When Pizza Prices Are Cut, Toppings May Be Trimmed

According to the Detroit Free Press, “No matter how you slice it, competition is fierce in the crowded pizza business.”

“With an estimated 64,000 pizzerias in the U.S. — not counting all the bars, bowling alleys and warehouse clubs that also sell pizza — every place wants a bigger piece of the market, and one way to increase sales is to offer better deals than the competitor down the street.

But what’s happening behind the scenes when pizza-makers cut prices or offer what appear to be almost unbelievably good deals?

Some pizza chains known for low prices simply use fewer toppings than competitors, says Steve Green, publisher of the trade journal PMQ Pizza Magazine and a former Domino’s franchisee.

He says there’s an inescapable connection between prices and food costs (the percentage of every dollar that is used to pay for ingredients). On average, he says, most pizzerias have food costs of 25% to 30% and labor costs of 20%, leaving the 50% or so as gross profits.”

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