Sandro's Pizza Case

Sandro’s Pizza

Value Proposition

Sandro’s pizza wants to differentiate itself from its competitors by offering a better service, in terms of both high

quality pizza and fast delivery systems by using oven-installed vans that can keep pizzas fresh for up to 2 hours. From

customers’ perspectives, it is not unjustifiable to say the quality of the pizza is better than that of traditional method.

But customers may not necessarily experience a faster service, since Sandro’s current delivery process of ordering

requires a time-consuming information relay (Customer-Clerk-Coordinator-Driver-Coordinator-Clerk-Customer).

When a customer orders a pizza, he will have to wait on the phone for a couple minutes before his order can be

confirmed. Therefore, though the delivery time is shorter (Appendix 1), the total time from making the call to receiving

the pizza might not be significantly less than that of the hotshot method used by competition. Another obvious

drawback of Sandro’s system is that Sandro’s customers can hardly customize their pizzas, for Sandro’s pizzas were

produced before the order was made.

Process Diagnosis

After a year of testing the new delivery system, Sandro realized a lower profit margin 2% versus the hotshot method of

16% (Appendix 2 for Profit/Loss comparison) despite a strong growth in sales. To find the root of the problem, the cost

drivers associated with the delivery system were identified (Appendix 3) and a comparison of service blueprints for

Sandro’s and Domino’s was also conducted (Appendix 4).

Examining the cost drivers, we found three areas that Sandro’s can improve. First, employee meals/waste accounts for

9% of sales due to 2-hr inventory held in vans and poor demand forecast. Second, wages of order preparation (delivery

coordinator) accounts for 4% versus 0% in hotshot method. Apparently, a delivery coordinator is not needed