By Billy Marino
Streamlining operations has become a necessity for pizzerias in the current economic climate. Recently, numerous articles have reported on the closure of various restaurants, particularly those that fall into the casual dining category. These are not pint-sized establishments or fine-dining options; rather, they’re places such as Applebee’s, traditional sit-down pizzerias, and breakfast, lunch and dinner venues.
These middle-of-the-road dining spots are facing significant challenges in today’s market. Signs point to chain pizzerias having a rough time, too: Pizza Hut and Papa Johns have both recently reported plans to close hundreds of units. The restaurant industry is currently navigating a period of profound structural dislocation that extends well beyond typical cyclical softness. Some experts have described this phenomenon as a “pruning” of the industry.
Americans are spending more on food than ever before, but their purchasing behaviors have shifted dramatically. This transformation, which I consider a tectonic shift in the hospitality market, is primarily driven by the emergence of third-party apps for online ordering and delivery.
Go Digital or Go Home
During the COVID-19 pandemic, digital ordering became the norm, replacing traditional phone calls and walk-ins. Now consumers primarily rely on online platforms to explore dining options, putting restaurants without a robust digital presence at risk of losing business. Traditional, old-school places have had to either quickly upgrade their online ordering systems or risk sales declines that could result in business closure.
Competition for consumer attention has intensified, particularly for medium-level restaurants located in neighborhoods with lower foot traffic. Consumers no longer feel the need to find nearby restaurants; instead, they look online, creating a disconnect for establishments that haven’t adapted to the digital landscape. DoorDash reports that 65% of consumers have used its app to explore and try out new restaurants. Even restaurants situated near large populations are struggling as diners browse options on their smartphones instead of venturing out.
Additionally, third-party apps have recruited a sea of new restaurants and bars to the carryout and delivery market. In 2023 alone, DoorDash added 100,000 merchants to its marketplace. Just a few years ago, when you opened the DoorDash app on your phone, it was filled with well-established restaurants and independents. Now, you see virtual brands, ghost kitchen brands, bars, convenience stores—literally everyone with a kitchen (or just a refrigerator) in their business is offering delivery on the apps. It’s become saturated. Pizzerias are no longer the only, or the dominant, delivery game in town.
At the same time, the cost of providing full-service dine-in has risen dramatically, making it less economical for consumers. As the economic headwinds continue to batter consumers, many have chosen to trade down. They are willing to spend $15 or $20 on a salad or pizza, but not $50 or $60 on a sit-down meal at an average restaurant. This shift has put the mid-level dining sector under severe stress, as people seeking affordable dining options are increasingly opting for delivery or carryout services instead.
Mid-level restaurants face the challenge of offering affordable full-service dining as operating costs soar out of control—and many establishments find the task increasingly difficult. This shift has resulted in a large decrease in customer dine-in traffic, and a growing number of full-service restaurants are filing for bankruptcy in response.
Go Small or Go Home
At Leona’s Pizzeria in Chicago, we have responded to these changing times by closing two of our full-service dining locations and shifting toward a more digital-focused operation. We realized that the guests were still there—along with a whole new generation of hungry, motivated pizza customers—but reaching them had changed.
By reducing our footprint by approximately 75%, we can operate smaller, more efficient spaces, averaging around 1,000 square feet. This decision allows us to optimize labor costs and minimize overhead while focusing on limited dine-in, plus carryout and delivery.
The goal is to provide top quality food without the traditional expenses associated with maintaining a large dining room. Pizza is traditionally considered an affordable food, but when you attach large real estate costs, dine-in labor costs and overhead, it can quickly become what I like to call “Cost Impossible.” We operate in Chicago, arguably one of the most expensive markets in the U.S., and we must stay wired tight to remain successful.
We have also focused on our slice business as part of our strategic footprint. We realize that people eat with their eyes; therefore, we have invested in large glass slice cases and multi-tier pizza warmers in all of our city locations. In Chicago, “slice culture” has never really been a thing until just recently. We enjoy the flexibility the slice cases give us to showcase new toppings and styles. It also allows people to try out numerous styles of pizza instead of requiring them to order a whole pizza.
These changes actually align with the origins of our brand. Leona’s started as a small counter service and delivery operation in 1950. The growth and success associated with our brand was attributable to a large delivery business. (Leona’s pioneered fleet delivery cars with branded signs.) Although dine-in pizza parlors were very popular and successful in the ’80s and ’90s, times have changed, and we needed to change with them.
This strategic shift has resulted in streamlined two-person staffing during slower times. We have a modular staff system that allows us to quickly ramp up staffing, ensuring efficiency during peak times. Our store staff is also cross-trained in multiple areas of the operation. Our cashiers and order takers can do prep work, clean, and even jump in and make pizza. Everyone does everything. We no longer allow employees to say, “I’m just a pizza cook” or “I’m just a dishwasher.”
The operations are smaller and more condensed, but don’t let the small footprint fool you. We can put out some serious volume. Our kitchens are built for volume. They flow in lines and are designed for high-traffic areas where we can put out large order volume—quickly.
We have front counters for order taking and also backup POS terminals for online orders during dinner rush.
Our latest location has a second backup pizza oven for the dinner rush, with a duplicate prep table in the rear to pick up rollover and online orders during peak times, when our front area is busy.
Without wasting resources on managing dining rooms, we now have developed arobust catering and business lunch segment. While some diners still seek casual-dining experiences, it is evident that maintaining a large dining room is becoming economically unfeasible, especially in higher-cost markets like Chicago. We maintain sidewalk cafes and limited inside dining at our locations.
Ride the Shifting Tides
The hospitality landscape is shifting dramatically. The future may or may not see a resurgence of casual full-service dining. However, the prevailing trends indicate a continued emphasis on convenience, value and an effective digital presence in the restaurant industry.
As we adjust to these realities, we must prioritize operations that are viable and capable of sustaining profitability in a highly competitive market. By staying adaptable and attuned to consumer preferences, we can effectively navigate these changes.
A U.S. Army veteran with a business degree from DePaul University, Billy Marino is an entrepreneur with more than 30 years of operational and executive experience. He uses his diverse background in construction, real estate, logistics and international trade to drive innovation in the pizza industry. He has collaborated with major foodservice brands—including Hormel, Rich Foods, Walmart and Fontanini Italian Meats—to support product development and international pizza initiatives. He has also contributed to the creation of frozen pizza concepts for emerging global markets.
Billy was mentored by the late industry icon Eugene Fontanini and continues to be guided by Fontanini Italian Meats co-founder Joanne Fontanini, gaining valuable insight into branding, sales, supply chain strategy and evolving market trends. In 2022, he acquired the legacy assets of Chicago’s historic Leona’s Pizzeria and has since focused on revitalizing the brand and expanding its product offerings.
