|
|
|
||
|
|||
It’s a little later than Pizza Power Reports from past years, but the pizza industry numbers have finally been received, analyzed and reviewed. Due to some changes in data collection from several of the sources PMQ uses, it took us a little longer to get everything together and study just what happed in the pizza industry since our last report. We would like to thank everyone at InfoUSA, Technomic, NPD Crest, the National Restaurant Association (NRA), Leading Edge Reports and RestaurantChains.net for their assistance in gathering this information. So let’s look at the numbers. All data for individual states was collected for the dates July 2005 through July 2006 with the exception of national restaurant sales and total pizza industry sales, which was collected for dates ending December 31st, 2005.
The Industry as a Whole
Store Counts - Compared to the previous year’s Pizza Power Report (2005), the total number of pizzerias in the U.S. dropped by 458 units, which represents a 0.7 percent decrease giving the pizza industry 69,386 total units. According to the NRA, there were approximately 900,000 restaurants in the U.S. at the end of 2005, which means pizzerias comprise 7.7 percent of all U.S. restaurants.
Sales - Sales for the industry as a whole rose $309,054,060 (1 percent) to give the pizza segment overall sales of $31,214,460,060 for 2005. This $31.2 billion dollars in pizza sales represents 7.1 percent of the overall ‘eating place’ restaurant sales in the U.S., which according to the NRA was $437 billion.
Store Averages – In 2005, the average store earnings for all pizzerias was $449,867/year, which is an increase of 1.7 percent from the previous year’s average store sales. According to the NRA, average store sales for all restaurants in the U.S. was $485,556/year for 2005.
The Independents
For this report, ‘independents’ are classified as all pizzerias NOT in the Top 25. The numbers collected this year show a good year for the independents in their battle against the big chains of the Top 25. Once again, independents gained market share of the total number of pizzerias in the U.S. compared to last year’s Pizza Power Report. But this year, unlike in the past, independents were also able to gain market share of the total industry sales.
For this Pizza Power Report, independents comprised 64.81 percent of the total number of pizzerias in the U.S., which is up from 64.31 percent, which was reported in last year’s Pizza Power Report. Independents captured 49.47 percent of the total industry sales compared to 49.22 percent, which was reported last year. About the only negative to report was that independents and all others not in the Top 25 averaged $323,411/unit compared to the $338,745/unit reported in last year’s Pizza Power Report.
While the Top 25 still control the majority of the industry sales with a lower percentage of total units, increases in both percentage of total units and total industry sales may indicate that the products, marketing and customer loyalty of the ‘mom-and-pop’ independent restaurants may be fairing slightly better than the big chains.
The Top 25
Ranking of the Top 25 pizza chains in the U.S. is based on sales. Overall, the Top 25 did well even though they lost market share in total industry units and sales. Out of the Top 25, only three chains showed decreases in sales compared to last year, those chains being *Pizza Inn (-4.3 percent), *Papa Gino’s (-0.8 percent) and *Mr. Gatti’s (-10.5 percent).
While Pizza Hut remains at the top of the list with 17.02 percent of total industry sales and 7,566 units, which is 10.5 percent of all pizzerias in the U.S., there are some other notables. It appears that Little Caesar’s has finally turned the corner and show an increase in sales of **11.4 percent and an increase of 9.1 percent in units. Other Top 25 chains that showed noticeable sales increases were CiCi’s Pizza (+12.9 percent), *Fox’s Pizza Den (+9.4 percent), *Rosati’s Pizza (+10.8 percent), *Jet’s Pizza (+16.2 percent) and *Villa Pizza (+21.2 percent).
There are some interesting points to look at when it comes to the total number of units in the Top 25. The first thing that jumps out is that while only three chains showed decreases in sales, there were six of the Top 25 chains that showed decreases in total units. Of them, the biggest percentage decrease in units came from Pizza Inn, which dropped –8.5 percent of their stores and now have a total of 313 compared to the 342 stores in last year’s report. Other decreases in units are: Mr. Gatti’s (-6.7 percent to 140 stores), Peter Piper Pizza (-6.3 percent to 104 stores), *Papa Gino’s (-5.2 percent to 164 stores), Mazzio’s Pizza (-4.4 percent to 174 stores) and Godfather’s Pizza (-1.8 percent to 560 stores). As noted, all three with decreases in sales also decreased their number of stores.
* Sales based on Technomic estimates.
PMQ’s 2006 Pizza Industry Enterprise (PIE) Award Winner
PMQ would like to congratulate this year’s PIE Award winner Villa Pizza. Villa Pizza increased sales by 21.2 percent versus the previous year while only increasing units by 2.5 percent. They managed to earn considerably more revenues without increasing units. Villa Pizza was founded by Michele Scotto and started in 1964 as a tiny pizzeria next to the Ed Sullivan Theater in New York City and grew into an international organization. Villa Pizza is still a family-run business with Biagio Pugliese (“Uncle Benny”) is secretary; Anthony Scotto as executive vice president, Biagio “Ben” Scotto as president and Michele Scotto is the founder. Be watching for PMQ feature article on Villa Pizza in the January/February issue of PMQ and be at PMQ’s New York Pizza Show (March 4-6, 2007) to hear representatives from Villa Pizza talk about their success.
What Happened in 2005?
In 2005, and leading in to 2006, the Big Four (Pizza Hut, Domino’s, Papa John’s and Little Caesar’s) showed steady growth in both sales and units. While these Big Four and many of the others in the Top 25 will continue to be powerhouse sellers, it has been shown this year that the independents aren’t going anywhere. For the first time in a few years, independent pizzeria owners continued to grow not just in number of units and total market share of units, they were able to close the gap in terms of total market share of sales. How? While we wouldn’t go so far as to say it was because the big chains failed, but because the independents are realizing some facts the chains have known all along…marketing works. In the past year, staff members of PMQ have seen many new and innovative marketing strategies, many of which employ customer loyalty programs (you can find many of these in PMQ’s Previous Issues Archives at www.pmq.com). There also seems to be a trend coming to the surface that has been bubbling for a while in the artisan pizza world. Many new operators are embracing old-world techniques for pizza making and getting back to the simple and basic forms of pizza making. It seems that quality food and customer service has gained a grassroots following of customers and they are speaking with their pocketbooks.
Trends
Food, like fashion, goes through stages and trends. While they say that all fashion trends comes in cycles (please don’t let parachute pants, acid–wash jeans or Member’s Only jackets come back) food may not be recycled so fast. Let’s take a look at some food trends to watch.
Gluten-Free - First, after a recent trip to Australia, I noticed a very popular trend emerging not only on pizza menus, but at the trade show as well. This trend is gluten-free. I was introduced to gluten-free about three years ago in Italy. I researched it and published and article (Pizza Without the Bread, located at www.pmqcanada.com/mag/1/gluttenfree.php). Last year, while in Australia, I noticed a few places that actually offered gluten-free pizza, but this year there was an explosion. Not only are operators reporting about 10 to 15 percent of sales coming from gluten-free, there were tons of pizza base, pasta and product suppliers coming up to me at the trade show. This products not only caters to Celiac sufferers (those who are gluten-intolerant), but to their families and friends who choose not to go out for pizza or pasta because of the dietary needs of the one with Celiac disease.
Latino Flavors - Another trend that we not only reported on in last year’s Pizza Power Report, but also in a special feature in PMQ (Viva Latino at www.pmq.com/mag/2006april-may/article.php?story=latinopizza) is Latino influenced flavors. Nuevo Latino cuisine combines the influences of Latin American countries and the Caribbean by blending ingredients such as corn, plantains, chilies and tropical fruits. According to an article on the NRA site “Nuevo Latino ‘is probably the hottest and most significant trend,’ says David Pursglove, who heads up the TrendsAnalytics Group in Washington DC. ‘And it’s not just because the Latino population is growing. I have a hunch that highly flavored foods may appeal to baby-boomers, who allegedly are losing their taste buds as they get older," he says. National Restaurant Association research shows that Generations X and Y also seem to be attracted to flavorful ethnic foods such as Nuevo Latino.’”
Healthy is Chic – With an aging Baby Boomer generation and a youthful generation that is more conscious of what they are eating, 2000 was a signal for many people. Healthful foods don’t necessarily mean bland foods. Consumers are moving towards healthy and flavor-laden ethnic cuisines like Asian, Latino and Mediterranean foods. Consumers view these as foods that are healthy. With an emphasis on vegetables, grains, organics, and energy foods, healthy menus appeal to health-minded consumers. People are watching fat content, cholesterol, sodium and carbohydrates. Be conscious of this and design a pizza specifically catered to the health watchers, but the key is using menus descriptions that are appealing to read and photos that are mouthwatering.
Back to the Basics – Fusion foods (the melding of different styles such as Asian with Italian, etc.) have been chic for some time, but it seems there is a trend of getting back to things that are simple and flavorful. Over the last decade, handcrafted artisan pizza has finally created enough of a wave to have a ripple effect on the all-powerful pizza industry. Now you even have association such as the VPN (Vera Pizza Napoletana, which means “true-authentic” Neapolitan pizza) regulating old-world styles. You have chefs like Chris Bianco and others becoming celebrities in the artisan style of pizza making. Getting back to the basics and promoting your methods can pay off for the independents.
Conclusion
There are several notes about the pizza industry for the past year that we can notice. First, sales have been consistently rising for the past few years, with the industry sales increasing an average of 1 percent more in overall sales each year. But pizzerias represented 7.7 percent of all the 900,000 U.S. restaurants in 2005 and pizza sales only represented 7.1 percent of the overall restaurant sales in the U.S.. We have a slightly larger slice of the total percentage of American restaurants than we have in percentage of American restaurant sales. Average sales per store for the pizza industry was $449,867/year, which was an increase of 1.7 percent from the previous year’s average store sales, but this was still lower than the NRA’s average store sales for all restaurants in the U.S., which was $485,556/year for 2005. There are several trends, such as Latino influenced flavors, gluten-free offerings, and the artisan movement which can all be used to increase sales. Our pizza industry lost 458 stores who were killed in action this past year, but the independent pizzeria owners are slowly gaining ground on the Top 25 chains. Congratulations to those owners who has a great year and for those who had a rough year, stay tuned to PMQ’s Pizza Magazine and PMQ.com for new marketing and operations features.