he discovered that the wealthy hired a professional chef while the poor qualified for Meals on Wheels. There was nothing left for those seniors in the middle of the snack bracket. Murphy estimates that his 2004 sales will be in the US$500,000 range. Not bad for a fledgling business. With this in mind, delivery may be poised for a comeback. Front-end baby boomers (born in 1946) are 58 now and will officially become senior citizens in 2011. One of the fastest growing demographics is the 100 plus age group, which means many of us, can expect to be a senior citizen for 35 years or more! It’s predicted that more people will stay in their houses as space in old age homes becomes scarce. Many of these people will have disposable income and this is where the opportunity for delivery may be. Baby boomers grew up on pizza and will continue to enjoy it in their later years. It’s healthy and already has proven itself to be a good candidate for delivery.
Raffaele Esposito realized in 1898 that to get the queen to try his pizza he must find a way to take the mountain to Mohammad. Who knows if pizza would be the staple food that it is today, were it not for pizza delivery. Judging from the trend indicators – a captive audience needing home delivery may just be a few grey hairs away.