February 24, 2013 |

2009 February: Delivering the Goods

By Daniel P. Smith

2009 February: Delivering the GoodsWhen Gary Cooney opened the first of his four Chicago pizzerias in 1981, local customers craved Waldo Cooney’s pie. His South Side Chicago outfi t set a delivery radius of one mile, plenty to keep the cooks, drivers and phones busy on any given evening.

Fast forward 27 years and Cooney shares a new reality. Shifting area demographics and increased competition forced Cooney to reevaluate his business plan, including his flagship store’s delivery radius.

“Originally, I wasn’t so focused on the competition; there were only two to three pizzerias in our area and we were just focused on taking care of the people in our immediate area,” Cooney says. “But the ballgame changed. The city changed.”

At the century’s turn, Cooney expanded his delivery area, pushing it gradually—a half-mile here, a half-mile there. Today, Cooney’s delivery radius extends three miles, a hefty area to cover in Chicago’s urban landscape. In recent years, he’s extended the delivery boundaries of his subsequent stores so that the delivery areas touch. Where one drops off, another assumes control.

“There’s a lot of competitiveness out there and we had to go for every person we could get,” he says. “But at some point, yes, you have to draw the line. You can’t keep pushing those lines out if it’s not cost effective or safe.”

For many pizzeria operators, the issue of delivery radius is a finicky one demanding balance between time and revenue, not to mention quality and customer satisfaction. Travel too far for customers and time could outweigh profits; set the boundaries too short and potential customers could be lost.

“Delivery area is an ongoing dilemma in our store,” says T.J. Banning, who owns two Rosati’s Pizza locations in Illinois.

When Banning opened his first store eight years ago in Yorkville, Illinois, a once rural community being consumed by suburban Chicago sprawl, he took to the road himself to define the store’s delivery radius. It was, he confesses, more art than science, but the necessary step. Merely looking at a map, one unlikely to identify the community’s latest street additions, wouldn’t produce answers.

“A map couldn’t show me things like traffic, population density, driver safety, stop lights, and trains,” Banning says. He called local direct mailing and promotional companies to get residential counts. “That was a free resource to see where people are in town,” he adds.

In recent years, Banning’s redefi ned the Yorkville spot’s delivery area. Residential growth arrived in a different area than Banning had initially predicted, while the town’s rural roads struggled to keep pace with the swelling traffic. At times, he’s contracted his area; at others, he’s expanded. Even today, with a delivery radius under three miles, it remains a work in progress. He monitors new subdivisions, competition, and traffic patterns while maintaining one golden rule.

“I never wanted to jeopardize the quality of our customers’ orders and go for too much quantity,” he says. “That was a hole I didn’t want to dig.” At the Ann Arbor, Michigan, headquarters of Domino’s Pizza, time is king.

An industry pioneer with delivery, Domino’s sets a strict delivery radius for all of its 5,000-plus U.S. outlets: deliveries can only be made to locations within a nine-minute rush hour drive.

If the pizza can be made, boxed, and on the road in 15 minutes, the nine-minute delivery window gives the driver six minutes of padding to meet the 30-minute mark that the company once guaranteed. When a Domino’s store opens, in fact, a corporate representative drives around during rush hour to set the location’s delivery radius.

“It all starts from the perspective of the consumer and how long they’re willing to wait. Our research says the sooner, the better,” says Domino’s Pizza President Patrick Doyle.

From staffing to computer systems, delivery influences all of his Domino’s decisions. “It’s the way we chose to differentiate ourselves 48 years ago. Everything we do is done with delivery in mind,” Doyle says.

Over the years, operators have learned delivery radius “tricks” to boost the bottom line. For instance, Cooney couples his advertising with delivery area. To maximize his marketing dollars, he matches his delivery boundaries to meet the advertising medium’s zone over advertising that serves too expansive an area.

Banning turns to his drivers for insight. From the frontlines, drivers can report on dangerous intersections, road construction projects, or the cost-effectiveness of making deliveries to a given area, all critical factors in defining a delivery radius. Banning also established a method to deal with orders arriving from outside his defined area. He directs his phone staff to offer the customer an incentive for carry out, such as a two-liter of soda or free breadsticks.

“This way you’re not totally losing the customer,” he says, noting that most customers appreciate the simple offer.

Cooney reminds all operators to be mindful of staffing and the tasks they are being asked to perform. An expanded delivery radius might demand more drivers, more back-of- the-house staff, and an investment. “You must have the workhorses to take care of the situation. We have to service the customers every day, every hour, not just when it’s convenient for us to do so,” Cooney says.?

The delivery debate: missing sales or avoiding a headache?

While Domino’s Pizza President Patrick Doyle says Domino’s does everything “with delivery in mind,” many other operators refuse to afford delivery such hallowed ground. Though delivery accounts for 35 percent of the nation’s pizza sales, some establishments pay it no attention. Are such operators missing sales or avoiding a headache?

“Missing profits,” assures Rosati’s Pizza Owner T.J. Banning, who owns two Rosati’s Pizza locations in Illinois of the non-delivery outlets. “Up to 70 percent of my customers have never entered my store. Plain and simple, delivery opens you up to customers you wouldn’t otherwise get.”

To launch delivery, operators must first consider numerous factors, including population density, traffic, and safety. For some, the list proves overwhelming and complex; for others, worth the trouble given the potential profits. Such a decision cannot be hurried or reactive, but rather well-conceived and executed.

“You bet delivery can be a headache, but if you go into it organized and knowing the area, it can be smooth and profitable,” says Banning.

Chicago-based writer Daniel P. Smith has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.