Trends within the Pizza Industry
Pizza Franchise Report 2011
Traditionally, pizza franchises have only offered pizza and closely related items like breadsticks and other Italian dishes to their customers. But in recent years, many pizza franchises have increased their menus’ diversity by launching new product lines to further compete with other lower-cost food chains in a bid to retain or gain customers.
A favorite amongst a demographic similar to pizza eaters, chicken wings, is one of the foods that has found its way onto the menu of many pizzerias. For example, Domino’s, a company not afraid of making changes, introduced their latest permanent menu items in early 2011 – boneless chicken and wings. The chicken fare, which was promoted in a grand manner very much like their reformulated pizza, joined Domino’s diverse menu that features pasta, oven-baked sandwiches, and desserts along with their trademark pizza. Salads have also proved to be popular amongst pizza franchises looking to expand their respective menus. Among the many outlets that give patrons the option of a salad bar at their restaurants are Cici’s Pizza and Pizza Hut.
The addition of healthy items, like salads, to pizzeria menus can be largely attributed to an increased focus on healthy eating that has overtaken the marketplace in recent years. According to a National Restaurant Association (NRA) survey, seven out of 10 consumers say they are trying to eat healthier when eating out now when compared to when they ate out two years ago. That finding is mirrored by restaurant operators where two-thirds of respondents to the same NRA survey said their guests are ordering more healthy items and paying more attention to the nutritional content of their food than just a couple years ago.6 Also, in response to the renewed focus on healthy eating, pizzerias have taken steps to cut trans-fat from their food and begun providing options to patrons such as low-carb and gluten-free items.
It’s important to note that the expanded menu options in pizza franchises aren’t restricted to just food. Recently, a number of Pizza Hut locations began applying for a license to sell beer at their restaurants illustrating that pizza franchisors are looking at every angle to expand their operations and provide consumers with what they want in one place.7
Increased Technology Integration
Pizza, of course there’s an app for that. Mobile phone usage has skyrocketed in the United States, particularly the usage of smartphones. Smartphones made up 54% of mobile phone sales in the first quarter of 2011, and this development in consumer behavior hasn’t gone unnoticed within the pizza industry.8 Several pizza franchises have developed applications in the past few years to reach consumers no matter their location in order to capitalize on the growing population of smartphone users. Pizza Hut created the industry’s first mobile app (for the iPhone) in 2009, and announced in May 2011 that they were updating their original iPhone app and introducing two more free mobile ordering applications for Android smartphones and the Apple iPad.9 Pizza Hut has been followed into the market by others like Domino’s, which in June 2011 generated over $1 million in sales from its new mobile app in the first week of its availability.10
To capture the attention, and subsequently the dollars, of consumers, pizza franchises have also turned to social media. “Social media has become very important to the [entire restaurant] industry and social media users are much more active and likely to dine-out, to connect with restaurants online and post reviews,” says Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association.11
By utilizing websites such as Facebook and Twitter pizza franchises are able to more effectively market to and broaden their customer base through special promotions along with the back-and-forth interaction social media was designed for. For instance, Pizza Streetza, which uses Foursquare to connect with customers, offers free garlic bread when customers check in.12
Previously, coupons and promotions were sent via large mailing lists and were not targeted at a specific audience. Franchises found it difficult to track the effectiveness of mailing lists as they provided little to no information on local trends, or marketing information. Pizza franchises are able now to take advantage of analytics provided by social media outlets to gather important marketing insights to fine tune campaigns. As Riehle noted from survey results, “more than eight out of 10 operators say social media is becoming a more important marketing tool. And there is much more acceptance of restaurateurs emailing and texting their consumers.”13