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Sneaky pizza fees are here to stay

Did you even know that you're being charged a pizza delivery fee? And we have no one to blame but ourselves.

By MSN Money Partner Jan 20, 2012 2:26PM

This post comes from Len Penzo at partner blog Len Penzo dot Com.

 

Len Penzo dot Com on MSN MoneyI love sleight-of-hand tricks, and occasionally a co-worker of mine named Fred will stop by my office and regale me with some truly amazing acts of prestidigitation.

 

I'm always left in awe every time he seemingly pulls a coin out of thin air or makes one vanish -- despite the fact that I know ahead of time he's going to pull a fast one on me. It doesn't matter how hard I concentrate on those coins; I always succumb to Fred's subtly masterful acts of misdirection.

 

Needless to say, the art of deception can be very advantageous to those who've mastered it. In 2008, magician David Copperfield reportedly used his sleight-of-hand talents to deceive a mugger into thinking he had empty pockets -- even though they actually held his wallet, passport and cellphone.

 

Today, even the pizza companies are honing their sleight-of-hand skills. Take delivery fees, for example.

 

My experience has been that most pizza joints rarely mention their delivery fees when quoting their prices over the phone. That's pretty sneaky, if you ask me. Usually, the conversation typically ends up sounding something like this:

 

"OK, sir, you ordered two Pizza Planet pepperoni specials for delivery. That'll be $26.67."

 

"Hold on. Those pizzas were advertised at $11 each. I know taxes are high here, but they're not that high."

 

"Well, sir, that total includes a delivery charge of $2.75."

 

"Whoa! Two-seventy-five? Say, your last name wouldn't happen to be Copperfield, would it?"

 

"No, sir. Why do you ask?"

 

"This isn't Fred, is it? Why on earth are you moonlighting at Pizza Planet?"

 

"Who's Fred, sir?"

 

"Oh, never mind."

 

OK, the part of the conversation where I talk about Fred is a stretch, but you get my drift. Post continues below.

Delivery charges are illusory in other ways. Ironically, they don't always go directly to the driver. Instead, most -- if not all -- of that money is typically used to boost the bottom line by offsetting business expenses like the cost of ingredients and employee wages.

 

It turns out that the major pizza chains began dabbling with delivery fees in select areas about a decade ago. Back then, Pizza Hut's delivery charges were typically 50 cents, while Papa John's and Domino's hovered around a buck.

 

Len's pizza chartHowever, those fees have increased dramatically since then -- especially when compared with the inflation rate over the same period.

 

Where I live, Papa John's levies a $2.75 fee for delivery. Meanwhile, my neighborhood Domino's charges $1.85 to bring their pies to your door, and the local Pizza Hut gets $3.

 

Out of curiosity, I surveyed two other local pizzerias to see what they were charging for delivery: Round Table tacks on an additional $1.50, and an independent joint down the street from me charges $3.

 

If you ask me, the most likely reason why pizza delivery fees continue to outpace inflation is that they provide a subtle way of disguising price increases. That monetary legerdemain allows pizzerias to painlessly raise prices while continuing to advertise pies at seemingly bargain rates.

 

By the way, in case you're wondering, those pizza delivery charges only became permanent and more widespread once it became apparent to the major pizza chains that they wouldn't result in an appreciable loss of customers

 

Of course, with all the hocus-pocus going on, it's uncertain exactly how many people realized they were even being charged a delivery fee in the first place -- but that really doesn't matter now. We've got nobody to blame but ourselves.

 

Unfortunately, because we didn't balk when we had the chance, pizza delivery charges are most likely here to stay.

 

In fact, they're so firmly entrenched in the market now, I suspect even David Copperfield couldn't make them disappear.

 

More on Len Penzo dot Com and MSN Money:

312Comments
Jan 21, 2012 12:10PM
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As a delivery driver myself I can speak to the fact that the delivery fee is just a way to drive profits to the bottom line. The franchise that I work for only pays drivers $4.29 an hour while the driver is on the road and 1.02 per delivery. they charge 2.50 for delivery. I am fortunate that I am in a high volume store.(currently averaging 9 to 11 deliveries in a shift) Luckily this store has been here a long time and has a large  number of high repeat business. the average tip  is between 2 to 4 dollars , sometimes the lucky Fiver. And occasionally the stiff that actually laughs at you when handing you exact change  or make you go to your car to hunt for the penny that you didn't happen to have in your pocket. Drivers deliver your food to you  in what should be the fastest , friendliest, and safest way possible. While at the same time put themselves at risk of accidents , robberies, or worse every time they get behind the wheel.

I myself had a drunk driver repeatedly ram my  car into oncoming traffic because I wouldn't turn against a red arrow. Two years of pain drugs and surgery later and medical bills totaling  over 120k . And because it wan an intentional act, the insurance on the car he was driving didn't have to pay. Fortunately I am properly insured to drive my vehicles for deliveries.( which is almost double what normal insurance costs here) To top it off he was driving his mothers car  on probation for his 3rd dui already with no license .Drivers are shot,stabbed,robbed all the time. Yet they strive daily to get you your food in a  hot fast and friendly fashion.  PLEASE REMEMBER they risk a lot to get you that pie.......If you go out to eat  typically 15 to 20% is a good tip, most drivers rarely see 10% on average and they risk their lives every time they come to you so that you may enjoy  pizza in the safety and comfort of your own home or business. The delivery fee is for the store  PLEASE TAKE CARE OF YOUR DRIVER.

Jan 22, 2012 12:57PM
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  I own a small pizza business in a small town. We do in fact charge a delivery fee. We also will deliver no matter how small the order is. So if you do not want to leave your house and want to order only a sub we will deliver that sub plus a 2.00 deliver fee. At the end of the night we pay our driver a percentage of that fee for gas. We also pay our driver minimum wage,not as a tipped employee so they average out about 15.00 dollars an hour with wages, tips, and gas money. Not bad for a small town in Ohio!  I assure you I am not getting rich off the left over from delivery fees! By the time I pay my workman's comp and etc trust me it almost costs me more to have a driver!!!! Until you own and operate a small business you do not realize the cost it takes to run that business. So for those of you who believe we are getting rich by charging you 2.00 dollars to deliver your food while you sit in a nice warm house and my driver is out in snow storms, braving unplowed streets and sidewalks I feel 2.00 deliver fee is a small price to pay including a tip to do what you did not want to do!!  We always give the total including the price for delivery it also states on my menu the delivery charge. SO as many of you said you have a few choices make your own, pick it up, or have it delivered to your home, fresh, hot and ready to eat!! As a mother, business owner, and someone who wear a million hats so to speak would be more than willing to pay 2.00 to have my dinner delivered after a long day! Happy eating..and remember tip your driver...they too come out in sleet, rain, and snow so you don't have to!!!
Jan 20, 2012 6:48PM
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I deliver pizza.  Not a career option, rather a part-time job I use to help me pay for the costs of living.  The company I work for charges a delivery fee of just under $3.00, of which I am compensated 0.90 for the first delivery.  If I take two, I get just 0.50 for the second.  They keep the rest.  I also get paid minimum wage.  Even if I didn't deliver pizza, if I order at a restaurant or get delivery, a tip is a planned part of the expense for my food.  If I don't feel like tipping, I go in and pick it up.  I deliver a quality product fast.  I deliver it to you more efficiently than you could do yourself.  I drive your area every day.  I know the most efficient route to your house.  Too often, people don't recognize the effort I put in to get their food to them on time and hot.  It is really disappointing...  People like dic_hurtz should be ashamed of themselves.  You were provided a service.  Why take it out on the person delivering your pizza instead of the store owner who is keeping the bulk of the money.  Not a very intelligent argument.  Instead seems more of a excuse for why you are cheap and ignorant.  By the way, your handle is a testimony for your shortcomings.

Jan 20, 2012 6:50PM
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This article is hilarious. I happen to be typing this at work managing a pizza restaurant. We charge a delivery fee of $3. We tell every customer "your total with tax and delivery is..." and the $3 goes to the driver. We don't get a cent of it. Now some people will ask if that $3 is a tip, the answer we give is no and that tips are customer discretion, the $3 goes to help offset their costs for gas and upkeep on their vehicles.

Now here is my problem with the joker that wrote this article. Why are you ordering food for delivery? It's because 1. You don't feel like cooking yourself food (or going to the store to buy groceries to go home and prepare) and 2. You don't feel like driving anywhere to sit and eat or pick up food and bring home. So you call the pizza place and they COOK YOU DINNER and BRING IT TO YOUR DOOR. That's why you are paying a delivery fee. The author of this article is probably the dude who starts calling after 15 minutes asking where his food is (the answer is usually "cooking").

If you want to write a column about people being fleeced, why do no one in the news business do investigative reports on the fact that banks are literally stealing money from millions of people everyday by putting holds on funds that should never have been taken or (on credit card returns) been immediately returned to peoples accounts? 

If we void a transaction while running a card, we never see a dime from it. It's an immediate no sale. Yet the banks put a hold on the customers money because there was an attempted transaction for 3-7 business days. It's literal theft, but let's write about pizza delivery charges.

Oh, by the way. The other reason you see delivery charges from everyone now is that it's the only way you can get anyone to work as a driver when the gas companies are raping us to the toon of 800 billion a year in profits as we pay $3-4 dollars a gallon for something that cost them nothing to make.

This is a great article... if your a sheep.
Jan 21, 2012 4:01AM
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As a current delivery driver for one of the large pizza companies, I can speak to this issue. 

 

First off, MOST delivery drivers these days make well below the Federal minimum wage.  they are paid in the range of $4 - $5.25 per HOUR under tip credit.  There are, however, 7 states that do NOT allow the use of tip credit.  If you are a driver out there who DOES make minimum wage, good for you.

 

2. The  delivery charge or any portion thereof really does not go directly to the delivery driver.  It goes directly to the store/company into the general revenue account.  Then they expense out the driver  reimbursement to the driver from an expense account.

 

2a. Most drivers are vastly under reimbursed by the company for the use/abuse of their vehicles.  most places only reimburse their drivers, on average, about 25 cents per mile (really covering only the gas they use during a shift)  driven despite the IRS suggested rate of 55 cents per mile.  All other expenses such as vehicle insurance (sometimes at a rate of 2 to 3 times the cost of normal insurance), repairs, regular maintenance, wear and tear, and depreciation are borne BY the driver out of their pocket (meaning out of their tips and base pay).  Alll the company has done is shift expenses ie. the IRS suggest rate of 55 cents per mile, to the driver who now loses 30 cents per mile driven

 

And to those who will claim that drivers can "claim" their unreimbursed mileage on their Federal taxes, think again.  Even IF you can claim that mileage, you will only "get back" about 15-20% of your actual unreimbursed mileage dollars.

 

Third.  More and more companies are trending toward tip credit wages while a driver is on the road.  This is because of pending lawsuits utilizing the Federal Dept. of Labor's 20% rule (look it up for details).  My personal experience with this during 2010 caused me to loose  $1800 to $2000 in income last year because my franchise went split wage (one wage on the road sub-sub minimum and one wage while in store minimum wage).

 

Fourth.  the larger pizza companies no longer enjoy a virtual monopoly in the business.  they now try and compete on price.  As in who can sell the cheapest pizza

 

Fifth.  The prices of commodities such as cheese (a basic ingredient for pizza) has risen sharply in the last 4 years.  As others have pointed out this is what partially drives the increase of the delivery charge.

 

Sixth.  ONE AGAIN PLEASE DO NOT EQUATE THE DELIVERY CHARGE WITH A BUILT IN TIP.

 

Seventh.  Please remember that each and every time a driver delivers a pizza to your house, they are literally risking their lives, limbs, and their vehicle to do so.  every week there are stories that detail robberies, murders, and beatings of delivery drivers.

 

WE ARE required to deliver in ALL weather situations.  This means blizzards, sub-zero temps, heavy downpouring rain, boiling heat, etc.  All the company sees is $$$ signs and really does not care about the safety of their employees in that respect.

 

 

Jan 21, 2012 7:52PM
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If pizza places want to charge a delivery fee, then they can get a few cars! That way the delivery drivers are not putting the wear and tear on their own vehicles---which they have to pay the repairs on themselves.  I will always tip the delivery people.  Most of them are students and people working more than one job just to get by.  If you don't want to tip the delivery people then either make it yourself or drive to get it!
Jan 22, 2012 6:56PM
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As someone who's worked as a pizza deliverer, all I'll say is this: We have no control over the delivery charge, and we don't make a profit off of it. The delivery charge is a corporate decision, so even if we "told off our cheapo bosses" (for which we'd probably lose our jobs), I doubt anything would change. We get a flat amount of that charge regardless of time and distance, so usually it'll cover our gas but not always. That's not even factoring car maintenance, which is quite substantial considering the amount of wear driving for a living does.

Just some food for thought if you want to punish the driver for fees that he / she had no part of and won't make a profit off of anyway. You'd tip a waiter to carry a dish 30 feet to your table, but you wouldn't tip someone who uses their own resources to bring dinner to a stranger's doorstep?
Jan 21, 2012 12:08PM
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Not all is at it seems.  I own a pizza restaurant.  We own our own delivery car.  We have a few employs as well as owners who are scheduled to do deliveries.   Yes we do have a delivery charge but that doesn't even cover gas, maintenance and commercial insurance, so we cover the shortage.  We pay our employs, even the drivers (other then the owners) an hourly wage.  All tips are given to the employs, allocated by how many hours they worked that week.  So be careful to not lump all pizza business' in to one lump.  Most people have no idea how difficult the restaurant business is and all the cost involved.  One last word: to have such a personal service at your door seems odd to me that it would be expected for free. 
Jan 21, 2012 8:32PM
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I am going to solve your problem. Get you lazy butt out to the car and pick it up. then you will have no excuse to whine................ See how easy that was. I love it when a plan comes together.
Jan 21, 2012 12:50PM
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I always order from a small privately owned establishment in the small town where I live. There is next to no crime here so the drivers are pretty safe. But, growing up, my 4 sisters all worked as waitresses at some time. After learning of all the crap they had to endure from rude, crude, and socially beligerent customers, I cannot in good conscience short a waiter or waitress on their hard earned tip!!! Usually those who can most afford to pay are the most beligerent and cheap!!  The drivers endure this, as well as, the expense of operating their own vehicle!!!  My tip is always a reflection of my appreciation for their service to me! I always give them 20-25% in cash and greet them with a smile and a joke or two!!  The big companies screw their customers and employees alike. Then after being screwed by their emlpoyers, these drivers are screwed again by lazy, rude, cheap-skate customers!! If you are one of these customers I forgive you because it's probably not your fault. Your mom couldn't teach you any manners if she didn't have any herself!!!
Jan 21, 2012 6:02PM
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don't like it?, get off your **** and go pick them up!, easy
Jan 20, 2012 11:06PM
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well i own a pizzeria an i disagree ! we do charge $2 for delivery all of which goes to our drivers 
i cant speak for the chains as to what they do but im an independent . the reason we started the fee was to help our drivers earn enough to make the job profitable. we started the fee when gas prices went an doubled. the fee is basically a way to cover the gas for the car an it was actually poor tipping that lead us there as people seemed to use pizza delivery as away to save money by not driving there car
but as with all services people should be prepare to pay for it 
Jan 21, 2012 10:25AM
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What  a racket!! Most pizza delivery guys use their own car,pay for their own fuel & maintainance &

get paid minimum wages. If they're going to charge for delivery the driver should get it, I mean really ! that's just wrong to be robbing their employees & their customers!!!!

Jan 22, 2012 6:43PM
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Tip the delivery person or go get it yourself, cheapskate!
Jan 21, 2012 5:21PM
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Well to avoid all the fees, remember the commercial, It's not delivery, It's Digiorno's !
Jan 22, 2012 10:15AM
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So why are we expected to tip if they are charging for delivery?

The kids that deliver expect a tip.

What is the delivery charge for?

Are they giving this money to the delivery kids? If they aren't what is the money for?

What is it costing the company to deliver? The kids are doing it in their own vehicles.

 

Jan 22, 2012 6:16PM
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Of course there's a delivery. that's the cost to cover paying an employee the time to deliver food to you, cause your to lazy to get off your a** and get it yourself.
 I have no problem paying it, I'm buying a service so I can stay home in my pj's. I also tip the delivery person 20% of the bill.  It's OK to be Lazy sometimes, it's OK to be Cheap sometimes . But You can't be both at the same time, it's one or the other. 
Jan 20, 2012 8:41PM
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I would completely understand a delivery fee if the pizza place was providing the vehicle, paying for the car insurance & wear on the vehicle. But expecting their delivery guys to deliver a pizza, using their own vehicle, insurance, and paying for their own maintenance.....and then to add a delivery fee that these guys never see a dime of.......That's a rip-off!
Jan 21, 2012 11:31AM
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I worked for Pizza Hut for over 10 years as a Delivery Driver. In those 10 years, I only got 50 cents per delivery. The only time it went up is when the gas prices went over $4.00 a gallon; and that was only an increase of 25 cents for a total of 75 cents per delivery. And, if you went to a hotel with 7 different orders for 7 different rooms, you STILL only got 50 cents for that trip. So, it's REALLY 50 cents per DESTINATION, not per delivery. I wish I had a nickel for every customer who was shocked to hear me tell them that I don't get one red cent of the delivery charge. The 50 cents I got was coming from the daily bank I was given at the beginning of my shift. I haven't worked there since they raised the price of delivery to $3.00. It was $1.50 back then. But, if you are willing to pay that much for delivery, you must have enough money to give the driver a decent tip. I could tell you stories about all the cheap-screws I've met over the years but, that would take weeks. My best tips came from the lower-middle class working man. Rich people and foreigners are the WORST tippers, for the most part.

 

TRUE STORY: Back in 1996, I delivered a pizza (2, actually) to Tiger Woods. He had just turned Pro and moved into his house in Windermere, Florida and signed a 60 MILLION lifetime contract with Nike and was 20 years old. Well, when I got to his house, he wasn't there. He was fooling around with his friends on the property somewhere. When he finally showed up(15 minutes later), he pulls up in his convertible Mercedes and says "Hey, how are you?" I said "Fine" but, in my mind I was saying "Where the hell have YOU been, ****! Not all of us are millionaires and our time is money!" So, he asked me how much it was and I told him: $14.03. Well, he then proceeds to reach for his wallet and open it up. Then, in front of me, he pulls out all of his cash and in a sort of bragging fashion, he begins to flip through each bill; starting with the $100's. He kept making his way through until he got to the $50's, then the $20's, then, finally he got to the $10's and the $5's and gives me $15.00 and says "Here, this ought to take care of it." Are you kidding me???? First, I have to wait for your sorry **** 15 minutes while I'm missing out on other delivery opportunities. Then, when you DO decide to stroll on home, you flash what was about $3,000 in cash in my face only to give me a 97 cent tip?!?!?!??!?! Well, needless to say, I couldn't say what I WANTED to say to him. But, he eventually got his karma.

Also remember, the drivers have to use their own cars and pay for their own gas and maintenance and insurance. So, next time you order a pizza and have money to burn on delivery charges (or, are just too lazy to go pick it up yourself that you don't care how much it costs), don't forget the driver who just saved you a trip to the pizza place to pick up your dinner or lunch. Most of them are doing it to make extra money. But, for a lot of them, it's their only source of income and, not by choice. Its what they have to do to make ends meat until they can find another full time job. Bottom line: If you can afford $25.00 for a pizza or 2 AND don't care about being charged a delivery fee,  you can afford to give a decent tip. Don't screw over the person bringing you your meal.

Jan 21, 2012 10:01AM
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I have to admit, as a stupid American consumer I thought the driver got most or all of the delivery charge. In thinking that we have sometimes been a little low on the driver's tip. We will now take care of our hard working driver a bit differently on the tip. They really do a difficult and dangerous job considering all the drunks out on the road when we order our late night snacks. They also have to worry about getting robbed and beat up for the little bit of money they carry.

 

I agree the pizza joints should just price their pizza higher by a dollar or two if that is what they need to stay in business and make a profit. They shouldn't hide behind the drivers to increase their cash flow. The pizza price should be for the pizza and the delivery charge should 100% go to the driver.

 

Added 5 hrs after original post

 

Looks like we have at least 3 others dumber then I am.... They must not work for a living like the rest of us.

 

I'm about to order a pizza now.... $19.99 large pizza and 20 wings coupon special. I will add toppings and the bill is usually about $27 with delivery fee. I will tender $35 with no change needed. Making the original advertised price almost double..... I still don't have to go anywhere for dinner. A little snow in the air and no inturuption on my college B-ball games.

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