Business Model:
Steinfort “In terms of the upfront costs, it’s very basic: car toppers, in-store merchandising, menus, brochures. We’re talking about a few thousand dollars. We have a lot of former pizza industry executives who say it takes $400,000 to make over a national pizza chain from a nondelivery restaurant to a delivery restaurant. Quiznos franchise owners can get into the program for just a few thousand dollars.”
Scrivano “Not offering delivery simplifies our business model, it makes it easier to attract [an entrepreneur] to become an investor, to become a franchisee, and to own a business. They see this simple business model that we operate and that attracts better and more people to come to our brand and to expand our business.”
Childers “We get the food at a discount from the restaurant—a 30 percent discount. Then there’s a minimum purchase [for the customers] of $20, and there’s a surcharge of $9.99. If the order is $20 or $2,000, it’s still only $9.99. We require gratuity for the mobile server and that’s just so he can make his money—it’s 15 percent.”
Driving Costs:
Steinfort “Despite the temptation to say that fuel is going to put a damper on this, I think it’s the opposite. I think that consumers are very sensitive about high fuel prices, and those drive them to want to get delivery—have someone else get in the car and bring it to them. I think the fuel prices actually help in many ways.”
Scrivano “When we offered delivery … we paid mileage costs for making deliveries. You might pay [drivers] 50 cents or a $1 every time they went on a delivery. There are also potential liabilities that are out there. If there’s anything unfortunate that might happen like an accident or robbery. Certainly in a delivery operation there are accidents that happen.”
Childers “We’re always listening to what the drivers are saying, but obviously [gas prices] are on the news. It’s a national issue. We’re just doing the best we can to increase their average dollars per shift. We’re looking at that number constantly, thinking of different ways to improve that.”
Challenges:
Steinfort “Our businesses get pretty busy when they start offering delivery. Some franchise owners do over $200,000 in sales. Some stores are seeing a 25 percent uptick in their store, and it requires you to manage the business as well as keep your in-store customers happy.”
Scrivano “Sometimes in the delivery model, you take multiple orders to multiple houses, so when it gets to that last house, it might not be the freshest product. We absolutely believe that as a carry-out operation, the customers get the best quality of food— hot out of the oven.”
Childers “The drivers are driving their own cars. We don’t do too much marketing through them since they’re contractors through us. We don’t require them to do signs or anything. And that’s a challenge. We have 400 people out there that we could be using to connect with the market.”
The Bottom Line:
Steinfort “The economics of it are really great because it’s almost a business within a business. The franchise owners make very small incremental investments to get into delivery, and yet they can get a huge business. We do charge that small $2 fee which works for consumers, but it also more than covers the cost of fuel for the franchise owner. The economics still work extremely well for them. A lot of the sales drop to the bottom line.”
Scrivano “Focusing exclusively on carry-out has grown our customer base over the years. So I think our customers recognize a high-quality product at a great price. We have no intent to change our business model.”
Childers “The restaurants have their fixed costs, but we don’t require any other costs from them. They already have their cooks there at 11 a.m., and they’re sitting around waiting for the day to get started where most of our deliveries come in around then. So that’s how we’re a big value to the restaurant.”