As Pizza Consumption Increases, Delivery Rates Fall

According to adage.com, “Another surprising victim of the recession: delivery pizza. Improved frozen fare, more grocery-made pies and a profusion of high-quality mom-and-pop shops have led the billion-dollar pizza chains to expand their menus to include wings, pasta and sandwiches. But the larger selection seems to have created a bit of an identity crisis for industry leader Pizza Hut, which will begin calling itself “The Hut” in some of its marketing efforts.”

“Even as overall pizza consumption increases, ‘the large chains have been losing share of the pizza market for years,’ said Technomic President Ron Paul. As a result, he said, major companies are leaning on their next-best asset: massive delivery infrastructures that can bring a variety of fare to consumers’ doorsteps in 30 minutes or less.”

“Pizza Hut’s sales grew 4% to $5.3 billion in 2008, while Domino’s sales fell 5% to $3 billion, according to Technomic. Pizza Hut holds about 18% of sales in the so-called pizza sector, a $29 billion category. Pizza Hut’s share was nearly double that of Domino’s 10%; third-place Papa John’s posted sales up 3% during 2008, to $2 billion, snagging 7% of the market,” the story said. 

“‘Limited-service’ pizza sales were up only 0.4% during 2008, and Pizza Hut and Papa John’s gains lagged in comparison to those in the freezer aisle. Frozen-pizza sales jumped 6% to $1.2 billion according to Information Resources Inc., which doesn’t include Walmart or club stores. Some top performers included sector-leading DiGiorno, up 14% to $228 million, followed by all private label, up 36% to $123 million.”

“Pizza Hut parent Yum Brands doesn’t break out same-store sales by chain on a quarterly basis, but the company has cited weakness at the chain since the beginning of 2009. During the company’s first-quarter earnings call, Yum President David Novak said the rest of the year will be challenging for Pizza Hut as consumers eat more at home. ‘Value continues to play an important role with our customers,’ he said, ‘and that is a challenge for us.'”