Best and worst of 2009

Dec. 21, 2009
We don't need to rehash the financial nightmare that was 2009. Practically all the major pizza players had, at best, flat same-store comps and at least a few store closings, though there was definitely a range: Pizza Hut's Q3 same-store sales slipped by 13 percent and invited the ire of its largest franchisee; but comparative newcomer Pizza Patron upped those same-period comps by 6 percent, while inking deals to enter new markets and sports stadiums.
But there was much more to the year than financial statements. Read on for a few highlights — and a pothole.
Retail pizza sales rose – A huge trend in dining this year was trading down, which meant more people got their meals from the grocery store, where meals were 2 to 3 percent cheaper than last year. Enter DiGiorno, Kraft Food's branded frozen pizza label, to hit pizza delivery sales when they were already down by positioning themselves as a cheaper-but-similar-tasting alternative. That helped the brand gain several quarters of double-digit growth, earned it accolades from AdAge, and made it to the poster child for other retail pizza success stories, including private grocery label pizza, which also posted positives.
The popularity prompted many takeout/delivery chains to pursue a retail strategy, or as Donatos Tom Krouse put it, "diversifying their portfolio."
"Right now if people decide they want to eat out less, we're in grocery stores; if more, (they can visit) our restaurants," said Krouse, Donatos president of expansion brands, who just helped roll out new retail distribution arm Jane's Dough Foods. We expect to see more pizzerias getting into the retail business successfully next year.
Neapolitan 'za made dough – Mom-and-pop Neapolitan pizza has been cropping up all over the States recently, with 2009 revealing some with real potential for franchised operations or inspiration for Top 100 menu offerings. The trend was helped by down-shifting, as the particular pizza type's air of authenticity and emphasis on premium ingredients made it seem like bargain-priced fine dining.
Some bigger names that got into the artesian pizza trend this year include renowned serial restaurateur Steven Starr, who opened Pizzeria Stella in Phoenix to much fanfare and rave reviews in September. And artesian chain Punch Pizza, helmed by the founder of Caribou Coffee, has just added its seventh location in the Twin Cities. The question is whether the finer points of Neapolitan pizza -- wood-burning oven, specific Italian ingredients and configurations, and the specially trained pizzaiolo -- can really be standardized among so many restaurants. It will definitely play into Technomic's and other industry consultants' bet that regionalized ethnic food will be big in 2010.
Naked Pizza covered the nation -- New Orleans-based Naked Pizza has only been around since 2006, but it announced impressive expansion plans November. Naked's success story is a lesson in differentiating in a saturated market.
The soon-to-be chain has gone beyond the hackneyed promise of organic to the emerging food-you-can-use trend by promising pre- and probiotic crusts, multi-grain pizza, and all-natural, lower-calorie toppings. But it also embodies the holistic, grassroots mantra of the already popular sustainable foods movement. Co-founder Jeff Leach says he wants his customers to help form something like the AARP of the pizza industry: "We view ourselves as a social media marketing company that happens to sell pizza," Leach said. "We're trying to create the world's largest grassroots health organization through this (outfit)."
The brand's specific position caught the attention of Mark Cuban earlier this year, who had been running a national business plan contest. Naked Pizza's concept was plucked from 3,000 others; now Cuban will develop all the Naked Pizzas for the state of Texas. But Naked's coverage will go much farther than that. Founder Jeff Leach says the company will have awarded up to 500 units for development by the end of the year.
Papa John's shored up social media opps – Most pizza companies have leveraged social media for customer loyalty or attention this year, but perhaps none have done it as consistently as Papa John's. Last November, the third-largest pizza company offered a free medium pizza to new Facebook fans. This year, the conpany not only repeated that move but also appealed to that captive, 700,000-plus audience at every opportunity. For example, "Papa" John Schnatter makes regular use of viral videos -- like some that depict him in a '72 Z28 Camaro like the one he had sold to fund his father's tavern, which elicits a transparent, nostalgic tone for this year's weathered consumers. The company used social media in a similarly brilliant move to drive already robust Halloween delivery sales with an online costume contest.
There's no way to say how much these measures actually contributed to the company's impressive 53 percent profit growth in Q3 2009, but it sure has kept it in front of its customers. 
Nontraditional markets gained groundCalifornia Pizza Kitchen hopped on the hot high-to-low trend when it entered Hofstra University this year, lowering prices and extending hours for its captive student audience. Pizza Hut was the first to take a multinational chain to Nepal. And Pizza Patron extended its largely Mexican-based brand to newer markets, like richly Cuban Florida. All of these extended reaches have helped shore up new customers in times of tight profits. Expect the Middle East and U.S. military bases and universities to continue as popular nontraditional markets in the coming year.
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Domino's tanked with the 'Tube – For all the promise of social media, the consumer-owned medium must be handled with care. Nowhere was this demonstrated better than when a couple of Domino's employees posted a YouTube video of themselves picking their noses and investing in other unsavory behavior while preparing pizza in the company's kitchen last April. The video spread quickly across the 'Net and its most vital platforms, garnering it millions of views before the company was able to remove it and resurrect an apologetic video of its own. The company also erected a Twitter account to help with damage control.  The brand may still not have fully recovered from the disaster — but it's an important reminder to the rest of us that companies need to be proactive about managing their social media presence, which isn't always their own.

Topics: Business Strategy and Profitability , Commentary , Marketing

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