Pizza Franchise Report 2010
New Technology & Business Development
One of the most influential developments in the pizza industry has been the growth of new technology and the increase in popularity of mobile internet devices. According to the National Restaurant Association’s 2010 Industry Forecast12, it is time for pizzerias to prepare for growth by reinvesting in their technological infrastructure. Using new technology as a marketing channel is increasingly more important for the success of pizza franchises. Increased trust in online purchasing and the introduction of new e-commerce platforms also offers the benefit of convenience to consumers.
Promotions and Marketing
Social media, such as Facebook and Twitter, now provide pizza franchises with a new platform from which to market to the consumer and broaden their customer base. Previous marketing strategies were focused on large demographics and so could not target specific groups. With social networking sites, search engines and a huge increase in the number of Americans with iPhones or other mobile internet devices, a franchise can now reach consumers that have a specific interest in the product and market to them directly. The consumer “signs up” for more information and promotions or they can download the pizza businesses’ app* directly to their cell phone. This enables franchisees to market more effectively within their local area.
Domino’s announced at the end of May 2010 that its official app for mobile devices has recorded 300,000 downloads during the past six months, producing millions in revenue for the company. Domino's chief executive Don Miej says:
"Technology is becoming a bigger part of our business. The app is powerful in that users can do it in their own time and it is convenient for them. It delivers a benefit for them as opposed to using the phone or ordering in store, because they are more relaxed while ordering."13
Pizza Hut also used a new smart-phone application in order to boost sales. The Pizza Hut application, which was released in July 2009, was responsible for $1 million in sales by the end of November 2009.
To capture budget minded consumers, pizza businesses are using tactics such as value meals and rebates. Eighty-five percent of pizza-chain sales are tied to promotions and discounts mostly acquired through social media sites according to Citigroup Global Markets. Previously, coupons and promotions were sent via large mailing lists and were not targeted at a specific audience. Franchisees found it difficult to track the effectiveness of mailing lists as they provided no information on local trends or marketing information. Promotions on social media sites allow the pizza businesses to gather essential marketing information.
An increasing number of online users in the US will order food online. It is predicted that the internet, interactive TV and text-messaging will eventually overtake telephone ordering of collection and home delivered foods as consumers grow more comfortable ordering and paying for products through multi-media devices.
Online and text ordering is now a quick and simple process. This combined with the recession-driven “eating in” trend means take-out and delivery sales are increasing, giving the pizza industry a huge boost.
Not only are green initiatives important for consumers but they can also benefit a pizza franchise. New technology has now made it possible to centrally control certain systems like lighting, room temperature and kitchen equipment through a single network. Operators get vital insights that can save thousands of dollars per year in energy costs. Machines can be monitored for optimal performance, equipment can be relocated for most advantageous workflow and output, and heat and air is monitored for optimal efficiency14.
The potential for increased energy savings is one of the reasons Papa John’s International Inc. began outfit¬ting all of its U.S. company-owned stores with high-speed ovens. The oven bakes 30 percent faster than a normal conveyor oven, while reducing energy consumption by about 25 percent. Franchises have not been required to change to these new ovens although many have opted to do so as they shave up to 2 minutes off the cooking time.
Many franchises now offer e-learning as part of the franchise package. Before the franchisee even attends the training facility they may be required to complete online training or course work. These training programs offer extra support and avenues for learning for both new and established franchisees.
Many pizza businesses have launched new product lines and adapted their menus in a bid to reclaim customers. Pizza businesses selling non-traditional items such as sandwiches, pasta and chicken, now offer the consumer a lower cost alternative to pizza. This allows pizza businesses to compete with low cost fast food chains. Pizza Hut is doing just that with its WingStreet concept. Within a couple of years, the franchise hopes to have WingStreet outlets in 85% of its domestic Pizza Hut stores.
Domino’s have not only launched an “inspired" recipe for a new hand-tossed pizza, which was reformulated due to tough criticism from consumers, but they have also begun to offer oven-baked sandwiches. In selling toasted subs however, Domino’s is opening itself up to competition from large chains such as Subway and Quiznos.
|The world of toppings
By now, pizza chefs have sampled nearly every pizza topping imaginable, including peanut butter and jelly, bacon and eggs, and mashed potatoes. Due to the huge global popularity of pizza, when you travel to different countries, you will discover many different popular pizza toppings. In India, people like pickled ginger, minced mutton, and cottage cheese. The Russians enjoy mockba pizza, a combination of sardines, tuna, mackerel, salmon, and onions. Brazilians prefer green pea pizza, the Japanese top their pizzas with eel and squid and the Dutch enjoy a Double Dutch: double meat, double cheese, double onion.
12National Restaurant Association, Research and Insights, www.restaurant.org
13http://www.smartcompany.com.au - "Domino's iphone success shows apps are moving from novelty to sales generator".
14Pizza Market Place, Ten technologies that make for better business, www.pizzamarketplace.com
*An app, or application, is third party software developed specifically for online media devises.