Article

Pizza concepts capitalizing on by-the-slice demand, economics

Pizza Hut is aiming to have 15 to 20 Slice Bars open in the US by the end of this year.

September 17, 2014 by Holly Freeland — Freelance Journalist, Pizzamarketplace.com

As the fast casual restaurant industry is booming with growth, pizza companies are finding ways to take a piece of the pie. While most are offering fast, personalized, lunchtime pizzas, other concepts are focusing on pizza by the slice. What was once just a staple on New York City street corners is now available at malls and airports and even Pizza Huts.

Pizza by the slice fits the snack, speed and convenience demands of today's consumers, and slices carry a high profit margin for stores. Chase Kintz, a Marco's Pizza franchisee, is finding footing in the slice business and thinks the category will grow.

“I think it will push pizza even further into the QSR category as the public will soon realize that slices are one of the fastest foods to serve in the entire food industry,” Kintz said. “A customer wanting something custom is one of the hardest parts for us, but we’ve found success in pushing them into ordering a small pizza instead. But, overall, in order to be successful, you must have slices ready, or the whole project will fail.”

For Villa Italian Pizza, the by the slice craze is not new at all; the company has been selling pizza by the slice since 1964. But Villa Enterprises CEO Anthony Scotto agrees that the space is becoming more crowded.

“We are very aware of the new competition in the pizza category, but we will continue to focus on quality products and talent,” he said. “There will always be room for the traditional slice business as the new pizza concepts have a more narrow market demographic than Villa Italian Kitchen offers."

Pizza Hut expanding Slice Bar concepts

But what about the larger, national chains, who are used to whole pizza sales both with delivery and pick up customers? Is there a niche for them to join in on the trend?

According to Pizza Hut spokesperson, Doug Terfehr, there is "absolutely" a place for them and they are banking on it being a great success. Earlier this year, Pizza Hut opened up new test stores in York, Nebraska, and Pawtucket, Rhode Island, which include Slice Bars alongside traditional dine-in options as well as takeout and delivery. 

Pizza Hut has since expanded the concept to two new locations in Taunton, Massachusetts, and Albany, New York. Three more will be added over the next few months and the ultimate plan is to have 15 to 20 Slice Bar restaurants in the US by the end of the year.

“It’s all about innovation and giving the customers what they want. On a national level, we have a steady drumbeat of new products that deliver great taste and pizza experiences that are unique to Pizza Hut. Bringing the Slice Bar to life in select markets is another way we are committed to innovation and learning more about how our customers want to enjoy their pizza,” Terfehr said.

Diners, he adds, love the convenience of a ready-to-eat slice.

"Our new open store concept fits with what consumers are looking for from a restaurant experience. Each Slice Bar concept delivers an experience that is unique to the community it serves. We do this by offering local deals and serving chef-inspired recipes alongside traditional favorites that give our customers plenty of options," he said.

Pros vs. cons

With all of the optimism for pizza-by-the slice sales, the potential outweighs any drawbacks, most agree. In other words, the profit margins offset food waste concerns.

Kintz, for example, explains that his locations cut a 16-inch pizza into six slices for slice sales.

"At the one topping price of $3.50, that equals $21. Our standard discounted offer on an XL one topping is $12.99. Assuming we sell a whole slice pie, the difference is almost $8,” he said.  “Oftentimes, we do have a lot of waste. From 11 a.m. to 2 p.m., we tend to sell 90-100 percent of every pizza and from 2 p.m. to 5 p.m., we sell about 50-60 percent of every pizza. The last four weeks, our average waste was 28 percent, leaving the cost at $15.12 per slice pie. But, if the concept of adequate waste converns you, don’t do ‘fresh’ slices."

Scotto adds that the slice is the most economical way to eat pizza.

"It allows the guests variety. By ordering more than one slice, you can have a completely different experience," he said. "For us, the cost challenges depend on foot traffic at any given meal period, whereas a whole pie to order, ultimately comes with a lower theoretical food cost and no food waste."

^{Photo courtesy of Wikipedia.}

About Holly Freeland

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