Pronto Pizza Analysis

Pronto Pizza is a family-owned pizza restaurant in Vinemont, a small town of 20,000 people in upstate New York. Antonio Scapelli started the business 30 years ago as Antonio 's Restaurant with just a few thousand dollars. Antonio, his wife, and their children, most of whom are now grown, operate the business. Several years ago, one of Antonio 's sons, Tony, Jr., graduated from NYU with an undergraduate degree in business administration. After graduation, he came back to manage the family business. Pronto Pizza was one of the earliest pizza restaurants to offer pizza delivery to homes. Fortunately, Tony had the foresight to make this business decision a few years ago. At the same time, he changed the restaurant 's name from Antonio 's to Pronto Pizza to emphasize the pizza delivery service. The restaurant has thrived since then, and has become one of the leading businesses in the area. While many of their customers still "dine-in" at the restaurant, nearly 90% of Pronto 's current business is derived from the pizza delivery service. Recently, one of the national-chain fast food pizza delivery services found its way to Vinemont, New York. In order to attract business, this new competitor has guaranteed delivery of its pizzas within 30 minutes after the order is placed. If the delivery is not made within 30 minutes, the customer receives the order without charge. Before long, there were signs that this new pizza restaurant was taking business away from Pronto Pizza. Tony realized that Pronto Pizza would have to offer a similar guarantee in order to remain competitive. After a careful cost analysis. Tony determined that to offer a guarantee of 29 minutes or less. Pronto 's average delivery time would have to be 25 minutes or less. Tony thought that this would limit the percentage of "free pizzas" under the guarantee to about 5% of all deliveries, which he had figured to be the break-even point for such a promotion. To be sure of Pronto 's ability to deliver on a