Coupons: The Danger Zone By Stephen MIllar | PMQ Staff

Pizza operators are constantly burdened by one obstacle after another. If it isn’t increases in cheese costs due to uncontrollable circumstances, there are operating expenses and the chains offering ridiculous retail pizza prices. When you start to look at the bottom line most operators start searching for that selling edge.

Many chains are offering deep discounted coupons and many of you are asking yourself the question, “Should I match them?” The usual answers are, “Our product is better than theirs, we have more pan sizes than them, and we have a point of difference.” But, for many independent pizza operators it is difficult to resist the urge.

Is that good? You might have to rethink that. Most of the chain restaurant industry has gone with having only one size pan. That way they can control food cost, hence bottom line return to the owner is better managed.

“We use high quality products” is another thing you hear from operators, but do you? I would also expect every shop to have a quality product otherwise you might as well go drive a bus. Ham and pineapple, in the public eyes, is all the same when it is called Hawaiian.

We hear this one a lot too: “We have a place that has a family atmosphere. Many families have been coming here for years with their children and now their children’s families come here.” If there is a statement that smacks with complacency it is this one. Operators stand by and think that as long as they do what they have always done customers will too...not anymore. There has to be more to entice customers to order these days and the operators must be more accountable for working the business.

It is this type of attitude that leaves the operator wondering why their business is dropping off and blaming everything from food costs to the economy for why business is decreasing rather than addressing ALL the issues that add up to the drop in the business.

Pizza operators can learn a lot from the chains if they sit down and ask themselves “Why are the chains doing this?” The chains are giving the public the right of choice. In some cases the high profile franchises put their toe in the water by introducing new lines and remove the same number of slow movers off their menu. They track and try to pin point the changes and differences. This gives their menu an advantage in some cases in that a higher priced item returning a better margin on the bottom line works their way as compared to their competition has to do to keep up.

If you want to go down the same marketing road, where the independent has the advantage over the chains is that they are the only ones that are responsible for their own destiny. Before you get started, there are a few questions need to be addressed first, such as are we comparing apples with apples (i.e.; do you have the same size pie as your competitor?). Have you costed ALL your products (i.e.; break down, weighed and costed each item on your pizza and each item on the menu)? Can you look me in the eye and tell me what every pizza on your menu costs in raw product? Or am I going to hear something like, “I think that it cost about...” NOT good enough! If you don’t know, you shouldn’t be in business. That like setting out in a car from Sydney to Perth without a working petrol gauge. You wouldn’t do it and it should be the same in business.

The chains know exactly what each pizza cost to produce. They weigh and measure everything. If the food costs blow out they know by how much because their POS (Point of Sale) tracks sales and food costs every inch of the way. They have the tools. If you were to run the shop the same way you would be miles in front because the chain location owners have the added overhead of advertising fees and franchise fees going in someone else’s pocket... you don’t. Their strength is that they have group buying power for advertising that lifts their profile just like McDonalds, Hungry Jacks, Burger King, Coke, etc. That isn’t hard to combat if you do your homework. Work your community before they do. Make a list of those immediate businesses within your area that you would service, demographics, sports clubs and schools.

Guerrilla marking techniques will be the way to take on the big players. You will not be able to match them in spending with radio, print media and visual media. If you have a marketing plan, the tools in place in your make line, staff training and keep to it you will increase your bottom line. In saying that I hark back to the concept of knowing the cost of everything thing you do from food to marketing. Track your marketing expenses and know your return on investment (ROI). Measure everything and you will succeed.

That doesn’t mean that you go out and sign up for ShopaDockets, Joes Letter Box drops and take out advertising in your local community newspapers.

Get your community to work for you (i.e.; pay them for pizza box lids as a fundraiser for their club, school or community project). They’re going to go out and promote your product. They are the unpaid mercenary, the terrorist in the suburb promoting your product to get your name out there. What more could you ask for? There are number of other ideas that can be cost effective too. Sponsor the sports team with a sports award... the community spirit awards.

Most of these small guerrilla tactics can have far greater return, support and branding than the chains promoting the idea of buying the cheapest pizza on a Monday, Tuesday or Wednesday. After all, this is the chain’s way to spread the costs for opening on those dead days across the board. To do this they need coupons to promote these cheap days.

If independent operators want to go down the coupon path then they need to know the cost of there product. Coupons should be a special occasion, such as a 10 year anniversary or “Pizza for Breast Cancer Day” where the net profits are donated to a local hospital or organisation. You should always check with those organisations to get their support before you start this type of promotion. Get them behind it and it will have a bit more clout. They could do the media releases that would have the network to get your community support. Support the community in a genuine way and it will return ten fold. Dig in and show compassion for your community.

As I mentioned, the coupon monster needs to have serious research before you go down that path. This is a subject that could have an entire book written about it and we are trying to get the basics across. In my next article, that will appear in the October/November issue of PMQ’s Pizza Australia magazine I will discuss reasons for doing coupons. We will list some ideas and reasons that will help determine if coupons are a right or wrong choice. Sometimes they are good choices when used the right way. There is a lot more to be said and if you would like to discuss it in more detail, or work out a plan that suits your pizza shop, give me at ring at 0413 902 391 or email me at: aupizzanews@yahoo.com.au. Stephen Millar: International Pizza Consultant.