Report: Pizza segment focuses on value for growth

 
Feb. 15, 2012

By focusing on value pricing, pizza restaurants have continued to perform well, despite unpredictable economic conditions.

A new report from market research firm Mintel shows that the pizza segment's value propositions have continued to attract customers and, with this strategy, operators should experience a modest 2.9 sales increase this year.

"The competitive nature of the pizza industry keeps the leading companies on their toes," said Eric Giandelone, foodservice director at Mintel. "Menu innovation, thoughtful pricing and national promotions aimed at value have been driving sales in the past several years and are expected to continue in the future."

The big players' current value-based promotions are a testament to the low-price competition, including:

  • Domino's is offering its new Parmesan Bread Bites for $1 with the order of 2 medium, 2-topping pizzas for $5.99 each;
  • Papa John's is giving away a free 2 liter of Pepsi with the order of 2 large, 1-topping pizzas for $10 each;
  • Pizza Hut's Dinner Box – with a medium pizza, five breadsticks and 10 Cinnamon Sticks – is currently available for $10; and
  • For a limited time, Little Caesars' large Hot-N-Ready pizzas are $5.

In order to remain competitive, the average pizza price has remained fairly flat (up only 1 percent) in the past three years. Restaurants have been making up for this pricing strategy by increasing the cost of other menu items, such as vegetables (up 13 percent), desserts (up 12 percent), pasta (up 11 percent) and salad (up 10 percent).

Salads take a bigger slice

Despite the price increases, salad is now the fourth-leading item mentioned on pizza menus, garnering the biggest increase (10 percent) in the past three years.

Restaurants are making an effort to add a more healthful slant to their menus to counter the unhealthy stigma of pizza, as well as bolster sales with a simple add-on.

This data complements another newly released report by research firm Technomic, which showed that salad orders have grown to about 50 percent, from 34 percent just two years ago.

Choosing a pizzeria

More than 80 percent of respondents in Mintel's research have chosen a specific pizza restaurant in the past month based on four factors:

  • Convenient location;
  • Price;
  • Speed of service; and
  • Pizza variety

However, having ready-made pizza and/or a pizza buffet is also enticing, especially to lower-income patrons and those with children, likely for the added-value proposition.

When it comes to choosing the right crust, 38 percent of consumers prefer thin. Pan-style and thick were the second and third favorite crust types, at 20 percent and 19 percent, respectively.

Pepperoni reigns supreme for toppings, garnering a 67 percent favorability rating. This is followed by mushrooms, sausage and onions (53 percent, 53 percent and 41 percent, respectively).

Read more about trends and statistics


Topics: Customer Service / Experience , Delivery , Domino's Pizza , Food & Beverage , Little Caesars , Marketing / Branding / Promotion , Operations Management , Papa John's , Pizza Hut , Pizza Toppings , Trends / Statistics


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