- WHITE PAPERS
Despite the poor economy, pizza franchises are booming, according to a recent report released by Franchisedirect.com. It studied 20 top pizza franchises and found that although independent pizzerias still dominate the pizza market with 51.66 percent of sales and ownership of 58 percent of pizzaerias, franchises are on the rise.
According to the report, the U.S. has about 65,000 pizza joints, which make about $36 billion each year. About 42 percent of the market is made up of the top 50 chains.
It comes as no surprise that the top four chains are Pizza Hut with 13,000 stores, Domino's with 9,000 units, Papa John's with 3,600 locations and Little Caesars with 2,500 units. Each of the big four are expanding, but lots of other pizza franchises are also growing. Take, for example, Naked Pizza, which now has 21 stores with plans to have 30 or 40 open by the end of the year and at least 100 by the end of 2012.
Its dedication to healthy cuisine may be one of the reasons for its success. According to a National Restaurant Association (NRA) survey, two-thirds of the restaurant operators polled said guests are ordering healthier items and paying more attention to the nutritional content of their food than just a couple years ago. The fact that many pizza franchises, such as Naked Pizza, are using natural ingredients or, like California Pizza Kitchen, are providing gluten-free items, has helped their bottom lines.
According to the report, other factors contributing to the pizza franchise boom are the increased usage of mobile and online ordering and social networking.
Additionally, consumers have become more budget-conscious over the past several years, leading some diners to trade upscale restaurants for less expensive options, including pizza establishments.
Social and Techy issues
The "socialness" of pizza also continues to make it a popular franchise model, said Tim McCallum, owner and general manager of a Vapiano location in Dallas.
"Pizza is a family meal in today's rushed society," he said. "We are centered on an experience. Hamburgers and subs will struggle to create what a pizza does for family or friends."
Successful pizza franchises don't only have the personal aspect of "being social" down, they are also pros with social media. This saavyness has also contributed to the industry's growth, according to Franchicedirect.
Domino's Pizza practically reinvented itself thanks to its 2009 social media campaign that apologized for its cardboard-tasting pizza and promised to do better.
"By utilizing websites such as Facebook and Twitter, pizza franchises are able to more effectively market to and broaden their customer base through special promotions along with the back-and-forth interaction social media was designed for," the report stated.
Pizzerias were also some of the first restaurants to embrace online and mobile ordering. According to the report, smartphones made up 54 percent of mobile phone sales in the first quarter of 2011, which didn't go unnoticed by the pizza industry.
Pizza Hut created the industry's first mobile app (for the iPhone) in 2009 and launched an update a few months ago along with an app for Android and the Apple iPad. Domino's generated more than $1 million in sales from its mobile app the first week it launched. Smaller pizza chains are following suit.
The bottom line
If your pizza franchise is struggling, maybe you should step back and take a look at your business model. What can you learn from the franchises that are growing? Does your menu have something for the healthy eater? Do you use Facebook and Twitter to connect with your clients? Are you on board with the newest technologies? If not, why not make a change; what do you have to lose?