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The Power of

PIZZA2014 STATE-OF-THE INDUSTRY REPORT

December 2013.indb 36 11/12/13 3:44 PM Click here for exclusive video coverage of the 2014 Pizza Power Report.

The Power of

PIZZA2014 STATE-OF-THE INDUSTRY REPORT

PMQ’s annual Pizza Power Report provides an in-depth look at the current pizza industry and an insightful glimpse into its future.

By Rick Hynum

here’s an invasion under way in the pizza industry. still like inexpensive, quick-service pizza, and they still enjoy Everyone from baristas to burger chefs, it seems, the upscale “slow food” experience, but there’s an in-between wants a slice of the action. The founders of Wetzel’s —called “fast casual”—that’s ripe for exploitation. Where Pretzels,T for example, put their own twist on pizza last year do you fit in? with (blazepizza.com), while Chili’s Grill & Bar By reviewing the past year’s overall numbers and examining rolled out a line of pies and flatbreads in early 2013. Smash- the trends in some detail, the Pizza Power Report has been burger founders Tom Ryan and Rick Schaden launched Live designed to help you plan for a more profitable 2014. We’ve Basil Pizza (livebasilpizza.com) in Denver earlier this year. culled data from a range of key industry sources, including And leading the offensive were Scott and Ally Svenson, who CHD Expert, Technomic, Mintel, the National co-founded -based MOD Pizza (modpizza.com) in Association (NRA), Euromonitor and RestaurantData.com. 2008 after making their fortune with Seattle Coffee Com- Let’s get started! pany in the United Kingdom. For independent operators, all of these big names—and the Predicting Pizza big bucks they attract—add up to stiffer competition at the It has been particularly difficult this year to estimate the pizza higher end of the market. But this trend also reveals something industry’s growth because our sources have not been unani- about consumers’ tastes—more discerning, increasingly sophis- mous in their analyses. But after weighing a wide range of fac- ticated, and, yes, a little pricier than you might expect. People tors, PMQ is predicting a modest increase of 1.16% in overall

December 2013 pmq.com 37

Pizza Power Report_December13.indd 37 11/19/13 10:06 AM State Rankings: Independent Pizzerias The chart below illustrates which states boast the highest percentage of independent pizzerias. GRAB A SLICE OF State Indepen- Chains Total % Inde- dent Units pendent PIZZA KNOWLEDGE! CT 940 137 1077 87% NY 4269 876 5145 83% MASTER THE BUSINESSES OF VT 150 31 181 83% PIZZA AND ICE CREAM AT NAPICS ’14! NJ 2125 460 2585 82% MA 1929 429 2358 82% February 9-10, 2014 NH 410 101 511 80% RI 276 82 358 77% Greater Columbus Convention Center • Columbus, PA 3152 1003 4155 76% ME 281 124 405 69% AK 94 45 139 68% DC 78 42 120 65% DE 190 107 297 64% OH 2025 1650 3675 55% Source: CHD Expert NV 341 296 637 54% pizza restaurant sales for 2013. Bear with of independent pizzerias vs. chain pizza FL 2302 1999 4301 54% us for a moment, and we’ll explain how stores for that period of time—both IL 1602 1421 3023 53% we arrived at that figure. chains and independents added and lost MD 706 628 1334 53% Technomic’s figures indicate a sales stores at a roughly equivalent propor- CA 3371 3259 6630 51% increase of 4.75% for the Top 50 pizza tion. Finally, we also factored in data WI 627 620 1247 50% chains for 2012. CHD Expert, on the submitted by industry researcher Keith IN 898 908 1806 50% other hand, showed a 2.4% decline in Gellman from RestaurantData.com. His MI 1389 1431 2820 49% SC 469 510 979 48% LEARN. EARN. SUCCEED. total pizza restaurant sales for the year research shows that, as of November 1, Keynote MT 113 129 242 47% ending October 1, 2013. Also weigh- 2013, there had been a record number EVERYTHING YOU NEED. NAPICS ’14. WA 630 735 1365 46% Address for 2014! ing in on the subject was Euromoni- of pizzeria openings. Additionally, Gell- VA 779 932 1711 46% Keynote speech: tor, which predicts a 4.04% increase in man’s data shows that pizza store open- Taste a little or a lot! thousands of food WV 286 344 630 45% pizza sales in North America (including ings have increased by an average of 13% samples, plus expert advice on using them. ID 157 192 349 45% Canada) for 2013. PMQ also took into per year since 2011. Gellman also esti- New, modern and money-saving: see the NC 883 1091 1974 45% consideration CHD Expert’s report on mates that nearly 10% of all restaurant latest equipment and tech gear for 2014. CO 465 575 1040 45% Cameron Mitchell, the rate of pizza store openings and clos- openings are now pizza concepts. UT 238 312 550 43% Go ahead, shop on site: Get show-only discounts. founder and president of ings between October 2012 and Sep- With these positive projections in Cameron Mitchell OR 374 506 880 43% Experienced Help: our pizza experts and tember 2013. In the latter case, we have mind and since the increase in the Top AR 282 419 701 40% peer-to-peer operators answer your questions “From Dishrags to Riches” reasoned that there was not a substantial 50 chain sales would strongly suggest a AZ 452 672 1124 40% difference between the open/close rates roughly equal increase in independent about everything pizza and ice cream. Listen to Mitchell’s inspirational story of GA 637 959 1596 40% starting as a humble dishwasher, climbing to HI 67 101 168 40% Is your pizza ‘The Best of the Midwest?’ executive chef and finally founding his own MN 518 789 1307 40% compete in pizza pizzazz for your share dynamic restaurant company. After opening TN 470 779 1249 38% of $15,000 in cash! JUst cameron’s, his first restaurant in columbus ND 66 110 176 38% in 1993, Mitchell grew cMR to become a NM 105 188 293 36% $39 33-unit multi-concept operation with annual WY 50 91 141 35% sales of $120 million. Mitchell sold two of his KY 327 615 942 35% brands in 2008 to Ruth’s chris steakhouse TX 1507 2868 4375 34% NAPICS is always a bargain! for $92 million. cMR now has eight unique OK 290 568 858 34% restaurant concepts located throughout • Register before Feb. 5, 2014 for JUST $39! the eastern U.s. LA 230 466 696 33% • Still a deal even on Feb. 9-10, 2014 for ONLY $59! MO 450 1051 1501 30% • Register at napics.com. AL 225 538 763 29% SD 62 155 217 29% IA 303 815 1118 27% MS 124 347 471 26% NE 107 315 422 25% Follow us—Twitter.com/napics SPONSORED BY: KS 187 558 745 25% Like us—Facebook.com/napics Official Media Sponsor Source: CHD Expert TOTAL 38008 33379 71387

38 PMQ Pizza Magazine The Pizza Industry’s Business Monthly Source: CHD Expert

December 2013.indb 38 11/12/13 3:45 PM GRAB A SLICE OF PIZZA KNOWLEDGE! MASTER THE BUSINESSES OF PIZZA AND ICE CREAM AT NAPICS ’14! February 9-10, 2014 Greater Columbus Convention Center • Columbus, Ohio

LEARN. EARN. SUCCEED. Keynote EVERYTHING YOU NEED. NAPICS ’14. Address for 2014! Taste a little or a lot! thousands of food Keynote speech: samples, plus expert advice on using them. New, modern and money-saving: see the latest equipment and tech gear for 2014. Cameron Mitchell, Go ahead, shop on site: Get show-only discounts. founder and president of Cameron Mitchell Restaurants Experienced Help: our pizza experts and peer-to-peer operators answer your questions “From Dishrags to Riches” about everything pizza and ice cream. Listen to Mitchell’s inspirational story of starting as a humble dishwasher, climbing to Is your pizza ‘The Best of the Midwest?’ executive chef and finally founding his own compete in pizza pizzazz for your share dynamic restaurant company. After opening of $15,000 in cash! JUst cameron’s, his first restaurant in columbus in 1993, Mitchell grew cMR to become a $39 33-unit multi-concept operation with annual sales of $120 million. Mitchell sold two of his brands in 2008 to Ruth’s chris steakhouse NAPICS is always a bargain! for $92 million. cMR now has eight unique restaurant concepts located throughout • Register before Feb. 5, 2014 for JUST $39! the eastern U.s. • Still a deal even on Feb. 9-10, 2014 for ONLY $59! • Register at napics.com.

Follow us—Twitter.com/napics SPONSORED BY: Like us—Facebook.com/napics Official Media Sponsor

December 2013.indb 39 11/12/13 3:45 PM sales, the staff at PMQ is splitting the difference be- Top 50 U.S. Pizzerias: Ranked by Sales tween the reports of CHD Expert and Technomic, Based on 2012 Sales thus arriving at our prediction that, when all the 2012 U.S. Sales % Change Rank Chain Name numbers come in, total pizza industry sales in 2013 (x1,000) from 2011 will have grown by 1.16% compared to 2012. 1 5,730,000 * 4.2 So what’s our final total? By our estimates, total 2 Domino's Pizza 3,504,000 * 3.1 sales for the period ending September 2013 amount 3 Papa John's 2,442,203 9.2 to $37,375,108,000. We derived this sum by taking 4 1,684,000 * 13.8 last year’s total sales of $36,786,524,044 (accord- 5 Papa Murphy's Pizza 733,800 4.5 ing to CHD Expert) and factoring in our estimated 6 CiCi's Pizza 505,000 * -2.1 growth figure of 1.16% over the past year. 7 405,000 -3.6 8 Chuck E. Cheese's 400,000 * -4.1 Store Counts and Averages 9 363,000 1.5 We have used CHD Expert’s data relating to total 10 Godfather's Pizza 318,000 * 1.6 store counts. The total number of stores, according 11 Hungry Howie's Pizza 290,800 8.8 to these figures, is 71,387. About 53% of all pizza 12 Jet's Pizza 214,000 * 15.7 stores are independents, while 47% are chains. (For 13 Marco's Pizza 190,392 32.3 the record, we are defining independents as pizzerias 14 174,952 19.1 with fewer than 10 units; any company with more 15 170,600 7.8 than 10 stores is referred to as a chain.) 16 157,000 * -5.4 17 Mazzio's Italian Eatery 151,000 * 0.7 According to our calculations, based on CHD’s 18 Papa Gino's Pizzeria 147,844 0.4 total number of pizza stores and our estimated total 19 Fox's Pizza Den 138,000 * -4.2 sales figure for 2013, the average per-unit sales for 20 Gatti's Pizza 133,329 -0.9 all U.S. pizzerias (chains and independents com- 21 Pizza Pro 114,000 * -3.4 bined) equaled $523,556, compared to $511,948 22 Villa Fresh Italian Kitchen 112,000 * -0.4 in the previous year. 23 Famous Famiglia 103,000 * 19.8 According to CHD, the chains’ total sales 24 Rosati's Pizza 101,000 * 2.5 amounted to $22,301,349,410 in 2013. The chains’ 25 Greek's Pizzeria 96,000 * 1.1 average per-unit sales equaled $668,125 in 2013, an 26 93,650 * -5.4 increase from $653,859 in 2012. 27 89,000 * -1.1 According to PMQ’s estimates, independent piz- 28 Mountain Mike's Pizza 85,000 * 4.9 zerias’ total sales amounted to $15,073,758,590, 29 Happy's ,000 17.7 compared to $14,557,100,260 in the previous 31 Monkey Joe's 68,000 * 8.8 year. The average annual sales for independents 30 Imo's Pizza 68,000 * -1.4 amounted to $396,594, compared to $380,111 in 32 Shakey's Pizza Parlor 67,000 * 0.0 the previous year. 33 Wolfgang Puck Express 62,000 * -1.6 Finally, the total sales for the Top 50 pizzeria 34 Me-N-Ed's Pizzeria 58,500 * -3.3 chains in 2012 was $19,753,075,000, with per-unit 35 Monical's Pizza Restaurant 57,748 1.6 sales averaging $721,995 (among 27,359 units), 36 ZPizza 55,500 * 1.8 according to Technomic. In 2011, the Top 50 sales 37 Dion's Pizza 50,000 8.7 equaled $18,472,166,000, with total per-unit sales 39 Simple Simon's Pizza 49,500 * 0.0 averaging $653,859 (among 28,251 units). That 38 Bellacino's Pizza & Grinders 49,500 * -2.0 means the Top 50 experienced a total sales increase 40 47,500 * 0.0 of nearly $1,280,909,000, while store counts fell 41 Straw Hat Pizza 45,000 * -16.7 by 892 in 2012. 42 Pizza Patrón 44,000 * 3.5 43 Stevi B's The Ultimate Pizza Buffet 43,000 * 8.9 The Cold War 44 42,500 * -6.0 The economy appears to have hit a “sweet spot” as 45 Happy Joe's Pizza and Ice Cream Parlor 40,000 * -0.5 far as the pizza restaurant business is concerned. 46 Brixx Wood Fired Pizza 38,500 * 4.1 While the recovery has been slow, it’s been strong 47 Extreme Pizza 37,500 * -6.3 enough to make pizza more attractive as an afford- 48 Sarpino's Pizzeria 37,257 14.6 able dining-out option, while the frozen pizza seg- 49 36,500 * -1.4 ment, according to Mintel, has declined by 1.1%. 50 Amato's Pizza 36,000 * 5.9 Mintel projects that frozen pizza sales will continue Source: Technomic *=Technomic estimate to drop through 2018 “as consumers rediscover

40 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 40 11/12/13 3:45 PM Top 50 Pizzerias: Ranked by Number of Units Based on 2012 Units The Healthcare Challenge 2012 U.S. % Change Chain Name Units from 2011 Like it or not, the Affordable Care Act keeps Pizza Hut 6,120 * 1.0 moving forward, but its full impact on restau- Domino's Pizza 4,928 0.4 rants remains unclear. The White House in July Little Caesars 3,725 * 5.9 delayed the employer mandate—which requires Papa John's 3,131 4.3 large employers to provide healthcare coverage Papa Murphy's Pizza 1,329 3.6 to workers or pay a penalty—by a year, allowing Godfather's Pizza 630 4.0 businesses additional time to prepare for it. Sbarro 602 -1.5 Once the employer mandate kicks in, restau- CiCi's Pizza 550 * -4.0 rants that average 50-plus “full-time-equivalent” Hungry Howie's Pizza 548 -0.2 employees will be considered “large employers” Chuck E. Cheese's 535 1.1 and must offer healthcare plans to those employ- Round Table Pizza 439 -1.6 ees or face penalties. Companies with fewer than Pizza Pro 430 -7.7 50 full-time employees won’t have to offer the Marco's Pizza 331 20.4 benefits or pay penalties, but other parts of the Jet's Pizza 283 26.9 law still apply. For example, existing healthcare Fox's Pizza Den 270 -3.6 plans must comply with new ACA regulations, and Simple Simon's Pizza 220 * 0.0 all employers covered by the Fair Labor Standards Villa Fresh Italian Kitchen 205 * 3.0 Act must provide written notice to their employees Pizza Inn 202 -5.2 about government-run marketplaces. Papa Gino's Pizzeria 179 -2.7 Regardless of their size, operators will need to Pizza Ranch 174 6.1 familiarize themselves with the details of the law, Mazzio's Italian Eatery 170 4.3 including its definition of full-time employment and Rosati's Pizza 167 3.1 how to determine the status of seasonal employees or Donatos Pizza 158 1.3 those with varying hours. They should be prepared to Mountain Mike's Pizza 145 -2.7 fulfill the law’s requirement for tracking and reporting Greek's Pizzeria 144 1.4 employee data. And they’ll have to make sure they Famous Famiglia 120 -8.4 know what constitutes an “affordable” healthcare Gatti's Pizza 112 -8.2 plan and what could trigger a penalty. Pizza Factory 111 0.9 Pizza Patrón 104 10.6 Vocelli Pizza 98 -3.9 Ledo Pizza 95 -5.0 Peter Piper Pizza 92 2.2 their spending power and open their wallets for Imo's Pizza 91 0.0 food away from home.” According to a survey of ZPizza 89 0.0 2,000 pizza-eating households released by Mintel Happy's Pizza 83 10.7 in July 2013, consumers cited taste and healthful- East of Chicago Pizza 74 1.4 ness as barriers to frozen pizza growth. Mintel also Bellacino's Pizza & Grinders 67 -4.3 states that, although black consumers and families Monical's Pizza Restaurant 64 -1.5 with kids are more likely to eat frozen pizza, these Monkey Joe's 63 3.3 two groups will likely grow only modestly between Shakey's Pizza Parlor 57 -3.4 2013 and 2018. Me-N-Ed's Pizzeria 56 -5.1 Straw Hat Pizza 55 -22.5 Overall Restaurant Growth Happy Joe's Pizza and Ice Cream Parlor 53 -7.0 On the whole, the restaurant industry continues Amato's Pizza 48 2.1 to enjoy modest growth and is the nation’s second- Stevi B's The Ultimate Pizza Buffet 47 4.4 largest private-sector employer, according to NRA Sarpino's Pizzeria 45 21.6 research. The NRA projects restaurant-industry Wolfgang Puck Express 41 7.9 sales of $660.5 billion for 2013, an increase of 3.8% Extreme Pizza 40 -4.8 from 2012’s figure of $636 billion and equal to 4% Brixx Wood Fired Pizza 21 0.0 of the U.S. gross domestic product. This was the Dion's Pizza 18 5.9 fourth straight year that sales went up for the res- Source: Technomic *=Technomic estimate taurant industry. Meanwhile, restaurant job growth in 2013 continued to outpace national employment

December 2013 pmq.com 41

December 2013.indb 41 11/12/13 3:45 PM Store Counts per Capita Above Average ‘My NEw yEaR’s REsOluTiON is’... State No. of Pop. (2012 U.S. Stores/ Stores Census Data) 10,000 People To Obtain New loyal customers Every Month!

New Hampshire 511 1320718 3.87 1118 3074186 3.64 Massachusetts 2358 6646144 3.55 Rhode Island 358 1050292 3.41 West 630 1855413 3.40 4155 12763536 3.26

Delaware 297 917092 3.24 Ohio 3675 11544225 3.18 Maine 405 1329192 3.05 We 72 Connecticut 1077 3590347 3.00 lco 19 ming N Since New Jersey 2585 8864590 2.92 ew Movers Vermont 181 626011 2.89 2820 9883360 2.85 1806 6537334 2.76

New York 5145 19570261 2.63

South Dakota 217 833354 2.60 Source: CHD Expert 745 2885905 2.58

Welcome to the Robinson Household 1234 Main St. Average Saint Petersburg, FL 33702-3715 State No. of Pop. (2012 U.S. Stores/ Stores Census Data) 10,000 People 176 699628 2.52 1501 6021988 2.49 141 576412 2.45 1307 5379139 2.43 242 1005141 2.41 OuR TOwN aMERica PROgRaM FEaTuREs & bENEFiTs 701 2949131 2.38 • Exclusivity - l ock o ut thE compEtition 3023 12875255 2.35 growth for the 14th straight year, adding jobs at a projected 637 2758931 2.31 rate of 2.4% and topping the national rate of 1.5%. Nearly • Zip c odE drivEn - mail from 1 to 1000+ Zip c odEs 422 1855525 2.27 10% of American workers—or 13.1 million people—drew 1334 5884563 2.27 paychecks from the restaurant industry in 2013. The NRA 880 3899353 2.26 • t rackEd roi • Bar c odE & pos tracking also reports that the restaurant industry is expected to add 1.3 858 3814820 2.25 • t urnkEy • f ollow-up l oyalty m ailing 4301 19317568 2.23 million jobs over the next decade for a total of 14.4 million Idaho 349 1595728 2.19 by 2023. 1247 5726398 2.18 942 4380415 2.15 The “Better Pizza” Movement Virginia 1711 8185867 2.09 Pizza, the old joke goes, is like sex: When it’s good, it’s great, 1 FREE MONTH and when it’s bad, it’s still pretty good. Fortunately, with the Below Average rising popularity of artisan pizza, bad pies are getting harder to State No. of Pop. (2010 U.S. Stores/ OF TRackablE MaRkETiNg iN THE 2014 calENdaR yEaR.* Stores Census Data) 10,000 People find. Many consumers today simply demand more from pizza 979 4723723 2.07 makers, and pizzerias have stepped up to the challenge. It’s all 1974 9752073 2.02 part of the so-called “better pizza” movement, which has kept all iNclusivE PROgRaM PRiciNg sTaRTiNg aT jusT $50 1040 5187582 2.00 pace with the “better beer” and “better burger” trends. Cheap 1365 6897012 1.98 and basic often just doesn’t cut it anymore. The freshness of *sign up for 1 FREE Month (with annual agreement) by january 31st, 2014. code ‘OuRTOwNPMQ’ Tennessee 1249 6456243 1.93 farm-to-table ingredients creates the perception of a health- Utah 550 2855287 1.93 139 731449 1.90 ier pie, while exotic cheeses and meats—think Gruyère and 1-800-497-8360 x226 | www.OuRTOwNaMERica.cOM District of Columbia 120 632323 1.90 sopressata—convey an aura of sophistication and provide a 6630 38041430 1.74 new experience in flavor profiles. 1124 6553255 1.72 “The consumer is really starting to figure things out, and 4375 26059203 1.68 everybody’s looking at quality,” says Scott Wiener, owner of 1596 9919945 1.61 Scott’s Pizza Tours in . “In part, I think that’s because Alabama 763 4822023 1.58 471 2984926 1.58 the consumer base is more educated today. People know more Louisiana 696 4601893 1.51 about what they’re eating. When they walk into a pizzeria now, New Mexico 293 2085538 1.40 they’ll ask you if you’re using San Marzano tomatoes or buffalo 168 1392313 1.21 mozzarella cheese.”

42 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 42 11/12/13 3:45 PM ‘My NEw yEaR’s REsOluTiON is’... To Obtain New loyal customers Every Month!

We 72 lcom e 19 ing New Movers Sinc

Welcome to the Robinson Household 1234 Main St. Saint Petersburg, FL 33702-3715

OuR TOwN aMERica PROgRaM FEaTuREs & bENEFiTs • Exclusivity - l ock o ut thE compEtition • Zip c odE drivEn - mail from 1 to 1000+ Zip c odEs • t rackEd roi • Bar c odE & pos tracking • t urnkEy • f ollow-up l oyalty m ailing 1 FREE MONTH OF TRackablE MaRkETiNg iN THE 2014 calENdaR yEaR.*

all iNclusivE PROgRaM PRiciNg sTaRTiNg aT jusT $50 *sign up for 1 FREE Month (with annual agreement) by january 31st, 2014. code ‘OuRTOwNPMQ’ 1-800-497-8360 x226 | www.OuRTOwNaMERica.cOM

December 2013.indb 43 11/12/13 3:45 PM Ethnic Flavor Trends According to research firm Technomic, ethnic flavors are coming to the fore in the pizza industry, including:

Thai Breaker—Top That! Pizza offers this Thai-themed treat, made with Thai peanut sauce, whole milk mozzarella, marinated chicken, roasted garlic, caramelized onions, chopped scallions, julienne carrots, sharp cheddar and roasted peanuts.

Jamaican Jerk—A popular specialty pie at Uncle Maddio’s Pizza Joint, this exotic pizza features tomato-basil sauce, mozzarella, grilled jerk chicken, red onions, green peppers, Despite a sluggish economy, many customers will pay more for artisan pineapples and cilantro. with gourmet toppings. Athenian— Pizza Company serves up this thin- Aging baby boomers also play a role, helping to fuel the crust Greek pizza with Italian herbs, fresh garlic, chicken, “better pizza” movement with their higher expectations, refined Kalamata olives, red onions, banana peppers, crumbled tastes and disposable cash. Born after WWII, they were the feta, fresh basil, sun-dried tomatoes and a mozzarella/ first generation of Americans to grow up on pizza, and, unlike their parents who had to pinch pennies in the Great Depres- provolone blend. sion, baby boomers will typically pay more for higher quality, although good value remains important to them. In general, most consumers haven’t let a sluggish economy said they were “interested in trying pizza with highly innovative get in the way of pleasing their palates; if anything, they’re get- toppings,” a big jump from 13% in 2010. ting pickier about quality. In a 2012 survey by research firm “I think people are still holding back on their dining-out Technomic, 34% of diners said they were willing to pay more budgets, but they see an upscale pizza as a better value than a for gourmet ingredients, compared to 26% in 2010, while midscale steakhouse or seafood,” Wiener notes. “A high-end 27% said they’d shell out more for natural or organic ingredi- pizza is still quite affordable—the high point is probably about ents, up from 21% two years earlier. In the same study, 33% $22 for a personal pizza. And that’s still pretty inexpensive

Customer Survey: To Create a Good Pizza, Operators Should Focus on Quality and Freshness

78% fresh toppings 84%

67% a large quantity of toppings 74%

68% appetizing appearance 73%

68% Variety of toppings to choose from 70% 63% a large quantity of cheese 69%

58% strong aroma 58%

36% new or innovative toppings 38% As this Technomic survey indicates, pizza consumers’ expectations are rising, and freshness of ingredients 2010 2012 is a major factor. Base: 1,500 consumers ages 18+ Respondents indicated their opinion on a scale of 1-6, where 6 = agree completely and 1 = disagree completely Source: Technomic Pizza Consumer Trend Report

44 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 44 11/12/13 3:45 PM 34% of diners are willing to pay more for gourmet ingredients, compared to 26% in 2010. —Technomic

when you’re comparing an entrée at a nice restaurant.” Based on the / paradigm, these For proof of artisan pizza’s growing popularity, look no stores put the customer in the driver’s seat. Proceeding along further than the country’s largest chains, including Domino’s an assembly-line station, guests can design their own pies from (dominos.com), which leapt into the market a couple of years the crust up, selecting from a plethora of toppings and sauces, ago and offers such selections as the Chicken & Bacon Car- requesting a little more of this, a little less of that. Super-hot bonara, the Tuscan Salami & Roasted Veggie and the Spin- ovens bake the pies in just a few minutes, and the price often ach & Feta. Meanwhile, take-and-bake giant Papa Murphy’s remains the same for any combination of toppings, typically (papamurphys.com) tested a premium line of pizzas made in the $7.50 range. with gourmet ingredients ranging from fennel sausage and With locations in Oklahoma, Texas, Colorado and the goat cheese to prosciutto and arugula. United Arab Emirates, Top That! Pizza (topthatpizza.com) has been on the forefront of the fast-casual trend since its first Power to the People store opened in 2010. “People are very interested in what goes As buzz phrases go, “fast casual” doesn’t really say much. It fails into their food these days, and feeling like they finally have to capture the essence of a movement that is rapidly transform- the power to create a pizza of their own has made this new ing the national pizza scene, with concepts such as Blaze Pizza, category very popular among just about every demographic Project Pie (projectpie.com) in San Diego and Las Vegas, Social out there,” says Top That! co-founder Lori Walderich. “Guests Life Pizza (sociallifepizza.com) in San Diego, and 800 Degrees can see their pizzas being made and know exactly what’s going (800degreespizza.com) in Los Angeles leading the way. For on top of it. The perceived value of the pizza is higher, along that reason, many operators prefer terms like “customizable” with customer satisfaction, as opposed to typical delivery or and “build your own” to describe this red-hot business model. commodity pizza.”

December 2013 pmq.com 45

December 2013.indb 45 11/12/13 3:45 PM Technological advances helped pave the way, too, Walderich observes. “There have always been wood-fired ovens that can cook pizzas in as little as 90 seconds. But the advent of the Turbo Chef ultra-fast impinger oven really set things in motion because of its ease of use and affordability.” You know an innovative concept has broken through to the mainstream when the big chains hop on the bandwagon. -based fast-casual eatery Pie Five Pizza (piefivepizza.com) is a Pizza Inn Holdings company, while Sbarro (sbarro.com), long known for its low-priced pies served in malls and air- ports, recently opened Pizza Cucinova (pizzacucinova.com) in Columbus, Ohio. But the pizza giants don’t have the field to themselves. Matt Andrew, co-founder and former president of

Fast-casual pioneers like Lori Walderich, co-founder of Top That! Pizza, Moe’s Southwest Grill, launched -based Uncle Maddio’s have empowered customers to take control of their dining experience. Pizza Joint (unclemaddios.com), while master- minds Tom Ryan and Rick Schaden, as previously mentioned, James Markham has helped launch three different fast-casual brought Live Basil Pizza to life in Denver. Even Buffalo Wild concepts, including MOD Pizza (modpizza.com) in Seattle, Wings has gotten into the act, purchasing a minority stake in (pieology.com) in Southern California and the afore- PizzaRev (pizzarev.com) in Los Angeles. All of these companies mentioned Project Pie. “I think it’s universally appealing,” he have aggressive growth strategies, and the Wetzels’ Blaze Pizza says. “People want to be able to get it the way they want it. You has even attracted well-connected celebrity investors, including can’t get it exactly the way you want it when someone’s making Maria Shriver and LeBron James. it in the back kitchen.” What took pizzeria operators so long to come up with the The Old-World Ways idea? “As we were developing Top That! Pizza, we were wonder- Of course, no one knows the concept of “better pizza” like ing the same thing,” Walderich says. “One possible reason is the pizzaioli from Naples, which may explain why Neapolitan that pizza operators over the years have been afraid of losing pizza has become booming business. “Neapolitan is still really money due to the assumption that guests would overload their big, and it’s getting bigger,” Wiener says. Neapolitan authen- pizzas with too many expensive ingredients. Or perhaps they ticity means following strict rules dictating quality and origin just flat-out didn’t think of it since pizzas have been done the of ingredients, dough making and proofing methods, even the same way for all these decades. So many pizza places focus on size and specs of the wood-fired oven. But that hasn’t discour- delivery, convenience and cheap pricing and achieve a good aged celebrity chefs—such as Nancy Silverton, Mario Batali level of profit, so why change?” and Mike Isabella—from signing on, notes Jay Jerrier, owner

World Growth of Pizza Industry (in billions of USD)

150.000 131.720 125.048 total 118.082 120.000 independents

Chains 90.000 49.254 41.117 46.340

60.000 82.465 76.370 78.707

30.000 This chart shows the steady growth of the pizza business around the world between 2010 and 2013. 0 2010 2012 2013 source: © euromonitor international

46 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 46 11/12/13 3:45 PM Pizza Power Report_December13.indd 47 11/14/13 11:50 AM Regional Annual Growth Rate 2013

eastern europe 10.20%

australasia 8.30%

Latin america 7.35%

asia pacific 7.11%

middle east and africa 5.39% The pizza industry has enjoyed Western europe 4.99% moderate to strong growth in various regions of the world north america 4.04% over the past year, with Eastern Europe showing the largest increase and North America, an 02468 10 12 already mature market, showing the smallest increase. source: © euromonitor international

of Cane Rosso (canerosso.com) in Dallas. “These chefs get a artisan, wood-fired pizza concepts without the Italian-origin lot of press, so when they open a side project with Neapolitan ingredients. That’s all over the place now.” pizza, it gets a lot of attention with the public and spurs a lot With its emphasis on high-heat ovens that can bake a pie in of people on the sidelines to try this style,” he says. just a couple of minutes, the Neapolitan model fits perfectly “The trend to eat healthier has been a big driver,” Jerrier with the fast-casual format, Jerrier says. “I think Anthony Car- continues. “ is a very light, digestible dough, ron at 800 Degrees has done an amazing job with that. He cre- and the cheese is all-natural fresh mozzarella, usually made in- ated a build-your-own model using high-end ingredients and house. Customer sensitivity to ‘eating local’ encourages pizza a fast-service concept. Punch Pizza (punchpizza.com) in Min- makers to take advantage of local produce. And even if you’re nesota does a good job with this, too. They make an artisanal adding meat to your pizza, it’s generally housemade or locally pizza style much more accessible to a much broader audience.” sourced sausage or house-cured charcuterie. That appeals to the L.A.’s Social Life is another example, serving up custom-made rising foodie movement.” Neapolitan-style 12” pies baked in a domed oven. However, some operators are more interested in capturing the essence of Neapolitan pizza without bothering with all Flatbreads, Craft Sodas and those hard-and-fast rules, Wiener explains. “Beyond the tradi- Gourmet Toppings tional Neapolitan pizzerias, Neapolitan-inspired pizzas are get- Speaking of old-world traditions, flatbreads, once a staple ting even more powerful,” he says. “More places are doing the in ancient Egypt and Mesopotamia, continue to find new World Pizza Market 2013 (in billions of USD)

north america 44.202

Western europe 51.901

Latin america 16.394

asia pacific 8.712

eastern europe 4.421

middle east and africa 3.414

This chart illustrates the current size of the world pizza market according australasia 2.665 to region.

source: © euromonitor international

48 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 48 11/12/13 3:45 PM life on American pizzeria menus. Pizza Hut (pizzahut.com) expanded into the category in June with its Firebaked-Style Flatbreads, which come six to a box with three toppings for $11.99. The Fazoli’s (fazolis.com) chain debuted two flatbread pizzas—the Tuscan Chicken and the Chicken Margherita—in the “Lighter Options Under 550 Calories” section of its menu. And Chili’s Grill & Bar was so eager to introduce its trio of flatbreads—the Margherita, Chipotle Chicken and California Grilled Chicken—that the com- pany moved the rollout date from June to May. With their lighter crust and “shareability,” flatbreads appeal to women in particular, industry observers say. Men, on the other hand, love beer, which should surprise no one. The craft brew phenomenon keeps picking up steam The rise of artisan sodas has given pizzeria consumers a wide range of as more local and regional breweries step up to meet rising new beverage options. consumer demand for specialty ales and lagers in the pizza restaurant environment. But diners who prefer nonalcoholic (emmaspizza.com) in Cambridge, Massachusetts, and Skinny alternatives have some pretty fancy options, too, thanks to the Pizza (skinnypizza.com) in Long Island, New York. Though the rise of artisan sodas from companies such as Boylan Bottling company has been bottling since 1891, its recipes (made with Company, DRY Soda and SIP. “I’m finding a lot of Boylan’s only pure cane sugar—no high-fructose corn syrup allowed), on tap instead of just Coke or Pepsi,” Wiener says. “We’re see- are a bona fide throwback hit. Other specialty soda companies ing more of these names pop up in pizzerias that are trying to specialize in high-end, unexpected flavors, such as Lavender distinguish themselves from their competition.” Lemon Peel, Coriander Orange and Rosemary Lime (SIP) or A Boylan fountain has already earned a prominent spot in Vanilla Bean, Rhubarb and Lavender (DRY). Markham’s Project Pie stores, and its sodas are also served in Meanwhile, gluten-free options continue to sprout up on Andiamo (andiamopizzamiami.com) in Miami, Emma’s Pizza pizzeria menus across the country, from delivery and carryout

December 2013 pmq.com 49

Pizza Power Report_December13.indd 49 11/14/13 11:51 AM F&B Trends for 2014 Food and restaurant consulting firm Baum + Whiteman recently predicted some of the hottest food and beverage consumers are slowly drifting away to Instagram, Snapchat trends for 2014, including: and Tumbler, to name a few options. But Facebook remains 1. Tasting-only menus. Tasting menus guarantee a spe- a rock-solid stronghold for mainstream adult consumers and cific average check along with precosted, highly con- a must-have marketing tool for pizzerias, notes Doug Brandt, trolled inventory. owner of Pie Hole Pizza Joint (pieholepizzajoint.com), which has two stores in Chicago. 2. Haute chicken. Upscale chicken restaurants are taking “Pie Hole thrives off social media,” Brandt says. “Our market flight around the . falls right in line with people of any age who are also active on 3. Fishy fish. Americans are giving anchovies, sardines social media. In a multi-unit environment, you should already and mackerel a second look. have a Facebook page for each location, plus one for the brand overall. You also should be active on Twitter, and, by all means, 4. Bubbling, fizzing beverages. Think craft sodas, teas, vermouth, sour beer and pressed juices. jump on Instagram!” Meanwhile, more restaurateurs have added mobile apps to 5. Creative spreads. When butter’s not enough and their marketing arsenal. Pie Hole presently has an app for EVOO’s old hat, some chefs are offering vanilla Android smartphones, but Brandt’s goal is to develop one tapenade, tomato jam, smoked ricotta and whipped that’s compatible with iPhones as well. He also wants to be chicken liver butter. able to offer online ordering with his app. “I’m not sure that 6. Green is the new black. Fast-growing vegetarian every independent pizzeria needs an app,” he says. “However, chains, such as Sweetgreen, Chop’t, Tossed and Tender I would most definitely say that, if you appeal to a college, Greens, urge you to eat your vegetables. urban or young ‘digerati’ market—or if you have three or more locations—then, yes, jump on it right away. You might not get 7. The new Asian wave. Kimchee on burgers and pizza? a tremendous amount of use out of it right away, but having Schichimi togarashi on chicken wings? Chefs are find- one early will reap rewards down the pike.” ing novel uses for exotic Asian flavors and seasonings. If you’d prefer not to bother with an app at this point, Brandt 8. Tastes of the Middle East. Foodies fleeing turmoil in says a mobile-friendly website—that is, a site that is customized Iraq, Iran, Egypt and other Middle East nations are for tablets and smartphones—is the next best thing. “There bringing their food to the West, including za’atar, are plenty of websites out there that will automatically convert pomegranate molasses, shakshuka and freekeh, to your website into something suitable for a smartphone,” he name a few. says. “These work to varying degrees of success, depending on how complex your website is. Website developers are now mak- ing smartphone-friendly sites right alongside the traditional eateries to fast-casual operations. More restaurants also tout desktop versions. Soon, websites will be designed primarily for locally sourced ingredients, and gourmet toppings have earned portable devices and only secondarily for desktop monitors.” a certain cachet among diners wanting something a little differ- In fact, many experts predict that a technique called “respon- ent, Wiener says. “Instead of sausage and , it’s brus- sive design” will soon dominate website development. With sel sprouts, pancetta and sopressata. Again, people just know responsive design, a website’s appearance and functionality more about what they’re eating now. They think of sopressata change depending on the end user and the type of device on as classy pepperoni when it shaves and puts on a nice suit.” which the site is viewed. This tailored approach provides a The Social Scene better browsing experience for the customer, regardless of the type of device he’s using. The fundamentals of effective restaurant marketing haven’t In other words, customers may soon have as much control changed much over the years, but recent advances in mobile over their Web browsing experience as they now enjoy over technology have spawned various new tools that marketers their pizzeria dining experience. Although this will undoubt- cannot afford to ignore. Most restaurants now have a website, edly pose some short-term challenges to operators, it should and online ordering has begun to enter the mainstream and be a win-win in the long run. Customers will derive greater will continue to spread, thanks to integrated systems devel- satisfaction from their interactions with the restaurant, both oped by leading POS companies. Social media has become online and in-person, and operators will be able to count on the 400-pound gorilla that restaurant marketers ignore at their repeat business and a more contented clientele. After all, when own peril. Complicating the situation is the proliferation of the customer truly comes first, the customer keeps coming so many social media outlets—too many for your average in- back for more. dependent restaurateur to keep up with. As moms, dads and even grandparents have commandeered Facebook, younger Rick Hynum is PMQ’s editor-in-chief 50 PMQ Pizza Magazine The Pizza Industry’s Business Monthly

December 2013.indb 50 11/12/13 3:45 PM