Pizza Franchise Report 2011

This report presents an overview of the U.S. Pizza franchise industry including background of its integration into American cuisine and current trends within the industry. It also outlines the initial costs associated with investing in a pizza franchise. The report is based on data drawn from online sources and the Franchise Disclosure Documents (FDD) of a sample of 20 pizza franchises.

Overview of Industry

From its origins in the Naples-region of Italy, pizza has become a mainstay in the American diet. According to the latest Pizza Power Report,¹ an annual analysis of the industry by respected trade publication PMQ Pizza Magazine, there are approximately 65,000 pizza restaurants in the United States, which combine for over $36 billion dollars in sales per year. Over 90% of Americans eat pizza at least once per month, and 26% of Americans eat pizza at least once a week.²

Pizza arrived in the United States in the early 1900s thanks to a large population influx of Italian immigrants. Up until the mid-1940s, pizza remained confined largely to the areas where the immigrants had gathered – most notably New York City, Chicago, San Francisco and Philadelphia. The popularity of pizza in the United States grew with the return of American troops to the U.S. after being stationed in Italy during World War II. Upon their return, the troops brought home to the U.S. a demand for the dish they had enjoyed in Italy, which expedited the mainstreaming of pizza into American cuisine.

Because of this boom in demand, pizzerias began opening all over the country between the mid-1940s and early-1960s to create enough supply. Franchises that were founded in this timeframe that would become mainstays and market leaders in the pizza business include Pizza Hut, Little Caesars, and Domino's.

For prospective pizza franchise buyers, acquiring financing will continue to be a main challenge, as it has been across all franchise industries. Commodity prices, such as gas and grain prices, will also have an impact on the rate of growth the pizza industry will experience in the near future. If the commodity prices rise, pizza franchises may have to consider raising prices to offset the increases, or find ways of absorbing the extra production costs. Despite these challenges, the outlook for the pizza industry is positive. Factors such as the increased usage of mobile internet devices and the popularity of social networking sites have helped pizza franchises keep pace with the demands and landscape of the marketplace. Additionally, consumers have become more budget-conscious over the past several years leading to some diners to trade down from more upscale restaurants to options including pizza establishments.

If you’re looking to get into a diverse industry with stable demand, a franchise within the pizza industry is an attractive for you. Operating a pizza franchise provides a franchisee advantages over their independent pizzeria counterparts. These advantages include an established business model, access to a larger pool of resources, and the marketing benefits that come with the experience and branding of a known pizza provider.

¹http://www.pmq.com/digital/201009/56.html

²http://www.technomic.com/Reports_and_Newsletters/Consumer_Trend_Reports/dyn_PubLoad.php?pID=42  

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