2002: A Year in Review

Sept. 23, 2003

The pizza business has always been tough, but few years will compare to the tight times of 2002.

Ongoing bloodletting from the endless price war that has typified the U.S. pizza market was eased somewhat by low cheese prices. Meanwhile, tourism declines in the UK pushed the sales and eventually the stock of England's largest home-grown pizza company to lackluster lows.

All wasn't lost, however, in the pizza universe. Far Eastern pizza companies saw record sales during the June World Cup soccer tournament, and growth of the pizza market in Latin America moved ahead unabated.

Still, all in all, tribulations mostly outweighed triumphs. Here's a look at some of both that happened over the past year.


* Powerful: Dallas-based Pizza Hut launched the P'Zone, a calzone-style sandwich. The chain spent $70 million to tout the $5.99 sandwich on TV, radio and in print.

* Powerless: After volunteering to deliver an order on his way home, Arnie's Pizza cook Charles Gordon went to an abandoned address where he was ambushed and shot by two men. He died on Jan. 13.

* Not grocery store pizza: Safeway supermarket, a London-based supermarket chain, volleyed an unexpected shell onto England's pizza war battlefield by launching a pizza delivery service from its in-store stone-hearth pizza ovens. Some 30 Safeway stores now deliver throughout London.

* Price collapse begins: As concerns of a milk glut circulate throughout the dairy industry, the price of block cheddar cheese drops 5.5 percent on the Chicago Mercantile Exchange to trade at $1.29 a pound on Jan. 29. Dairy analysts say that the unusually warm weather in northern states has trigged an early "spring flush," when milk cow output rises with the arrival of spring. The "flush" precipitates a year-long fall in already low prices.

* Pizza King laid to rest: Victor J. Cassano Sr., 79, cofounder of Cassanos Pizza King, died in a Miami Valley, Ohio, hospital Jan. 1.


* Sliding sales of bellwethers: Pizza Hut and Louisville, Ky.-based Papa John's announce their January comparable sales were off (Pizza Hut's were flat, Papa John's were down 5.3 percent), starting a trend that lasts through nearly all of 2002.

* Supremely silly: Cheese maker Suprema Specialties is served a class-action lawsuit by its investors accusing the Paterson, N.J. firm of stock fraud. Suprema declares bankruptcy just weeks later and is delisted from Nasdaq in March.

* Bounty of buffets: Dallas-based Cici's Pizza announces plans to open as many as 100 low-priced buffet pizza stores in Colorado over the next decade with the help of former Pizza Hut president Allen Huston, former Pizza Hut COO, Pat Williamson, and former Boston Chicken (now Boston Market) president and CEO, Larry Zwain. The trio's franchise company launches under the name Pizza PALS (an acronym for passion, attitude, leadership and sales).


* Record breaker: Ann Arbor, Mich.-based Domino's Pizza announces record results for fiscal year 2001, including a system-wide sales increase of 6.8 percent to $3.79 billion, a net income jump of 46 percent to $36.8 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 10.1 percent a $162.2 million.

* Ways of wireless: Panago, a 150-store pizza chain in Vancouver, B.C., launches a new payment service called Debit at the Door. The service allows customers to pay delivery drivers at the door via a wireless, belt-mounted credit card terminal.

* Buying spree: Louisville, Ky.-based Tricon Global Restaurants, parent company of Pizza Hut, signs an agreement to purchase Long John Silver's (seafood chain) and A&W All American Food Restaurants (hamburger and hot dog chain) from Lexington, Ky.-based Yorkshire Global Restaurants for $320 million in cash. The company also changes its name from Tricon to Yum! Brands Inc., upon completion of the deal.

* Bargain below the equator: Auckland, New Zealand franchisee Restaurant Brands New Zealand Ltd. purchases 51 Pizza Hut stores in Australia for $12 million (NZ), bringing its "red roof" total to about 135.

* Death of a delivery driver: Empire Pizza employee Victor Arce, 37, is shot and killed during a robbery of the Hartford, Conn., store.


* Blue light warning: Closures of 284 U.S. Kmart stores take 98 Little Caesars pizza stations along with them. The Detroit-based, fourth-largest pizza chain says it's confident Kmart will right its foundering ship and allow its 665 other pizza operations to remain open.

* Take and book: Tom Morrell, president of Vancouver, Wash.-based Papa Murphy's Take 'N' Bake Pizza, announces he'll leave the company in May.

The foodservice industry veteran called the departure "amicable," but said it was time to try his hand at something new.

* Goin' deep: Papa John's begins testing deep-dish pizza in its Wichita stores run by none other than Pizza Hut founder Frank Carney, a PJ's franchisee since 1994.

* Let's get together ...: Afton Food Groupand Pizza Delight Corporation agree to merge their two companies. Pizza Delight's shareholders will receive approximately 28.5 million Afton shares in the deal and become controlling shareholders (63 percent of its shares) of Afton.

* Rapid rise: Domino's Pizza UK & IRL, Plc, announces systemwide sales in the first 15 weeks of 2002 are up nearly 29 percent to £33.1 million (U.S. $48 million) compared to 31 percent and £25.7 million (U.S. $37.3 million) in the same period last year.


* Took the money and ran: Bryan West, a franchisee of 20 Noble Roman's Pizza stores in Indiana, abandons his properties and shorts more than 100 workers two to three weeks' pay.

* Two-minute pizza takes flight: Brisbane, Australia, chain Eagle Boys Pizza rolls out its Eagle Express "two-minutes or it's free" carryout service. Tom Potter, founder and managing partner of the 120-store chain says the electronic system holds pizzas for 30 minutes without product deterioration.

* Food fascists strike pizza: Washington, D.C.-based Center for Science in the Public Interest provokes the ire of the pizza industry with claims that pizza is horribly unhealthful. Pizza Hut president Mike Rawlings responds by saying companies like his are simply giving customers want they want. "Frankly, I think people are a little tired of being told what not to eat."

* Growth? Fugghedaboutit! Goodfella's Brick Oven Pizza & Pasta completes two separate area development agreements to open 20 pizza stores. The four-store operation, based in Staten Island, N.J., sets its sights on Pennsylvania, Delaware, Indiana and Puerto Rico.


* Savory service: Domino's Pizza Distribution names Louisville, Ky.-based custom sauce maker Paradise Tomato Kitchens and Denver-based cheese maker Leprino Foods its Pizza Suppliers of the Year at its annual Suppliers Working Actively Together (SWAT) Awards Dinner.

* Hole lot of trouble: Charlotte, N.C. pizza delivery driver David Miller and his car are swallowed up by a sinkhole while stopped at a red light on the way to work. The sinkhole results from a faulty 48-inch water main being installed beneath the road.

* Let's settle: A breach of contract lawsuit battle between two Shakey's pizza franchisees and Shakey's Inc. is "amicably settled" when both parties cease the litigation to avoid further expenses.

* Strapped for cash: Declining sales force 300-store London-based PizzaExpress cuts almost 30 senior-level positions and cancels a £1million (U.S. $1.5 million) annual dinner for managers to save £4 million (U.S. $6 million).

* You've been delisted: In a sign of its continued fall from investor favor, 800-store Spanish pizza carryout and delivery chain Telepizzais bumped from the Ibex 35 stock index. In the first two months of 2002, Telepizza's shares fall 30 percent, on top of a similar drop last year.

* World Cup floweth over: Business at pizza stores in Japan and Thailand rises 25 to 50 percent during the month-long World Cup soccer tournament. In Thailand, Pizza Hut boosts its staff nationwide from 1,500 to 2,000, and its 300 delivery drivers work overtime.

* The milk's just about free: The USDA reports that record milk production in the U.S. continues, which buries the price of block cheddar on the Chicago Mercantile Exchange at $1.12 per pound.

* Deadly driving: A Muskegon, Mich., pizza-delivery driver is charged with negligent homicide in a May 29 crash that killed a West Olive, Mich., couple. Driver Michael John Beyrle, 23, ran through a stop sign and crashed into the car of Robert and Julie Dirkse, which collided with a utility pole and caught fire.


* Hail Caesar! In a rare public announcement of its sales performance, Little Caesars reports its sales increased 11 percent for the first half of 2002.

The company attributes the boost to the roll out of its deep-dish pizza and improved franchisee relations.

* ... Let's break up: Afton Food Group and Pizza Delight Corp. terminate their share purchase agreement made in May. Though Afton believes shareholders of Pizza Delight are in default of the agreement, Pizza Delight shareholders accuse Afton of not being forthcoming with information about the company. Afton later recapitalizes into an income trust.


* Doh! Dough! Yeast-filled pizza dough in the back of an unrefrigerated 18-wheeler expands and breaks out the back of the truck to create a 30-mile gooey traffic hazard in upstate Chippewa Falls, Wis. Three hours' work by snowplows, shovels and pitchforks are required to remove the blown dough.

Public! No, private! Rumors circulate that Domino's Pizza may go public as early as August, according to a report in BusinessWeek Online. The publication cites "several knowledgeable sources" saying an IPO is in the works.

* Of German engineering: Donatos Pizzeria announces it wants to open 200 stores in Germany by 2005. The 200-store McDonald's-owned company, based in Columbus, Ohio, says it will open its first unit in Munich in October.

* Chicken fight: Papa John's announces it will roll out a chicken side item on August 26, while Domino's said it's introducing a new chicken product on -- you guessed it -- the same day.

* Strength in numbers: About 100 pizza delivery drivers band to form the Association of Pizza Delivery Drivers. Association president J.W. Callahan says APDD was formed to improve drivers' working conditions; he and other members say drivers are underpaid and forced to ply their trade in unsafe situations.

* Rogers, over and out: Pizza Inn CEO Jeff Rogers resigns amid board suspicion he can't pay back $1.9 million the 395-store chain loaned him years before. Ronnie Parker replaces Rogers, who led the company out of bankruptcy in his 12 years with the Dallas-based firm.

* Going deeper: Papa Murphy's announces it will launch its Deeper Dish take-and-bake pie beginning Oct. 1.

* Achieving closure: Sbarro Inc. reports in an SEC filing that decreased traffic at malls and airports continues to hurt store sales in a post-9/11 economy. The 913-store company closes 32 units (19 company-owned, 13 franchised) in the second quarter, shutters another 17 in its third quarter, and anticipates closing 13 more under-performing stores before year's end.

* Falling too frequently: For the third time this summer, a Detroit pizza delivery driver is shot in the line of duty. Two other drivers are shot and killed, one each in August and July.


* Ten years in the making: Pizza Hut introduces a new Chicago-style deep-dish pizza the chain claims took 10 years to develop. Proper cooking of the $11.99 pie requires the crust to be parbaked and the sauce to be heated separately in the conveyor oven.


* Crossing the redline: Franchisees of Pizza Hut and Domino's announce they'll resume after-dark deliveries to two questionable neighborhoods in Tarpon Springs, Fla. Residents there accused both companies of racism for not delivering after dark, and asked the city's council to revoke the franchisees' operator's licenses if deliveries didn't resume.

* The mouse takes a beating: Four-hundred-twenty-store Chuck E. Cheese's Pizza reports a 2.7 percent drop in comparable-store sales and predicts further sales declines for 2002. Huge sell-offs of CEC's stock nearly halves its value.

* Killed for $15: Marietta, Ga., Pizza Hut delivery driver Paul Kevin Wojcik, 45, is strangled to death and robbed of $15 during a delivery run. A suspect is arrested one week later.

* We want to go deep, too! Bake-to-rise pizza maker DiGiorno joins several other pizza providers by rolling out its own deep-dish pizza.

* Duped! Hoping to set-up and rob a pizza delivery driver, two Pittsburgh teens instead shake down an undercover police detective dressed as a driver. A foot chase ensues, but both teens are arrested.

* 'Public' speaker: In what appears to be another step toward a public offering, Domino's appoints Lynn M. Liddle as its executive vice president of communications and investor relations. Liddle led internal and external communication during Valassis Communications' 1992 IPO.


* We're for sale, but not forcheap: PizzaExpress receives a takeover offer from the Twigway investor group led by the chain's former owner Hugh Osmond. The £251 million (U.S. $393 million) offer is withdrawn weeks later when Osmond claims Pizza Express isn't providing enough detailed information about the company.

* Close 30 here, open one over there: At nearly the same time Donatos opens its first German outlet, it closes 28 stores in the U.S., including all 23 sites in the Atlanta market. Two more Donatos close a week later on Dec. 6.

* Don't want to be like Mike: Unable to reverse negative sales trends, Mike Rawlings resigns from Pizza Hut and is replaced by Yum! veteran Peter R. Hearl, 51.

* Deadly driver:A Virginia Beach, Va., pizza delivery driver on a run collides with a minivan carrying two adults and three children. Two 5-year-old girls die in the accident for which Jon B. Schneider, 31, is charged with reckless driving and running a red light.


* I told you I'd pay it back! Pizza Inn announces former CEO Jeff Rogers paid off his $1.9 million debt to the company, which it had written off its 2002 balance sheet as a loss. The news sends the company's stock price soaring nearly 50 percent.

* Utah bound: Lone Tree, Colo.-based Nick-N-Willy's World Famous Take-N-Bake Pizza signs an area development agreement to open up to 20 stores in Utah over the next seven years. The chain has 25 stores in six states.

* Driver murdered: Twenty-nine-year-old delivery driver Eduardo Flores is murdered during a Dec. 10 run. The married father of two is trapped by four men in another car and shot, but lives just long enough to drive away, crash his own vehicle and provide a description of a 16-year-old who is later charged with the crime.

* Merry Christmas! Have a rate cut! Pizza Hut instructs its area coaches in and around Kansas City, Mo., to reduce delivery driver reimbursement rates to 50 cents effective Christmas Eve. Drivers are outraged at Pizza Hut's insistence that 50 cents is its national reimbursement standard when many claim they've been paid 75 cents to a dollar per run for years.

* Here, here for Dominos! -- Domino's Pizza Group UK is named the London-based Pizza, Pasta and Italian Food Association's Pizza Delivery/Takeaway Chain Overall Operator of the Year for 2002.

* See you next year, in court! Seventeen franchisees of the 61-store Shakey's pizza chain sue its Garden Grove, Calif. parent company, Shakey's Inc., for breach of contract, accounting fraud, negligent misrepresentation and breach of the covenant of good faith and fair dealing.

Topics: Cheese, CiCi's Pizza, Commentary, Crime, Domino's Pizza, Dough, Financial Management, Independent Operation, Little Caesars, Marketing, NAPICS, Online Ordering, Operations Management, Papa John's, Papa Murphy's Take 'N' Bake Pizza, Pizza Sauce, Pizza Toppings, POS, Public Companies, Shakey's, Telecommunications

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