Higher gas prices may drive deliveries

However, there have been less obvious effects on business that just might turn out to be positive.

When Tim Somerfield and Tina Jones started Munchy Man Delivery Service in February 2005, gas was $1.49 a gallon, Somerfield said. In the eight months the business has been open, the co-owners have seen the price of a gallon of gas reach as high as $3.19.

“It did have an effect on us; we weren’t making as much on our bottom line,” Somerfield said.

Both Singh Hundal, owner of Mr. Goodcents Subs and Pastas, and Todd Wiesehan, co-owner of Imo’s Pizza on South Glenstone, said they increased delivery charges to alleviate some of the cost of the rising gas prices.

Fees have increased from 50 cents to $2 at Mr. Goodcents; Imo’s Pizza delivery charge was raised 45 cents to $1.95. Both business owners said that the extra cost goes directly to the delivery driver.

“It’s a little harder to find people that want to deliver. We’re trying to make it as profitable as we can,” Wiesehan said.

Hundal and Wiesehan both expressed concern that customers will tip drivers less because delivery fees are higher.

Hundal said he’s already noticed that tips are slightly lower at Mr. Goodcents. At Imo’s Pizza, Wiesehan said it’s too soon to tell.

Somerfield said he’s seen the opposite reaction among his customers, but the business concept is a little different, too. Munchy Man delivers meals from 35 local restaurants and also offers delivery of convenience items and groceries.

Somerfield said that the grocery shopping service charge is based on a percentage of the total bill; fees range from $3 to $5 for restaurant deliveries and convenience items.

“We always said that most delivery charges would be $4, and we’re still trying to stay in that range,” Somerfield said.

In the research Somerfield and Jones did before opening Munchy Man, they found that maintaining reasonable pricing was key.

“People didn’t want to pay delivery fees that were equal to the price of a meal,” Somerfield said. So when gas prices leaped, Munchy Man delivery charges stayed the same.

“I have had people tip extra because they appreciate that we’ve kept our prices the same – especially when gas was $3.19 a gallon and we were still charging $4 for delivery,” Somerfield said.

He said he hopes that the profits lost to gas price increases will be made up in quantity.

“Even if gas prices go up, we hope there are three times as many people ordering,” Somerfield said.

Noting that the number of deliveries increased when fuel prices passed $3; Somerfield speculated that customers decided to conserve their own fuel and opted for the convenience of delivery.

The higher fuel prices did reinforce the importance of streamlining orders and optimizing fuel efficiency.

Somerfield said that his drivers no longer drive around until the next order comes in; they now park between orders to save gas. At Imo’s Pizza, everyone’s paying a little more attention to the way deliveries go out.

“It’s something we’ve always done, but now it’s even more important to group orders together. If we can speed up one order to get it in with a delivery about to go out, we’ll do that,” Wiesehan said.

For now, the food delivery business seems to be holding steady, and business owners are watching gas prices carefully.

“If the cost continues to go up, we will have a problem,” Hundal said.