Pizza Power 2013 State of the Industry Report

Make plans for 2013 with PMQ’s report on the pizza industry—both domestic and worldwide—along with a forecast for the coming year.

(page 3 of 4)

 PMQ 2012 Reader Census Stat: 
A majority of respondents charge more than $2 for delivery.

Additional Revenue Opportunities

In addition to taking advantage of trends and gleaning ideas from PMQ’s annual reader census, take a look around your own neighborhood and cities nearby to see what’s working in other restaurants. Don’t limit yourself to examining pizzerias; you could discover a fantastic salad idea at a Brazilian restaurant, a clever way to hand stretch mozzarella tableside at a high-end Italian trattoria, or be inspired to create a new dessert after a visit to a local donut shop.

Be conscious of opportunities to raise awareness—and prices—on items that consumers are currently interested in as well. According to Mintel, drinks, breadsticks and salads are the most-ordered items after pizza and represent an easy opportunity to grow profits.

Additionally, a Mintel survey revealed that half of respondents limit the amount of pizza they eat because they feel it has too many calories or too much fat. If you aren’t currently offering a thin-crust option, the addition of one might offer another revenue stream, as 38% of consumers surveyed said they prefer thin crust over pan-style (20%) or thick crust (19%). And, also on the topic of cutting calories, 40% of those surveyed by Mintel said they’d like to see more personal-size pizzas on the menu, helping to shave calories and provide a grab-and-go option.

Menu Labeling

The industry continues to wait for the widespread menu labeling laws that were outlined in the Patient Protection and Affordable Care Act of 2010 to take effect. Meanwhile, though, big strides were made during 2012 in the fight against what many in the pizza industry see as an unfair law that would require all pizzerias with more than 20 locations to provide nutritional information that labels an entire pizza as one serving.

The American Pizza Community (APC), a coalition of some of the nation’s largest pizza companies and suppliers, formed in January 2012, with one of its main goals being to advocate fair menu labeling practices. In July, the APC endorsed the Common Sense Nutrition Labeling Bill, saying it would allow small-business pizzeria owners to comply with federal menu labeling requirements using innovative approaches that strengthen consumer education and reduce excessive regulatory costs.
The bill, among other provisions, would amend the existing law as follows:

  • Establishments that receive the majority of their orders from customers who order off-premise–such as those that offer a delivery service–would be allowed to provide calorie information on a remote-access menu instead of an expensive, and rarely seen, on-premise menu board.
  • Establishments would have the option to provide calorie labeling for pizza by the slice, as opposed to whole-pizza labeling (the average consumer eats 2.1 slices).
  • The bill allows for flexibility in providing calorie information for variable food items, such as pizzas, where a multitude of toppings, crusts and sauce create millions of ordering options. These options would include ranges, averages, individual component labeling of ingredients or labeling of standard menu offerings.
  • The bill ensures that establishments acting in good faith are not penalized for inadvertent human error and other unavoidable variances in nutrient content disclosure.

Future Challenges

For a look at what’s in store for the industry, IBISWorldwide’s March 2012 report, “Pizza Restaurants in the U.S.,” sheds some light on the next five years. Pizza restaurants will benefit as the economy continues to improve, unemployment rates decline and consumers return to spending money on eating out. However, while the industry will grow, pizza restaurants will continue to be affected by rising competition from other retail food outlets and consumers’ preferences toward healthier foods.

Consumers are expected to become even more health-conscious, and many Americans will steer clear of fast-food establishments such as pizza delivery outlets. They will continue to crave products made from fresh and organic ingredients, resulting in an increased focus by pizzerias on using high-quality goods.
Pizza restaurants will continue to face competition from alternative retail outlets, such as grocery stores. Since Americans’ schedules are becoming busier, being able to pick up a made-to-order pizza while shopping for groceries is extremely convenient. As a result, pizza restaurants, especially those that offer delivery, will have to come up with ways to draw consumers back to their shops.

The industry will be negatively affected by commodity prices. Through 2017, the price of milk and wheat is predicted to increase, causing operators’ ingredients costs to rise. Some restaurants will increase prices to help with the rise in expenses, and others will cope by changing some of their menu offerings. Large chains that are able to buy in bulk will better manage the rise in expenses.

With revenue expanding, more restaurants will open up in the industry, at a rate of 3.1% per year. Employment numbers are projected to follow suit. In the five years to 2017, employment is predicted to increase an average of 2.3% per year, to 994,936 workers.

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