By Eric Brown
The tiny peanut is posing a big challenge to Chris Epperson, president of The Virginia Diner, which also operates a gourmet peanut mail order and Internet business.
“Customers today expect free shipping,” she says. “But the cost to ship a can of peanuts to the next town can approach—or even exceed—the price of the peanuts. Ground service is very expensive.”
In other words, the cost for shipping peanuts isn’t exactly, well, peanuts.
The Virginia Diner, located on US 460, has been a reliable refuge for hungry travelers passing through Wakefield since 1929. “We like to say, The Virginia Diner is in the middle of nowhere on the way to somewhere,” Chris quips.
Years ago, The Diner branched out by establishing its peanut business. It has become so successful that The Diner lays claim to being “The Peanut Capital of the World.” The Diner also markets country hams.
Each day, The Diner ships about 200 packages of peanuts, a figure that spikes as high as 12,000 in December—when its rings up 80% of its annual business. The shipping spikes again just before Easter.
“We have a very heavy product for the value,” Chris says. “The delivery costs are eating us up. We are looking at options that will reduce our shipping costs, beginning with the shipper.”
She calls UPS, The Diner’s current shipper, “the Cadillac of delivery companies.” It is highly reliable, but very expensive.
“UPS adds a variety of surcharges to each shipment,” she says. “We could pay as much as $8 to ship a $10 can of nuts.”
However, the idea of changing delivery companies gives Chris pause because of prior experiences. Before returning to UPS, Chris recalls how one shipper closed its doors just before Thanksgiving—on the cusp of peak season. “It was a disaster for us,” she says.
Another shipping company seemed consistent only in delivering terrible service. Cans of nuts arrived dented; some were delivered half eaten. One driver drove across the front lawn of one of the largest corporate customers while delivering the order.
Still, The Diner is in discussions with two delivery organizations and Chris is determined to lower costs.
In the meantime, the company is pursuing greater efficiencies.
“Right now, we’re being charged for three pounds when we have a shipment weighing 36 ounces,” Chris says. “We are trying to better consolidate our boxes.”
The Diner is also looking at the Internet—not just the interstate—for major improvements to its business. The Diner has been using its operating system since 1992, continually modifying it along the way. But this system can no longer keep up.
“We are moving our website—the whole online business,” Chris explains. “Our shopping cart is not typical of what you find on the Internet. Our fulfillment software is complex because some customers will want to download and ship to 500 different addresses. We are also trying to show availability of items online and what’s on backorder. That’s what we’re working toward.”
It is a monumental task and may cost upwards of a half-million dollars.
“The Internet is part of our long-term plan,” says Chris. “Our surveys show people use our catalogs to place their orders. We also see how catalogs can drive people to the Internet. But I don’t want to focus on driving people to our website just yet. Our site is getting better; when it’s ready, we will leverage it to its full potential.”
For The Diner, the little peanut is big business.
