FORGET FINANCIAL LITERACY: CHECK YOUR PIZZA LITERACY

Don't get too worried about financial literacy. Improve all forms of literacy. Compare what’s said with what’s implied. Seek to understand the fine print. Look for what’s left out.

With practice, you can.

It's Financial Literacy Month. It's also Pizza Month. Let's combine both and look at your Pizza Literacy. We’ll examine a flyer I received. The name of company doesn’t matter since you’ll find similar approaches taken by others.

Any Size

You can get any size of pizza for $14.99 (including three toppings, two cans of Coke and one dipping sauce). Tax and delivery is (as expected) extra.

Merriam-Webster says that ANY means EVERY: “used to indicate one selected without restriction; <any child would know that>.”

Here ANY SIZE means Small (10”), Medium (12”) or Large (“14”). Extra-large (16”) costs $15.99 and Party Size (15”x21”) isn’t available. How’s that for playing with words?
If you’re paying $14.99, you get the most value with the Large pizza. If you buy Medium or Small, you overpay. Why would the pizza chain make this inane offer? Perhaps some customers get fooled and get a Small for the price of a Large. What’s left over, you can reheat and eat later.

Say you pick Large. You can’t tell how much you’re saving because the regular price isn’t shown anywhere in the flyer. Our Costco has nice 18” pizza with three toppings for $13.99.

No Toppings For The Price Of One

Here’s another offer.

This time you have a choice of pepperoni or cheese for $4.99 (walk-in only). Since pizza comes with cheese, they're saying you have a choice of one topping or none. If you get cheese, you're paying more — unless they pile on more cheese.

Trans fat

Saying "no added trans fat" is not the same as "no trans fat". Maybe there's already trans fat in some of the ingredients. If so, how much? Why can't that trans fat be removed too?

Also, making the pizzas fresh doesn’t mean the ingredients are fresh, organic or free of preservatives.

True Price

Grocery stores show the price per unit. Say dollars per pound or per 500g. That helps you compare different packages.

With pizza, there's no unit price. There’s no standard size for a slice. The flyer shows that a Small pizza has 6 slices (13.1 square inches) while a Large has 10 (15.4 square inches). In the offer, the smaller slice costs $2.50, while the larger slice costs $1.50.

Fine print

The offers are subject to expire without notice. Why? If a pizza chain runs out of pizza, they've got big problems. Maybe they're saying that if mistakes that hurt them are discovered, the offer gets pulled.

The coupon implies you can get chili for $1 but the fine print says you’ve got to buy one chili at full retail price first. There’s no mention of how much chili you get or the price.

The coupon is valid from Monday to Sunday. Doesn't that mean everyday? Maybe not. The Beatles sang about Eight Days A Week. Maybe there's an extra day we don't know about.

Donations

Companies like to show they’re doing some good with the money we give them.

This chain has raised over $1 million. That’s great, but over what time frame? Over a month is much more impressive than since inception, which could be years or decades. Saying “proceeds will be donated” implies the money was raised now. Maybe the money was raised in the past but never paid out.

Generosity is better measured based on what you give from what you have — donations as a percentage of pretax earnings. Among US companies that give the most in 2010 (Forbes), Kroger is #1 with 10.9% and Whole Foods is #10 with 3.4%.
There’s no mention of how much gets donated per purchase.

Hungry For More?

The pizza flyer leaves out important information. Wouldn’t you like to know the ingredients, calories, sodium, cholesterol and fat? Maybe those details are (buried) on the website.

The flyer raised other questions but you get the idea. It’s easy to get less than you expect if you don’t pay attention. Imagine what happens with complex financial products like investments and insurance.

“the quality of advice you get from a financial adviser is likely to be tied directly to your financial literacy” — SmartMoney (Apr 2012)

Get more literate.

Links

• The ABCs of 1-2-3: the key to financial literacy / numeracy
• Why we accept airport security but deny our financial security
• A short quiz about your financial foibles
• Repairing your computer vs fixing your finances
• Where are the customer ratings for advisors?
• The cost of getting advice from your banker
• Is the best advice free or for-fee?
• Do you understand compound interest?
• $1,000,000 after taxes on investment growth
• The fine print taketh away
• American companies that give back the most (Forbes, Oct 2011)

Podcast 196

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PS I feel like having pizza