Pizza Trends You Must Know

During the last year, 4,034 American pizzerias were killed in action. Without ceremony, they were replaced by 4,159 new ones. What if those unfortunate victims who lost their livelihoods could have known what you are about to read? Could it have changed their destiny?

There are many dramatic and exciting changes going on right now in our industry that will impact on our odds of success and the path we should take. Fortune-making pizza opportunities are still there, but their appearances have changed.

PMQ took a look at the last 18 months of American pizza activity to identify trends, opportunities and potholes. By looking at how well the leaders of our industry have done; we hope to draw some conclusions about what pizza customers really want. We would like to thank Technomics, NPD Crest, InfoUSA and the National Restaurant Association for their help in this report.

Independents Have Better Year Than The TOP 25 Pizza Chains

Independents and smaller regional chains are having a great year. Their sales increased at twice the rate of the TOP 25 pizza chains. During the last year, independents and the smaller pizza chains increased their annual sales by 11% while their TOP 25 counterparts managed only a 5.4% gain. Most everyone had a good year; more stores, more customers, and more money spent by customers. More people than ever are eating pizza and the trend looks likely to continue.

As a whole, the pizza industry increased their sales by 8.4%. Even though the independents had a better year, they still lag far behind when comparing annual unit sales. The average TOP 25 pizza store is currently doing $589,000 per unit in annual sales. That is well ahead of the independents who managed just over $350,000 per year.

PMQ looked through the data presented here and wondered if we might develop some bold and generalized hunches of what your customers may want by looking at the success or failure, of the leading companies within our industry.

The Delivery Niche Category Doing Well

Let's look at what happened during the last year to those companies that are most identified with delivery to see if pizza delivery is still an effective way to win customers. While Domino's enjoyed their 26th quarter of consecutive positive sales increases, Papa John's is the current reigning superstar of the pizza industry. They've increased sales by an incredible 23.4% while increasing pizza outlets by 20%. Should you offer delivery?

Price Buster Pizza Niche

Hmmm. Only one of these made it to the TOP 25 list and Little Caesars closed over 600 stores last year. According to Sue Sherbow, VP of communications with Little Caesars, they closed only their under performing stores, while the other stores showed a positive sales increase. Internationally, they are doing much better. If you want to be the price leader in your market, you may want to wait for the next recession or be sure you're known for something other than just the price.

Take-and-Bake Pizza

Cold pizza has never been hotter. Want proof? Segment leader Papa Murphy's sales up 40% and units up 30%. Take-and-bakes have also found a very complimentary market within video stores. There are major mergers and minor mergers going on. Take time to visit the biggest video store in your town and see if it makes sense to set up a satellite store in their lobby. You'll be open during peak dinner/video rental hours. There are plenty of cooperative marketing opportunities as well.

Non-Traditional Locations.

Arkansas based Pizza Pro opened 24 stores during the last year to make the list of those opening the most. Villa Pizza also made it. And just falling short of our list was mama Ilardo's which you can read about in this issue on page 64. If pizza customers will not come to the store, then bring the store to the customers. That is the idea behind the non-traditional pizza locations now showing in gas stations, convenience stores, train stations, hospitals and grocery stores. As consumers continue to put more pizza into their diet, we are responding by building a more complete distribution system.

Regional Chains and New Concepts Building Strength

Now that Papa Johns has proved that there is always room for a good competitor, other regional chains are following. Notice below the list of fresh names you see among those pizza chains that are showing the most growth.

THE WINNERS	# of stores opened
Papa John's	305
Domino's Pizza	150
Papa Murphy's Take 'N' Bake Pizza	98
Casey's Carry Out Pizza	71
Villa Pizza/Cossoli's	70
CiCi's Pizza	35
Noble Romans	35
Godfather's Pizza	33
Fox's Pizza Den	27
Hungry Howie's Pizza & Subs	27
Pizza Pro	24

Those Pizza Chains opening more than 20 stores during last 12 months*
*Information based on InfoUSA mailing list of all new pizza stores opened during last 12 months. (Little Caesars and Pizza Hut were removed from this list since they closed more stores than were opened)

The majority of the members of the winner's list are following a convenience niche. Notice that the top six spots are held by pizza concepts, which are tightly focused on delivery, carry out, family buffet or non-traditional locations.

THE LOSERS	# of stores closed
Little Caesars	648
Pizza Hut	328
Mr. Gatti's	39
Pizza Inn	28
Mazzio's Pizza	14

Those pizza chains closing more than ten stores during 1999*
*Data calculated by PMQ based on information provided by Technomics.

The traditional pizzeria is here to stay, but these companies are running into some well-managed regional chains and independents. The pizza industry is now dealing with a harder-to-satisfy class of customer who wants to be enticed, entertained and fed. It's time to be creative like Mazzio's Pizza. Although they are 5th on the losers list they are taking advantage of change. They've closed their weaker stores while reinventing themselves as Zio's Pizza. Zio's Pizza has already made it in to the TOP 25 with only 11 stores. That's over three million a store.

During the last 12 months, 4034 U.S. pizzeria's disappeared but were replaced by 4159 different looking ones. Who's opening the new stores? Independents and small chains. Of the 4159 new pizza stores that were opened, only 929 were opened by the TOP 25. That means 78% of all new pizza stores are being opened by independents and small chains. Next summer we will see how they did when we do our 2001 Summer Pizza Progress Report.

What are your yearly sales?

Notable Others

*Chuck E. Cheese's
$1,531,000 per unit
355 units

**Piccadilly Circus Pizza
$210,000 per unit
681 units

Information provided by Technomics Inc. (312) 875-0004

Pizza Store Geography

Change In Pizza Store Count Since Last Summer

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The numbers positioned on each state represents the change in the number of pizza stores compared to last summer. Since then, there has been a relatively low turnover with a net gain of about 2%. The figures used to count pizza stores come from InfoUSA's continuously updated list of American pizza stores (sic code 581222) and in addition include Italian restaurants that advertise under the yellow page listing of "Pizza".

Pizza Store Geography

American Pizza Stores Per Capita

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Above Average
State	Stores	Population	per 10,000
ME	519	1,253,040	4.14
NH	478	1,201,134	3.98
PA	4,564	11,994,016	3.81
IA	1,078	2,869,413	3.76
RI	356	990,819	3.59
CT	1,174	3,282,031	3.58
MA	2,207	6,175,169	3.57
NJ	2,802	8,143,412	3.44
DE	257	753,538	3.41
OH	3,694	11,256,654	3.28
VT	182	593,740	3.07
MI	2,945	9,863,775	2.99
IN	1,733	5,942,901	2.92
WV	523	1,806,928	2.89
NY	5,232	18,196,601	2.88
SD	202	733,133	2.76
ND	174	633,666	2.75
Average
State	Stores	Population	per 10,000
MT	240	882,779	2.72
AK	163	619,500	2.63
WY	125	479,602	2.61
IL	2,995	12,128,370	2.47
MN	1,166	4,775,508	2.44
WI	1,277	5,250,446	2.43
ID	304	1,251,700	2.43
OR	765	3,316,154	2.31
NE	380	1,666,028	2.28
KS	591	2,654,052	2.23
CO	898	4,056,133	2.21
MO	1,196	5,468,338	2.19
NV	393	1,809,253	2.17
UT	447	2,129,836	2.10
KY	826	3,960,825	2.09
FL	2,997	15,111,244	1.98
AR	496	2,551,373	1.94
Below Average
State	Stores	Population	per 10,000
MD	998	5,171,634	1.93
NC	1,459	7,650,789	1.91
VA	1,301	6,872,912	1.89
WA	1,059	5,756,361	1.84
AZ	874	4,778,332	1.83
OK	606	3,358,044	1.80
SC	691	3,885,736	1.78
NM	307	1,739,844	1.76
CA	5,632	33,145,121	1.70
TN	901	5,483,535	1.64
DC	82	519,000	1.58
GA	1,130	7,788,240	1.45
HI	168	1,185,497	1.42
AL	560	4,369,862	1.28
TX	2,559	20,044,141	1.28
LA	518	4,372,035	1.18
MS	299	2,768,619	1.08

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AVERAGE
STATE	PIZZA OWNERS	PIZZA STORES	STORES PER OWNER
MS	58	299	5.16
HI	38	168	4.42
TX	667	2559	3.84
OK	158	606	3.84
KS	161	591	3.67
IA	294	1078	3.67
AL	155	560	3.61
DC	23	82	3.57
NE	107	380	3.55
LA	149	518	3.48
MO	346	1196	3.46
GA	331	1130	3.41
ND	51	174	3.41
NM	92	307	3.34
TN	271	901	3.32
VA	421	1301	3.09
SD	67	202	3.01
ABOVE AVERAGE
STATE	PIZZA OWNERS	PIZZA STORES	STORES PER OWNER
UT	150	447	2.98
AR	168	496	2.95
NC	498	1459	2.93
WY	43	125	2.91
AZ	303	874	2.88
KY	293	826	2.82
CO	336	898	2.67
IN	658	1733	2.63
MN	448	1166	2.60
NV	151	393	2.60
FL	1154	2997	2.60
ID	120	304	2.53
SC	273	691	2.53
OR	311	765	2.46
IL	1229	2995	2.44
WV	223	523	2.35
CA	2470	5632	2.28
BELOW AVERAGE
STATE	PIZZA OWNERS	PIZZA STORES	STORES PER OWNER
MD	442	998	2.26
MI	1314	2945	2.24
WA	476	1059	2.22
OH	1683	3694	2.19
MT	110	240	2.18
WI	642	1277	1.99
AK	85	163	1.91
DE	137	257	1.88
NH	279	478	1.71
RI	210	356	1.70
NY	3096	5232	1.69
MA	1324	2207	1.67
NJ	1684	2802	1.66
PA	2842	4564	1.61
ME	349	519	1.49
VT	124	182	1.47
CT	850	1174	1.38