The 2018 Pizza Power Report a State-Of-The-Industry Analysis
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34 PMQ Pizza Magazine The Pizza Industry’s Business Monthly The 2018 Pizza Power Report A State-of-the-Industry Analysis Embracing speed and technology is the key to toppling the competition in 2018. Just ask Domino’s. By Liz Barrett his year’s Pizza Power Report practically wrote itself. As we combed through Tthe numbers and reviewed the year’s leading and trailing trends, the same buzzwords and brands kept appearing. It became crystal clear that pizza consumers want their pizza the way they want it and as fast as they can get it. Fast-casual pizza chains like Blaze Pizza and MOD Pizza showed some of their best unit and sales growth yet, proving that consumers are still yearning for customization and speed in their pizza experience. Domino’s, meanwhile, has blazed new trails with digital technologies that, as we’ll explain later in our report, could soon move the chain into the No. 1 position over Pizza Hut. December 2017 pmq.com 35 2018 QUICK FACTS TRENDS COMPARED TO 2017 PIZZA POWER REPORT TOP 50 CHAINS WORLDWIDE UNITED STATES NO. OF U.S. AVERAGE UNIT PIZZA• MARKET PIZZA• MARKET PIZZERIAS• •SALES $134 BILLION $45.1 BILLION 75,243 $577,909 Source | Euromonitor Source | PMQ Estimate Source | CHD Expert Source | Technomic FOCUSING ON CONSUMER NEEDS understand consumers’ out-of-home dining behaviors The big winners in the pizza race this past year were those and preferences. The top three attributes that North who embraced websites, social media, online ordering and American respondents listed as reasons for choosing a delivery technology. Many of the fastest-growing pizzerias restaurant were Reasonably Priced Food (47%); Food also had the highest web rankings, illustrating that there’s Quality (30%); and Type of Cuisine (25%). a direct correlation between a strong web presence and These insights show us that even pizzerias with fantastic healthy sales. websites, great delivery and perfect social media pages On top of that, consumers are now spending as much can fail if consumers deem them to be too expensive or money eating out as they do eating at home. According provide poor customer service. to a recent study in Consumer Reports, around half of This year’s industry statistics and trends, presented here every food dollar is spent at restaurants, equaling roughly in PMQ’s annual Pizza Power Report, will illustrate key $2,222 per person, per year. areas where you can focus your efforts to guarantee future The survey of 68,950 restaurant-goers told Consumer growth within your business. Let the learning begin! Reports that nothing matters more in the choice of a restaurant than the taste and quality of the food. And MAKING HEADLINES while respondents were satisfied with about half of the Never one to shy away from the spotlight, pizza made its restaurants listed in the survey, they did note areas that fair share of headlines in 2017. In February, a social media needed improvement, such as service that was frenzy ensued when the president of Iceland, lacking, restaurants that were too noisy, Gudni Thorlacius Johannesson, joked inattentive waiters, and long waits to with high schoolers that pineapple order and get the check. pizza should be outlawed. Since we’re eating out more In June, a tenacious team of often, we’re also concerned pizzaiolos—led by industry about affordability. The Niel- giants like Giulio Adriani, sen Global Out-of-Home Business Insider named Blaze Pizza as Dining Survey polled more the fastest-growing pizza chain in the than 30,000 online respon- country and pizza itself as the fastest- growing segment of all fast-casual dents in 61 countries to restaurants. 36 PMQ Pizza Magazine The Pizza Industry’s Business Monthly UNITED STATES VERO PIZZA & PASTA PIZZA SALES* $45.1 Billion *PMQ Estimate Independent | $18.5 Billion 41% Experimenting Top 50 chains | $26.6 Billion 58.9% With Meal Kits PMQ estimate was calculated using The meal kit category has ballooned CHD Expert numbers that track independent pizzerias and Technomic to more than $2 billion, according to numbers that track Top 50 chains. research firm Pentallect, with restau- rants just scratching the surface. Accord- ing to the National Restaurant Association, Tony Gemignani and John Arena—gathered in Los Ange- 49% of consumers said they would buy les to break the Guinness World Record for the world’s meal kits to prepare at home if their favorite longest pizza. restaurant offered them for purchase. Pizza was also unsurprisingly labeled as the fastest- Pentallect’s research showed that, beyond growing segment of fast-casual restaurants in 2017, with enjoying the experience and the unique Blaze Pizza named the fastest-growing restaurant chain items, the main reason consumers use in the country by Business Insider. meal kits was “for convenience” (53%). But just as the industry was celebrating these victories, The main reason others did not use meal it also had obstacles to overcome—as did the rest of the kits was because they “had no real need” hospitality industry. Those obstacles included devastating (42%). Pentallect noted that the reasons hurricanes in Texas, the Gulf Coast and Puerto Rico; fires for not using a meal kit—which also included in California’s Napa and Sonoma counties; and the ongo- factors such as “can get what I need else- ing battle for wage increases across the hospitality sector. where” and “have not thought about it”—can No one can control natural disasters, but we can do our be overcome with creative marketing. part when it comes to wages. “I pay my pizza makers a commission based on the volume we do each night,” says If you’re ready to experiment with meal kits Paul Giannone, founder of Paulie Gee’s in Brooklyn, New in your pizzeria, start small, with just one or York. “It incentivizes them to work harder, and therefore, two of your most popular dishes. Make sure they always make more than minimum wage.” the ingredients can be delivered fresh and Lenny Rago, co-owner of Panino’s Pizza in Chicago, prepared within 30 minutes. Once the kits says operators should not be afraid to raise prices to offset catch on, you can expand the offering. rising wages. “Most consumers will pay for quality,” he says. “You have passion for what you do, and you pick your ingredients to give the customer the best product INCREASED INDEPENDENT CLOSURES possible. Let the customer know that quality can’t be According to CHD Expert, there were 75,243 pizza automated.” restaurants in operation at the end of September 2017. This year’s ups and downs were reflected in an above- A total of 4,992 new pizzerias opened their doors, while average increase in sales, but with most of the gains going 5,291 closed. to chains. Euromonitor reported a North American Independents opened 2,868 stores and closed 4,121, industry increase of 4.58%, with chains seeing growth while chains opened 2,124 and closed 1,170. Last year’s of 5.83%, while independents saw only a 2.65% increase. report showed a net store loss for the independents of only 38 PMQ Pizza Magazine The Pizza Industry’s Business Monthly INDEPENDENT PIZZERIAS VS CHAIN STORES LESS THAN 10 UNITS MORE THAN 10 UNITS INDEPENDENTS 2,868 OPENINGS CHAINS 2,124 TOTAL PIZZA INDUSTRY 4,992 INDEPENDENTS 4,121 CLOSINGS CHAINS 1,170 TOTAL PIZZA INDUSTRY 5,291 -1,253 +954 -299 NET LOSS INDEPENDENTS CHAINS TOTAL PIZZA INDUSTRY Source | CHD Expert 42 units, while this year showed 1,253. Overall, however, emotional metrics. Some of the top attributes included the overall net loss of pizzerias for the industry this year being community-oriented, offering personalized service was less than last year, at only 299 units. and sharing the customer’s values. Despite an above-average number of closures from independents, they still account for a higher percentage INTERNATIONAL GROWTH of the total industry, with CHD Expert reporting 41,728 Large pizza chains continued to expand beyond U.S. bor- independents and 33,515 chains. However, per-unit sales ders this year, with a keen focus on nations with rising for chain pizzerias are nearly 70% higher than that of disposable incomes. independents, according to CHD Expert, with chains Pakistan is the world’s fastest-growing retail market, reporting $745,557 per store and independents reporting according to Euromonitor International, with Pizza Hut $443,258 per store. planning to double its store count in Pakistan to 150 over But don’t let per-store sales numbers get you down. the next five years. Almost two-thirds of the 200 million Consumers still often choose independents over chains. people in Pakistan are younger than 30, according to In fact, Chicago-based food industry consulting firm Pen- Bloomberg, with disposable incomes doubling since 2010 tallect, in collaboration with Critical Mix, conducted and 40% of household expenditure spent on food. consumer research that found consumers rated inde- According to a recent article in The New York Times, pendent restaurants as superior to chains in 12 of the many nations view Western foods such as pizza and 15 studied key attributes across both operational and fried chicken as status symbols, furthering the growth of December 2017 pmq.com 39 $134 BILLION WORLD PIZZA MARKET (2017) CURRENT SALES + 5-YEAR FORECAST 2% 11% Russia | $1.18B 3% 12% Eastern Europe | $3.90B Western Europe | $46.99B North America | $50.07B 28% China | $3.6B 22% Brown arrows indicate the seven Asia Pacific | $10.85B regions that 15% contribute to the total world pizza Middle East/Africa | $4.79B market of $134 18% billion.