order Precinct Pizza tonight, I would obviously want them
to order directly through the store, because if they order
through the outside delivery company, I lose 25% to
30% of the profit.
But let’s take a closer look at the numbers. As I said,
I’m currently splitting deliveries between my in-house
team and outside third-party providers. If I had contracted out 100% of Precinct Pizza’s delivery business—a
total of $935,701 in sales—to outside delivery services in
2015, we would have given up $280,710 in third-party
I also calculated that payroll for the drivers that year
was $168,452, and the payroll taxes for those drivers
amounted to $20,292. In addition, we spent about $2,000
on uniforms, raincoats, hot bags and other delivery items.
The Non-Owned & Hired insurance premium cost for
that year was about $5,000. So if we’d gone 100% with
outside food delivery companies in 2015, the numbers
would look like this:
D Revenue lost due to fees: $280,710
D Savings on driver salaries: $168,452
D Savings on driver payroll taxes: $20,292
D Savings on equipment expenditures: $2,000
D Savings on insurance premiums: $5,000
Net loss: $84,966
As you can see, we would end up losing money if
we turned over all deliveries to a third-party company.
By continuing to use our own in-house delivery service in addition to a third-party service, we saved about
$85,000, compared to the model of using only an outside
USING THIRD-PARTY DELIVERY EXCLUSIVELY
If your pizzeria does lower delivery sales than mine,
the savings of in-house delivery will decrease. At a
certain point, it may actually make sense to do away with
in-house delivery service altogether, especially if you are
in a small market and can work with an outside delivery
service that’s reliable and professional.
Let’s assume your driver labor percentages, insurance
costs, taxes and expenses are about the same as mine. If
you generate $750,000 annually in delivery sales, you
would save about $68,000 by splitting your deliveries
with an outside company rather than letting that company handle all of your deliveries. If you make $400,000
in deliveries, you save about $33,000.
Once your delivery sales go below $250,000 a year,
it may make financial sense to use only an outside food
delivery service if one is available. The time and money
that you spend training, scheduling and insuring your
drivers, plus other delivery-related expenses, aren’t worth
the small amount of money you’d save in keeping an
in-house delivery team.
For Precinct Pizza, due to our delivery volume, it’s a
no-brainer—the numbers show that we should not give
Once your delivery sales go
below $250,000 a year, it
may make financial sense
to use only an outside food
delivery service if one is
After dividing his delivery business between in-house team members like Amanda Horton (above) and third-party providers, Precinct Pizza’s Rick Drury
says his in-house delivery continued to thrive and his overall orders increased.