Shooting Yourself in the Foot
By Diana CoutuFeatures Business and Operations Marketing
Go for the head, it’s much quicker and less painful
I have seen the enemy … and he is us” – Pogo, by Walt Kelly. I’m talking about the pricing strategy that most pizzerias use today –
‘2 for 1,’ ‘3 for 1’ and in my city, there are even ‘4 for 1’ pizza
Go for the head, it’s much quicker and less painful
I have seen the enemy … and he is us” – Pogo, by Walt Kelly
I’m talking about the pricing strategy that most pizzerias use today – ‘2 for 1,’ ‘3 for 1’ and in my city, there are even ‘4 for 1’ pizza prices.
Now let’s be clear – often the price for each pizza is built into the ‘[insert number] for 1’ price. But the average Canadian consumer doesn’t know it. And I think the average pizzeria owner has forgotten.
Years ago, there was only one pizza for one price. If you wanted two pizzas, you ordered and paid for two pizzas. Maybe you got $3 off. Then, and I’m not sure of the exact date, a gimmick was launched – ‘2 for 1’ pizzas. It was meant to boost sales on a slow day, but it caught on – like wildfire. And like a fire, it spread … everywhere, and has gotten completely out of control.
The pizza industry has become synonymous with this ridiculous type of pricing. No longer a ‘special’ saved for Mondays or Tuesdays, it’s now an everyday price. The average Canadian consumer has come to expect it. It’s interesting that the burger places, or the Chinese food places, haven’t followed suit.
Why do you think that is? If it is such a winning strategy, don’t you think they’d use it everywhere … and all of the time?
Hell, even the ‘GM employee discount’ isn’t that good – and they have a large overstock to sell.
I see a lot of pizzeria owners hurting. I see a lot of them not paying themselves a wage. Their employees make more money than they do. They have their moms, dads, brothers, sisters and cousins working in the shop for free to help out because there is so much to do, and there’s no money to pay for it to be done. They drop their prices even more on Mondays and Tuesdays.
Many go out of business in six months or less. Some struggle to hang on, with the help of funds from friends and family.
Is this sounding familiar?
I have seen the enemy and he is us.
By adopting this pricing model as the norm we have all devalued the product that we sell to make our living. We have turned what used to be a profitable business that one could make a good living and raise a family into slave labour for our kin and made ourselves into the working poor.
Hey, I’m as guilty as the next person. We used to have ‘2 for 1’ and even some ‘3 for 1’ pricing too. We struggled, but we thought that we just needed more business, more customers. So we sent out some flyers and increased our sales, increased the workload – but somehow, we didn’t increase the profits.
Then one day when I was looking in the freezer section at the grocery store, I realized that you could get two frozen pizzas for the same price that we were selling two fresh ones. This wasn’t a ‘2 for 1’ price on the frozen pizzas. This was the regular, full price. I knew about the elusive 5a permit that allows frozen pizza manufacturers to get their cheese for about 30 per cent less than I could. And I knew that the frozen pizza industry was (and still is) very profitable.
I started asking myself questions. Questions like, is there any particular reason why we shouldn’t be as profitable as the frozen pizza manufacturers? And, why on earth would two frozen pizzas cost the same as two fresh ones (except for the taxes) plus get delivered too – for free?
And one better, how come my suppliers don’t give me two cases of cheese for every one I buy? Or ‘2 for 1’ cases of pepperoni? And even better, how come there’s never any money left in my bank account after I pay for everything and everyone else?
Now the best one, how come, no matter where you go, two large two topping pizzas have been $19.99 for over a decade and it still comes with a free 2L pop?
Then I woke up. I realized that since we didn’t get these kinds of deals from our suppliers, we couldn’t offer those prices to our customers. I realized that since we didn’t source the ingredients for our pizza based on the cheapest price, we couldn’t and shouldn’t sell on a cheap price. I also realized that we would never qualify as a non-profit organization, even though technically, we were. We were shooting ourselves in the foot.
We changed our pricing structure. One pizza, one price and if you want two, well that’s twice as much. I remember my husband and I were white knuckled worried that we’d go down in a burning hoop of flame. It was a gutsy, big brass balls move. And yes, we did lose some customers. More importantly, we increased profitability and grew into a viable, sustainable business.
Knowing what I know now, you’d have to shoot me in the head before I’d go back to ‘2 for 1’ pricing. My customers don’t expect ‘2 for 1’ prices, they expect a superior pizza and I deliver it. And every so often, I hold a customer appreciation day where the offer is ‘Buy 1 Get 1 Free’ pizza. But it means something. My customers know that I’m not making any profit that day, and that I can’t afford to do it everyday and still be in business next month.
They say “to serve is the noblest of professions.” Nowhere does it say to put yourself and your family in the poorhouse doing it.
Don’t you deserve to be as profitable as the frozen pizza manufacturers? Stop the insanity, get rid of the gun and let your family off the hook. •
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