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 edibles..so 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 wait..it 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: 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