Taking delivery in house
Technology and convenience have spurred increases in food delivery outpacing dine-in by 300 percent since 2016.
Still deciding whether to use a third-party service for your pizzeria delivery or to do it yourself? To help you make the decision, let us look at the cost of Do It Yourself (DIY) Delivery from anchovies to zucchini.
Here are the considerations for adding DIY delivery with a sample estimate of costs. Read further for the wider range of costs for your budget:
Your drivers will be delivering in their own vehicles since driving a company vehicle for delivery is cost-prohibitive. Insurance for this is called Non-owned Auto Insurance and is purchased in addition to your regular business coverage. Operating DIY delivery without non-owned auto insurance would be the worst business decision you could ever make. The cost is based on the number of deliveries you make and can run anywhere from .10 to .25 per delivery. If you deliver 300 orders per week, your cost may run from $1,560 to $3,900 per year.
A good POS System, designed for pizza delivery, will manage the phone calls, the customer database, the kitchen logistics and the delivery logistics. Without this, you would be operating in the Stone Ages. The costs associated with a POS system are two-fold: initial hardware and software costs and monthly support. Costs for a POS system vary widely but a budget of $15,000 to $20,000 per location for the initial system (hardware, software, menu setup, web site, install and training) is a good place to start. Monthly support costs may range from $200 to $400 per location.
A website with online ordering is another must for DIY delivery. Digital ordering represents over 40 percent of all pizzeria orders. Last year, Dominos reported that 75 percent of their orders were placed digitally. Online ordering should be included with your POS package. The food photography is where you will have some additional costs. Depending on the size of your menu, and whether you take the photos in-house or hire a professional, expect to budget anywhere from $2,000 to $5,000 for food photography for the online ordering.
Often neglected in the planning for DIY delivery is the kitchen equipment and design. Adding delivery can easily add 30 percent to your sales. Can your ovens, makelines, fryers and refrigeration handle the capacity? Do you have a driver station large enough to accommodate staging the hot bags? What about packaging? Do you have shelves for folded pizza boxes and to-go containers for your menu items? Adding delivery may require a kitchen remodel and additional equipment. Budgeting for this can run into the hundreds of thousands, but let’s look at the less expensive considerations. Adding a driver refrigerator, long stainless table for the driver station, and pizza box shelving can easily be done on a budget of $4,000.
The second most-neglected item in the DIY delivery plan is the phone system. While many of your delivery and carryout orders will come from your online platform, expect an increase in your phone calls. Answering phones in the middle of a noisy kitchen or at the same counter where dine-in customers place their orders leads to customer frustration and operator mistakes. Is your office large enough to accommodate phone stations? Is there another area of the restaurant that can be converted to a quiet place to take phone orders? The minimum budget should include a good phone system, able to queue orders and have messages or music for the customers on hold. Often, this can be setup using VoIP (Voice over Internet Protocol), so you do not have to pay for extra lines. A good phone system can be had for $2,500.
Delivery driver pay is two-fold. You must identify the hourly wage and the ‘mileage’. Drivers are usually paid minimum wage because they make tips. The minimum hourly wage varies state-to-state. If available, consider using the ‘tipped minimum wage’. Another cost is driver mileage. This is the amount of money you reimburse the driver for using their own vehicle and their own gas. This amount must meet at least the Standard IRS Mileage Rate for that year. The rate for 2021 is 56 cents per mile. The amount you reimburse your driver (suggested to pay daily at the end of the shift) depends on the size of your delivery area. While the average delivery area can be created by driving seven minutes in every direction to determine boundaries, this is by no means the rule. Miles driven logs are not required but recommended when you first begin delivery to ensure you meet the standard. If you pay less than the IRS standard, it means that your driver was not fully reimbursed and the difference effectively reduced their hourly wage, which may put them under minimum wage.
Driver Supplies include delivery bags and car top signs. Hot bags cost about $30 each. Consider insulated bags for the cold food as well. Budget $1,000 for 25 standard three-pizza hot bags, 10 cold bags, and a few larger five-pizza hot bags. Another consideration is your driver’s vehicle. Will you be providing/requiring the use of a car top sign? A six-magnet, automatic-lighting car topper will cost about $250 each. Budget six signs for $1500. If you are delivering alcohol, consider a scanning device that not only verifies age but stores the scanned information. These cost about $500 per device.
Whether you are planning your DIY delivery on a shoestring budget or going all-in, the potential for ROI (Return on Investment) is evident. DIY delivery offers you incremental sales; additional sales using the same resources. Many of your fixed costs remain constant when you add delivery. Rent, kitchen and management staff, marketing and utilities will be reduced as a percentage of sales, leading to higher profit margins. With studies showing over 60 percent of Americans will get food delivered this year, it is time to get your slice of the pie.
Dan Collier is the founder of Pizza Man Dan’s in California and a speaker at International Pizza Expo.
