(This post originally appeared on Inc.)
The hearty souls who braved the crowds and weather in Times Square this past New Year’s Eve unfortunately had to brave something else: really, really expensive pizzas. How expensive?
According to a New York Post report, a Domino’s outlet on 40th street in New York’s midtown was delivering pizzas to hungry revelers at a steep price: $30 a pie, which is nearly double the normal cost. Although the practice isn’t new – the franchise has been doing so for more than fifteen years – it caught the attention of a few angry Twitterers…including the city’s mayor.
“Jacking up your prices on people trying to celebrate the holidays? Classy, @dominos,” Mayor Bill de Blasio tweeted from his official city account. “To the thousands who came to Times Square last night to ring in 2020, I’m sorry this corporate chain exploited you — stick it to them by patronizing one of our fantastic LOCAL pizzerias.”
So was Domino’s wrong to charge $30 for a simple cheese pizza pie on New Year’s Eve? Maybe. It’s certainly easy to go after the big, corporate bad guy like the mayor did. But, like a simple cheese pizza pie, the answer isn’t so simple, and for two reasons.
The first is that the big corporate chain that “exploited” its customers is itself actually made up of a lot of small businesses. Dominos is a giant, but its locations are independently franchised. The guy at the 40th Street location who owns the Domino’s franchise is really no different than any other small business owner in the city. Like them, his costs were probably higher due to holiday overtime. His profits, after his franchise fee, are his to keep. So isn’t it fair for him to charge what the market will bear, considering the competition?
Which brings me to reason number two: yes, there are “fantastic LOCAL pizzerias” as the mayor says. But those “fantastic LOCAL pizzerias” were also doing the same as the big corporate meanie. According to the New York Post report, locally owned pizzerias were charging $4 per slice that night, which means that an entire pizza pie would’ve been $32, a price even higher than Domino’s!
So was it right to charge so much? Unfortunately, there’s no correct answer. While some people were annoyed at the alleged gouging, others weren’t so concerned. “What’s wrong with Domino’s cashing in? Everyone else was doing it last night,” one Brooklynite said. “The mayor has more to worry about. How about he fixes the trains?” Many others agreed, with some defending Domino’s as “important to the neighborhood” because the business employs people and delivers a good product.
It’s why Uber can impose a surcharge on a rainy night, an NFL playoff ticket can sell for many times its face price on StubHub and a flight to Pittsburgh can cost as much as a flight to Rome over the holidays. If people are willing to pay for these things, then so be it. It’s a free market, right?
True, but business owners must still be careful.
It’s 2020 and it’s an election year. During this election year, we’re going to be hearing a lot of talk about capitalism, socialism, the benefits of the free market along with the growing divide between rich and poor. Businesses this year – big and small – need to consider their actions in light of this environment. The wrong words in a marketing campaign, a questionable firing, a too-high-price on a highly demanded item could easily draw media attention – the wrong kind of media attention – and create a public relations problem.