In the May, issue we took you to Italy, France, Austria, Spain and Switzerland. This month, we’ll explore the industry leaders in Norway, Sweden, Finland, Russia, Poland and Turkey.
The pizza market overseas is divided into three areas—full service, quick service/fast food and delivery—and each segment has its own rules. The quick-service restaurants and the delivery services have profited the most during the difficult economic climate of the last few years, and they are also the ones who are announcing the most ambitious expansion plans. Two U.S. brands dominate the pizza scene overseas: Pizza Hut (pizzahut.com), with more than 13,000 units in almost 100 countries, and Domino’s Pizza (dominos.com), with more than 9,000 stores worldwide. Both brands are present in numerous European countries. Pizza Hut has nearly 1,340 outlets in Europe, most of them in Great Britain (649), France (112) and Portugal (97). The four European pioneer brands are Telepizza (telepizza.es; Spain), Pizza Express (pizzaexpress.com; U.K.), Koti Pizza (kotipizza.fi; Finland) and Spizzico (Italy).
Among the Scandinavian countries, Norway is known as the pizza loving country. Pizza is a common everyday convenience dish in Norway, and the average Norwegian eats a pizza meal every other week. Two large foodservice players dominate the market: Peppes Pizza (peppes.no), with 93 units around Norway; and Dolly Dimple’s (dolly.no), with 80 units. Norwegians’ consumption of pizza is among the highest in the world. Out of the total number of pizza meals consumed in Norway, the majority consist of frozen pizzas sold in supermarkets, and a smaller part is sold in restaurants or delivery shops. Norway is the country where the delivery segment has enjoyed the greatest success. A common market observation is that the overall pizza segment growth has stagnated in the last couple of years, and competition among the chains has increased. “We experience that price has become an important competition factor,” says Harald Barfod, marketing director of Peppes Pizza. “We welcome more focus on concept and product development, in order to draw the customer’s attention from price to value and quality.” Peppes Pizza is owned by Umoe Restaurant Group, the giant foodservice player on the Norwegian market that also holds the licence for Burger King, T.G.I. Friday’s and other brands. Peppes introduced the American-style pizza in Norway when its first restaurant opened in 1970. About 50% of Peppes’ units are run by franchisees, and about 50% are company-owned. Since 2005, it is also present in Kuwait, with five units, and soon will open in Egypt with the same franchisee partner as in Kuwait. About 60% of the pizza meals are consumed in-restaurant, 25% for delivery and 15% takeaway. In the restaurants, Peppes has launched new pizzas in a recipe cooperation with the famous chef and member of the Norwegian culinary team Sven Erik Renaa. Peppes is also in the retail business, with a line of branded products to “make Peppes pizza at home.” The range includes fresh pizza dough, pizza dough flour mix, pizza cheese, tomato sauce, pepperoni, etc. Another large pizza player is Pizzabakeren (pizzabakeren.no), a chain of 80 pizza shops in Norway focusing on 100% takeaway/delivery (waiting seats only) and 100% franchise. The company has had a rapid expansion and plans for continued growth (approximately 10 to 15 units per year). In October 2010, Pizzabakeren will open its first outlet in Sweden and plans to expand further in the southern parts of Sweden. Other players competing on the Norwegian scene are, for example, Pizza & Kina Expressen (22222222.no; 11 units), which used to be owned by NorgesGruppen but is now privately owned; and Pizza Baronen (pizzabaronen.no; 9 units).
The pizza market in Sweden is dominated by small, local and privately owned pizzerias “just around the corner.” More than 70% of these units’ turnover comes from takeaway business. It’s still quite common for consumers to phone in their orders, and then come and collect the pizzas themselves. Online ordering is increasing; website examples are onlinepizza.se and pizza.nu. The companies behind the sites coordinate the orders and their delivery from individual pizza shops and restaurants. There is a general trend toward higher-quality ingredients, and specialty trends toward gourmet pizzas, sourdoughs and dough made of spelt flour. Pizza is also on the menu in restaurants that do not specialize in pizza as such; for example, in full service restaurants such as Kungsholmen (kungsholmen.com) in Stockholm, part of the F12 Group, which includes a shell-fish pizza on the menu. Pizza Hut (pizzahut.se) is Sweden’s only established pizza chain brand. The NRG Pizza company holds the nationwide licence from franchisor Yum! Brands. NRG runs 11 Pizza Hut restaurants in Sweden and plans to add another one to two units each year. The strategy for Pizza Hut Sweden has been to move its market position toward casual dining and even more toward the premium dining segment. “During the last five years, we have developed a broader menu and invested in restaurant interior and atmosphere,” says NRG managing director Björn Källström. Pizza choices are complemented with pasta dishes, salads, spareribs, chicken wings, nacho dishes, etc., in order to offer a better variety for regular guests and those who prefer other dishes to pizza. The American pan pizza is still the dish with the greatest sales volume. There is a growing preference among customers for more high-quality fresh ingredients and toppings. Many of these ingredients are added after the pizza is baked—for example, rucola salad, Parma ham, fresh herbs, etc. SSP, Scandinavian Service Partner, holds the Pizza Hut Express license for high-traffic locations. The company is currently operating two Pizza Hut Express outlets. One is located at an airport and the other is at a train station.
The pizza segment in Finland is practically in the hands of one player: Koti Pizza. With the impressive number of 280 restaurants in Finland, one in Russia and two in Estonia, it is one of the top three pizza chains in Europe in terms of number of units. Rabbe Grönblom, an entrepreneur to his fingertips, founded Koti Pizza in the city of Vaasa in 1987. Since then, growth has been steady and entirely organic. The strategy is to operate exclusively on a franchising basis, and most franchisees run one or two units. Only eight outlets are company-owned. The domestic expansion in Finland will continue. “There are more than 1,000 individual pizzerias in Finland, so there is clearly a market potential for more Koti Pizza outlets,” says managing director Kim Hanslin. “In Russia, we will start expanding as soon as we have selected a master franchising partner there.” Koti Pizza is also in the process of entering the Korean market and hopes to open its first unit in Korea soon. All Koti Pizza units have some form of eating-in facilities, although some of them are small. The expansion focus in Finland is on shop-in-shop (establishments in gas stations and shopping centers). A distinct trend within Koti Pizza is more takeaway and delivery. Delivery service is available all over Finland and provided by a mix of company-owned vehicles, taxi cooperations and external distribution companies. The health trend affects the pizza consumer as well, and there is a tendency to choose healthier pizza alternatives.
Italian cuisine is still a hit in Russia, though the number of traditional pizzerias keeps decreasing. Most restaurants are widening their concepts to include pasta, main courses, American thick-crust pizzas, and sometimes other ever-popular bestsellers, such as Bavarian sausages, Russian salad, borscht and even sushi. Russian pizza chains started to widen their offerings five years ago, aiming for a bigger target clientele. Some chains still have the word “pizza” in their brand names, notwithstanding a vague, often multinational offer. The share occupied by pizza on the menu depends on the concept. If the chain positions itself as an Italian trattoria or osteria, pizza accounts for no more than 30%. More than 80% of the food provided by delivery chains is pizza. Most Russian consumers prefer thick pizza toppings with a lot of meat as opposed to simple formulas; they would rather have pork and beef or ham and mushroom than a Margherita. Bacon, cheese, tomatoes, olives and mushrooms are among the bestselling toppings, and fish and veggie pizzas are less popular.
The choice of fresh or frozen dough depends on the concept and the size of the chain. Single restaurants and small chains of three to 10 units mostly use fresh dough. Big chains using a central kitchen—i.e., Il Patio (il-patio.rosinter.com)—work with frozen dough, which is cheaper and easier to use. For many years, Il Patio, operated by Rosinter Restaurants Holding, has been Russia’s biggest pizza chain. The first outlet opened in 1993 under the name of Patio Pizza. In 2004, Patio Pizza turned into Il Patio as the result of total rebranding. The chain now operates 75 full-service restaurants in Moscow and the Moscow region, 37 of them as franchises, and 41 more in other regions of Russia. Pizza accounts for 25% of the menu and is sold in two sizes, 25 and 30 centimeters. The average bill comes to 1,100 rubles (28 euros). The main menu includes two pages of pizza offerings: “Pizza Neapolitano,” with classic recipes; and “Pizza Moderno,” with original pizzas from the chain’s brand chef, Andrea Maestrelli.
The second biggest operator is Sbarro (sbarro.ru; owned by GMR Planet of Hospitality). The brand first came to the Russian market in 1997. The company has grown in recent years, mostly in food courts. The chain now operates 110 QSR restaurants, 51 of them in Moscow and seven in St. Petersburg. Pizza generates about 40% of total Sbarro sales, with delivery accounting for 10%. Bestsellers are the Margherita, Chicken With Vegetables, and Meat (mozzarella, pepperoni, Italian sausage, ham and bacon). The average bill comes to 280 rubles (7 euros).
2006 was the year the first pizza concepts in the higher-price segment appeared in Moscow, among them Bocconcino (bocconcino.ru), now turned into a chain, with an average bill of 2,000 rubles (50 euros). Bocconcino’s owner, Mikhail Gokhner (also owner of El Gaucho and Café Uzbek) relies on a classic Italian full-service formula. Bocconcino has three outlets in Moscow; the next restaurant is planned to open in Nizhny Novgorod. Pizza is prepared in a woodburning stove, and it accounts for about 30% of the menu. Top sellers are the Seasons (mozzarella, ham, olives and artichoke, for 480 rubles/12 euros) and Bocconcino (mozzarella, tomato and Parma ham, for 780 rubles/19 euros). Apart from pizza, homemade pasta, antipasti, salads, cheese and olives are on offer.
Mi Piace is more of a budget concept, with an average bill of 1,000 rubles (25 euros). The chain, consisting of seven full-service restaurants, is operated by the Inter-Style group. The co-owner is Levon Oganezov. Mi Piace is now heavily promoting telephone and online delivery service.
Academia Cafe & Pizzeria offers pizza alongside sushi and sashimi. The average bill comes to 2,000 rubles (50 euros). The project, which is run by Igor Vitoshinsky, has successfully expanded to 10 outlets in the last 10 years. Bestsellers among the pizzas are the Spinacha (cream, mozzarella, fresh spinach, eggplant, zucchini, beef and olives), Quattro Formaggio (mozzarella, ricotta, Gorgonzola and Parmesan) and Italiana (tomato sauce, mozzarella, salami, porcini mushrooms, rucola and Parmesan). A pizza costs 350 rubles (9 euros).
Another large part of the pizza market consists of chains offering a delivery service, with or without restaurant sites. Papa John’s (papajohns.ru) sells American-style thick-crust pizza from 11 outlets in Moscow and delivers to homes, to the office and even to parks from the chain’s own restaurants and kitchen-centered units, which have only two or three tables. The franchise holder is PJ Western Retail Investments, run by Christopher Wynne. The delivery service accounts for about 70% of total sales. Pizza generates about 60% of the chain’s total sales. Along with thick-crust dough, which most consumers prefer, thin-crust pizza is also on offer. Top sellers are the Super Papa for 479 rubles/12 euros (pepperoni, Italian sausage, ham, mushrooms, green pepper, onion, olives, mozzarella and tomato sauce), Chicken Ranch for 449 rubles/11 euros (grilled chicken, bacon, fresh tomatoes, garlic, mozzarella and ranch sauce), and Alfredo for 489 rubles/12.5 euros (ham, bacon, tomatoes, mushrooms, mozzarella and cream sauce). The average bill in the restaurants is 560 rubles (14 euros), 25% lower than for delivery (750 rubles/19 euros). The chain aims to open 30 to 40 units in Moscow so as to provide a delivery service for the entire city. The Papa John’s standards aim at delivering pizza within 35 minutes, the range being strictly limited because of Moscow’s heavy traffic.
Pizza Hut was one of the first international chains to enter the Russian market at the end of the 1980s. The chain has gone through hard times and now has only three restaurants left in Moscow, all of them offering delivery, which generates half of total sales. The average bill is 350 rubles (9 euros). The brand is also present in St. Petersburg; 11 restaurants are operated by AmRest via franchising.
Among the leaders in the delivery segment is Pizza Factory (pizzafab.ru). Pizza can be ordered by phone or bought at any of the chain’s 23 cafes. Delivery accounts for about 70% of sales. Dough and toppings are prepared at the central kitchen.
Domino’s Pizza (dominospizza.ru) is run by Langard DP, the brand’s master franchisee in Russia since 1998. Pizza is either delivered or sold on-site at 12 pizzerias in the suburbs. Bestsellers are the Deluxe (tomato sauce, mozzarella, green pepper, onion, pepperoni, mushrooms and pork), Canadian (tomato sauce, mozzarella, pepperoni, mushrooms and bacon) and Meat (tomato sauce, mozzarella, ham, pepperoni, pork and beef).
Allo!Pizza (allopizza.su) started with delivery in 2000. Some time later, the company made the decision to start its own budget pizzerias, and 10 of them are now open in Moscow, with three in St. Petersburg. The menu is half pizza, half pasta/antipasti. The average bill is 240 rubles (6 euros).
The development of pizza chains is one of the most dynamic aspects of the Polish restaurant market. Proof of this is the imminent return of Domino’s Pizza (dppoland.com) to Warsaw. Its Polish operations will be headed by the DP Polska corporation, which has signed a contract with the U.S. headquarters to this effect. On the board of directors at DP Polska are the co-creators of the Eastern European coffee-bar concept, the Coffeeheaven chain.
The agreement marks the return of Domino’s Pizza to Poland following its previous failure some years ago. Domino’s was first launched in Poland in the 1990s, with a company called Pizza King Polska in charge of its development. By 2002, all Domino’s Pizza outlets had disappeared from the Polish market, and the corporation that was charged with managing them had gone bankrupt. Some of the 16 service points that had been established were closed, and the rest were sold off to AmRest, the owner of Pizza Hut (pizzahut.pl) in Poland. Domino’s Pizza will begin its return to Poland by opening new service points in Warsaw; 27 of them are set to open in the capital by the year 2012. There are also plans for expansion into other large Polish cities, although there have, as yet, been no details of these plans.
However, bringing this well-known pizza chain to Poland might be harder than one imagines. It’s true that this type of restaurant is developing energetically in the Polish market, but there is also heavy competition. Aside from the larger chains, there are numerous smaller ones, not to mention the vast number of small restaurants that offer pizza as part of their overall menus. The largest pizza chain in the Polish market is Da Grasso (dagrasso.pl), which owns 203 service points in more than 140 towns and cities. These include 169 pizzerias, 22 premium pizzerias, two Da Grasso Express pizzerias and 10 restaurants under the Da Grasso label. This year alone, the corporation plans to open 14 new service points. “The rapid development of Da Grasso is testimony to the fact that we understand our customers well,” claims Magdalena Piróg, vice president of Da Grasso. “We know what they like, but we also try to surprise them with new additions to our menu. The new restaurants will be more modern and have a far more tasteful interior design. We are proud to be present in more than 140 Polish towns. The Da Grasso label is recognized and enjoyed in every part of our country.”
As well as building new pizzerias, Da Grasso is also working on new projects, such as the development of a number of restaurants based on the Da Grasso Express concept. Da Grasso restaurants serve Mediterranean food, including pasta, salads, soups, appetizers and desserts. Beyond that, their menus offer 75 types of delicious pizza, all served with two unique sauces—garlic and tomato. The Da Grasso Express concept concentrates on a fast delivery service to customers from a limited menu. The company has been continuing to implement its plans since the beginning of this year, even though it is in the process of merging with the Sfinks Polska corporation.
Da Grasso’s main competitors on the Polish market, which have also gained a great deal of experience in Europe and around the world, are the Pizza Hut and Telepizza (telepizza.pl) chains. The former currently has 54 service points, the latter 118—and their ambition is to equal Da Grasso.
Another competitor that is doing well in the competition with its foreign counterparts is the Polish-owned pizza chain Pizza Dominium (pizzadominium.pl). The company currently has 60 service points throughout Poland and four Telepizza, Poland Pizza Hut, Poland Da Grasso, Poland overseas restaurants. This year, it plans to debut on the Polish stock market. The money the company earns from the sale of stock will be used to fi nance its further development and expansion.
The success of pizza chains in Turkey is fed by the enthusiasm for new food experiences there, as well as by changing customs (people are increasingly too busy to cook at home). Nevertheless, there is a cultural factor that distinguishes the pizza market from other exotic food businesses. Pizza is a typical Mediterranean food, somewhat similar to Turkish dishes such as pide, borek or lahmacun. So, compared to other foodservice operators in Turkey, pizzeria owners have performed relatively well in recent years. This is due to consumers’ need to save money, which has led to their seeking inexpensive meals and dining at home. This, in turn, has stimulated takeaway and delivery services.
Pizza delivery is a relatively new phenomenon in the country, largely because of problems with organization and transport that have slowed its development. However, particularly among the youth population, the trend is on the up. Indeed, pizza chains in Turkey perform well with express formats, which have a reduced outlet size and few or no dine-in areas, encouraging takeaway. Delivery service is available chiefly in Istanbul but also, to a lesser extent, in other major cities. Online delivery orders are gaining market share through the website yemeksepeti.com.
Turkey’s pizza market is dominated by hundreds of individual local operators, notwithstanding the increasing number of chains. Individual Turkish entrepreneurs have succeeded in gradually opening more units, as in the case of Pizza Bulls (pizzabulls.com), Pizza Max (pizzamax.com.tr) and Pasaport Pizza (pasaportpizza.com). Even though they may be considered small in terms of number of outlets, they enjoy high levels of trust among local consumers and have ambitious expansion plans for the future. However, the best example of what is happening in the Turkish market is the Pizza Pizza (www.pizzapizza.com.tr) chain, which is the largest in the country, located mainly in the city of Izmir. The first outlet was opened in Izmir in 1995, and the company started expanding in 1999. Today, it operates about 145 units.
Multinationals also play a major role in Turkey’s pizza sector. Domino’s Pizza (dominos.com.tr), with the strongest presence in Istanbul and Ankara, and Sbarro compete with Pizza Pizza in the top three, while Pizza Hut (pizzahut.com.tr) was the pioneer international chain, entering the market in 1989. Little Caesars (littlecaesars.com.tr) also appears on the list of foreign pioneers, opening its first outlet in Istanbul in 1996.
Pizza chains continue to have high expectations of Turkey, quoting the country as a key global market and planning further growth in operations there. The majority of chains are located on the Western side of the country; Istanbul, which alone has more than 11 million people, represents the core of the pizza market. In recent years, the pizza business has rapidly expanded in other major cities, such as Ankara, Izmir, Antalya, Dalaman and Bursa.
When it comes to full-service restaurants, there are more international Italian restaurant chains providing pizza than there are home-grown, full-service pizza chains in Turkey, where full-service restaurants tend to be individual, local operations. Full-service pizza restaurants attract wealthier customers, especially businesspeople, thanks to an informal luxury design. As a result, the average bill per person is three times that of continental Europe.
Part three of three will cover the U.K., Germany, the Netherlands and Belgium.