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Rounding & Cheese

Yesterday for lunch I stopped at a local piz­za joint for a cou­ple of slices and a diet cola, I bought 3 slices, and told the guy that he need’nt heat them up, because I wasn’t going to eat them for ‘hours’, he put them on a paper plate and asked me…

“you need a bag?,” now there was no snap­py retort, or abu­sive con­ver­sa­tion I stop in this place fair­ly often and any form of abuse is just going to yield me sali­va on my i chilled, at least ver­bal­ly, I stared at him and ner­vous­ly smiled, hadn’t I said I wasn’t eat­ing them for hours? did he hon­est­ly think I was going to walk around with loose cold piz­za on a ‘less than qual­i­ty paper plate’, The whole exchange up to this point was very awk­ward, but got bet­ter.

so I got my bag ‘o slices and my cup­p-a-­coke, and he rang me up, my total was $6.35, I tossed out a tenspot and he sweati­ly hand­ed me my change, 4 bucks??? whatthe­duece? so being me I ques­tioned it.

S: “You gave me the wrong change…”
Piz­za: “I smoothed down”
S: “smoothed?”
S: So you smoothed away 25 cents off my bill?
Piz­za: yeah, makes the change eas­i­er.
S: I see… okay, lat­er [and I head­ed towards the door ]

S: Say, just out of curiosity how many slices do you thing ya’ll sell in a day?
Piz­za: We go through about 50 — 70 slice pie’s a day on the week­days, and prob­a­bly twice that on a Sat­ur­day or a Sun­day.
S: Wow that’s a lot of pizza’s. [and I left]

So the geek in me has to do the Math, lets assume that Piz­za dude ‘Smooths’ away any change under 50 cents, lets start with a week­day.

Monday’s Slice Sales: 70 piz­za pies x 8 slices = 560 slices;
Monday’s Slice Rev­enue: 560 slices x $1.75 = 980 bucks [poten­tial­ly at least]

To ful­ly com­pre­hend the impact of ‘Piz­za Smooth­ing’ we need to make an addi­tion­al assump­tion, the aver­age slice buy­er is buy­ing 2 slices and a small cola for a bill of $4.35

Monday’s Slice Sales Quan­ti­ty: 560 slices ÷ 2 = 280 sales
Monday’s Adjust­ed Slice Rev­enue: 280 x $4.35 = $1218.00

Still no change, so per­haps Pizza’s method­ol­o­gy is sound?… not hard­ly, we have to look at the impact on indi­vid­ual sales, remem­ber based on our orig­i­nal con­cept he ‘smooths’ away all change under 50 cents.

Monday’s Smooth­ing Loss­es: 280 x $0.35 = $98.00
Week­ly Loss­es: $98.00 x 5 + (​$98.00 x 4) = $882.00

Now I’m not an eco­nom­ics expert, but giv­ing away almost 900 bucks of rev­enue is prob­a­bly an eco­nom­ic no-no. If you think of it in Piz­za terms it’s like giv­ing away 504 slices of piz­za for free.

They could elim­i­nate ‘Smooth­ing’ cut the slice prices by 60% and still increase prof­it, AND they’d have the bestest + cheap­est piz­za in town.

And to think, my high school math teacher thought I was sleep­ing