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For decades, McDonald's has crushed Wendy's and Burger King. The two also-rans lob volleys at each other for the second place title without a thought of overtaking numero uno. Two years ago, McDonald's introduction of premium coffees dominated the burger war press. Today, the PR is all about Five Guys, The Counter, The Habit, Smashburgers and In N Out. This is the growth of the burger industry and the top three are looking over their shoulders.
What are the lessons for the pizza industry? How do you become the "Hot off the Grill" concept in your neighborhood?
Lesson 1 – Use Better Ingredients
In the minds of many pizza operators, if they could just buy cheese for 2 cents per pound less, all would be good in their world. Food costs would stabilize and the distributor's invoice would not be the subject of shock and fear.
Not one of today's hot burger chains looks to slash their food costs by purchasing cheaper ingredients. Of course, they care about food cost and the rising cost of commodities, but they are enticing consumers by offering better ingredients that cost MORE than what is available at the Big 3. Kobe Beef, Gruyere cheese, focaccia bread all cost more than 80/20 ground beef, processed American and white bread buns.
Lesson 2 – Sell Food for what it is Worth
The big pizza chains focus on low prices, $5 pick-up, $10 large and low priced "all you can eat". The true hope of these giants is to sell a large soda. Do you think that the franchisees that invested their money and their labor dreamed of selling soda? Yet, much of the independent pizza operators follow them right down the path. It is a race to the bottom that no one wins.
Smashburger sells burgers for $6.50 and up, The Counter offers $12 burgers. McDonald's and Burger King franchisees routinely complain and push back on the 99-cent price point. Consumers know that a McDonald's burger is not the same as the better burgers. They know the price is higher, and still they line up. Not every day, but enough times a month to create huge growth in the "better burger" category.
Lesson 3 – Promote Food not Price
I will use the same ingredient list as above, Kobe Beef, Gruyere cheese, focaccia bread. Makes your mouth water doesn't it? Most pizza promotions focus on price, offering deals like $2 off a pizza -- kind of makes your wallet water, doesn't it?
The point is simple; use your promotional muscle to engage consumers in your product, not your price. Advertising price animates consumers to search for coupons not great food. Pizza operators that compete on price with the giants without properly differentiating their product lose the war. I believe that consumers that are smart enough to tell the difference at burger chains can also tell the difference with pizza.
Seek better ingredients, describe the experience, charge what your product is worth and let consumers decide. That strategy works for hot burger concepts and can work for you, too.
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