- PROJECT HELP
- WHITE PAPERS
This year, the pizza segment seemed to throw years' worth of recessionary caution to the wind, and get back on a track toward growth – both domestically and internationally.
That growth, coupled with the staggering increase in online/mobile ordering, trumped high gas and commodity prices as the (non-food) stories of 2012.
Domino's international division recently turned in its 75th consecutive quarter of same-store sales growth, attributable in part to store growth. The company is expanding in new markets such as Nigeria, Germany and Macedonia, and reached its 10,000-store milestone in September with an opening in Turkey.
"Reaching that milestone is just a platform for us to launch our next phase of international growth," CEO Patrick Doyle said in a recent call.
In September, Papa John's also marked a milestone opening, with its 4,000th global location. In November, the company reported that its international division has a pipeline of about 1,500 units planned within the next six years, with markets such as Azerbaijan debuting in 2012.
Pizza Hut continues to have the wind at its back in China, while also growing in Africa, Thailand and throughout Canada.
This global ambition has extended far beyond the big three. In the midst of a turnaround effort, Sbarro is expanding in India. Villa Italian Kitchen signed deals for Egypt and Colombia; zpizza and Pizza Rustica are headed to the Middle East; Round Table is spreading in Mongolia; and Papa Murphy's has big plans for Canada and the Middle East.
Plenty of pizza players gained capital and confidence this year to expand their domestic footprints as well. By year's end, Papa John's will have more than 200 new agreements in place from 2012.Fresh Brothers just opened its eighth unit and secured equity to accelerate growth to 100-plus units.
Russo's New York Pizzeria and Russo's Coal-Fired Italian Kitchen marked their 20th anniversary by outlining expansion plans. Go Roma is eyeing the Upper Midwest, while Stevi B's added a presence in Virginia and Fuel Pizza debuted outside of the Carolinas.
Also growing their footprints are Mellow Mushroom, Flippin' Pizza, Blaze Pizza, MOD, Casey's, Spin!, Papa Murphy's, Pizza Patron, LaRosa's, Patxi's Pizza, Straw Hat Pizza, Pie Five Pizza Co. and more.
Remodeling and rebranding
Rebranding was the big 2012 theme in the quick-service burger space. Some pizza brands are doing the same, with objectives ranging from righting the ship (Sbarro, post-bankruptcy) to modernizing and energizing the concept (California Pizza Kitchen's new prototype).
CiCi's is remodeling its system, with an increased focus on carry out. After hiring a new agency in January, Chuck E. Cheese transformed its iconic mouse into a modern, rock star mouse, while shifting its marketing focus from kids to parents. Little Caesar's also tapped a new agency for a brand makeover, and has revisited its traditional "Pizza! Pizza!" tagline.
The Loop, Domino's and Pizza Patron have also introduced new prototypes. Domino's new "Pizza Theater" store design is complemented by a new logo. Pizza Patron has added drive-thrus to some stores, designed to push out pizzas in less than 4 minutes.
Additionally, Pizza Hut has increased its focus on its Delco Lite model (delivery and carry out), while Noble Roman's introduced its new standalone take-n-bake model.
Sports (and) marketing
Pizza and sports make great bedfellows; it's why the biggest business day of the year is Super Bowl Sunday. This year, sports promotions were especially prevalent, anchored by Papa John's 2 million pizza giveaway, introduced by now-franchisee Peyton Manning.
Pizza Hut tapped Tim Tebow for its annual children's reading program, and Aaron Rodgers for its Big Dinner Box ads. NASCAR got a boost from brands such as Pizza Inn, Cottage Inn and Hunt Brothers. Naked Pizza partnered with Steve Nash, while Little Caesar's signed on to sponsor ESPN's SportsCenter.
Pizza Inn added its name to the Iowa Speedway and Minnesota Twins facility, while Derrick Rose promoted Giordano's. March Madness campaigns were also created by Domino's, Pizza Hut and Little Caesar's.
The U.S. Census indicates that the Hispanic population is expected to grow 34 percent from 2010 to 2020, and restaurant chains are shifting their marketing techniques to appeal to the demographic.
Pizza Patron's "Pizza Por Favor" campaign, which ran for three days in June and offered a free pizza for customers ordering in Spanish, resulted in record sales for the company. The chain is also currently testing a multi-lingual online ordering component.
In November, Domino's launched a new Spanish-language mobile ordering app. The chain also debuted its first-ever Spanish language TV campaign in June.
Social media grows up
Just a short time ago brands were starting to figure out how to effectively use Facebook and Twitter. Now brands such as Chuck E. Cheese's, Domino's and Naked Pizza are expanding their presence to fledgling sites like Pinterest and Instagram.
Others have stepped up their existing social campaigns to better engage their fans. In July, Rosati's crowdsourced its Facebook fans for a new pizza recipe, and zpizza added a fan-created pizza to its menu in January.
Domino's celebrated Global Day this month, with a 50-percent discount for its Facebook fans in 52 countries. Sbarro's pizza giveaway tour yielded 100,000 new Facebook fans, while Uncle Maddio's credits social media for its rapid growth.
Papa John's celebrated its 2 millionth Facebook fan milestone early in the year by giving away free Pepsi Max, while Papa Murphy's rolled out its bacon cheeseburger pizza with a Facebook grill giveaway.
Stirring the pot
The restaurant industry was front and center in a lot of PR fumbles this year. In the pizza segment, Papa John's created a backlash — and boycott threats — when CEO John Schnatter said the cost of pizza would rise "11 to 14 cents" each because of Obamacare, and that the company would "find tactics ... to pass that cost onto consumers in order to protect shareholders' interests."
A Papa John's employee also created a stir in January (and was quickly fired) when a customer was identified on her receipt as "lady chinky eyes." Domino's gluten-free launch was applauded initially, until it was discovered the pizza may contain a trace of gluten that could potentially make celiacs sick.
Meanwhile, the segment's pay rates are in focus as quick-service workers in New York City protest for higher wages. And NYC is also in the spotlight as operators wait for the controversial soda ban to go into effect.
Mobile and online ordering on a tear
An estimated 788 million consumers will be on smartphones by 2015, according to CISCO. Coupled with a growing online presence, as well as strong delivery and carry out components, pizza is well positioned to capitalize on the digital trend.
Domino's hit $1 billion-plus in U.S. digital sales within a year (April 2011 to April 2012). The chain also hosted a phone giveaway in February to mark its new Android app, and has since extended its mobile ordering capabilities beyond Android and iPhones to Amazon's Kindle Fire. In the U.S. about 40 percent of the company's delivery orders come from digital, while in the U.K., digital accounts for nearly 60 percent of orders.
During a recent call, Papa John's CMO Andrew Varga said orders from online/mobile platforms are in excess of 35 percent.
Smaller chains are also developing a digital presence to better compete with the big fish. For example, Flippers Pizzeria launched its iPhone app in November. Boston Pizza International re-launched its website to include enhanced online ordering tools.
Fast and casual
Subsegments that emerged this year included fast casual-specific brands and, similarly, top-your-own concepts. These began popping up a few years ago, but have accelerated to include players such as Top That!, Pie Five, Blaze, PizzaRev, Uncle Maddio's, MOD, Pizza Rustica, Go Roma, Pie-ology and more.
Finally, the story on every operator's mind this year was the volatile commodities market. Specifically, a debilitating drought over the summer caused wheat prices to rise sharply, and little relief is in sight. A recent report from IBISWorld predicts these pressures to continue increasing through 2017. Namely, milk and wheat will rise, causing pizza operators' main ingredient costs to rise as well. From 2007 to 2012, the world price of wheat increased an average of 3.4 percent per year. Milk, the main ingredient used in cheese, jumped more than 27 percent in 2010 alone, and 9.2 percent in 2011. Restaurateurs have either increased their prices or switched up their menu to deal with these pressures, and they're expected to continue this strategy into the New Year.
Up next: Predictions for 2013.
Read more about pizza trends and statistics.
Topics: Equipment & Supplies , Food Allergies / Gluten-free , Franchising & Growth , Marketing / Branding / Promotion , Online / Mobile / Social , Operations Management , Staffing & Training , Trends / Statistics
© 2014 Networld Media Group All rights reserved.