October is National Pizza Month and a great time to check in on this common indulgence in American diets. Here are some quick facts:
- Around 17% of all restaurants in the U.S. are pizzerias.
- Pizza restaurants in the U.S. combine to bring in nearly $40 billion annually.
- It’s estimated that 93% of Americans eat pizza at least once a month.
- The top 5 days for pizza sales are: Super Bowl Sunday, New Year’s Eve, Halloween, the day before Thanksgiving, and New Year’s Day.
While there are approximately 75,000 pizzerias in the U.S., the industry is currently dominated by 4 franchise brands: Pizza Hut, Domino’s, Little Caesars, and Papa John’s. Specifically, the market share at the beginning of 2016 for the four pizza franchises were as follows:
- Pizza Hut: 25.1%
- Domino’s: 18.8%
- Little Caesars: 14.7%
- Papa John’s: 12.2%
However as Darren Tristano, executive vice president at Technomic notes, “In future years, this market share picture might change dramatically if more build-your-own pizza brands crash the Top 500 [Largest Restaurant Chains, an annual ranking done by Technomic]. This fast-casual expansion story is familiar, if a little different, but it’s only just begun [with pizza].”
It may not be long before the shift happens. Fast casual, made-to-order restaurant brands account for over 10% in annual growth – more than 3x the annual growth rate for restaurants overall. And within this segment, create your own, or custom, pizza is growing even faster.
While it isn’t brand-new – a number of pizza franchises have been operating in this area since at least the 1990s – custom pizza has never seen a growth spurt like it’s experiencing now. “Today’s consumers are less beholden to their standard pizza orders, as emerging players push the envelope of what’s expected on a pizza menu,” says Deanna Jordan, manager of consumer insights at Technomic. “New chef-designed specialty pizzas positioned as customizable…allow for the personalization these consumers increasingly expect.”
According to an editorial in the March 2016 edition of Franchising World, the average create your own pizzeria serves the following:
- Personal pizza with an average size of 10 inches and an average price point of $7.95
- Pre-packaged salads
- Pre-packaged cookies or brownies for dessert option
- Soft drinks, including bottled water
- Beer and wine
The custom pizza segment is growing at a rate of 22% annually, and includes franchises such as MidiCi Neapolitan Pizza, 1000 Degrees Neapolitan Pizzeria, Russo's New York Pizzeria, Toppers Pizza, Uncle Maddio’s, Persona Wood Fired Pizza, Pieology, and Top That! Pizza.
Outside of the typical fast casual restaurant concerns of serving a quality product in an acceptable time to customers, the growing pains that come with rapid growth appear to be the biggest obstacle these pizzerias face in the foreseeable future. “Since the majority of these [newer] concepts have been created by non-pizza professionals, the rush to market might very well be their downfall in the long term,” says Glenn Cybulski, CEO and co-founder of Persona Wood Fired Pizza.
“As market players increase, one thing is for sure: some of them will close their doors as fast as they opened them,” he says. “To be truly relevant in the next five to 10 years, you will have to evolve within the concept you have created. Did you leave yourself enough room to do that? Maybe so, but many did not. What happens in the fast casual and the custom pizza space in the coming years will be interesting to watch.”
Note: Some details in this post originally appeared as a section in our Food Franchise Industry Report 2016, which can be viewed here.