There are approximately 62,000 pizzerias in the U.S. according to research firm Packaged Facts, with thousands of additional convenience stores and restaurants serving up fresh pizzas every day. And with good reason. Approximately 94% of the U.S. population eats pizza. More than three billion pizzas are sold in the U.S. each year, making it one of the most popular foodservice segments in the country. Other notable pizza facts include:
Pizza has become a foodservice staple for convenience stores because of its portability, versatility and its ability to be easily customized to satisfy a wide range of palates.
Names like Hunt Brothers, Piccadilly, Hot Stuff, and Noble Roman’s dominate the convenience store pizza industry because they cater to the customer profile. While they target the mainstream’s middle-of-the-road flavor preferences—pepperoni, mozzarella, mild vegetables—they have strayed occasionally to experiment, to capitalize on taste and lifestyle trends, and to draw attention. These companies may be doing well, but they are not ignorant of changing tastes and concerns.
For example, Hunt Brothers earlier this year recruited Brian Osborn to head its menu research and development. Osborn is one of the founding members of the Research Chefs Association, whose membership includes chefs and food scientists.
“It’s an industry that needs innovation,” said Jennifer Litz, an editor at industry watchdog Pizza Marketplace. “QSRs have ruled it, and it’s become monolithic.”
For example, Seth Kahn, owner of Darla-K Food Marts in Cameron, La., had not planned to incorporate pizza into his foodservice plan, but “customers demanded it,” he told CSD. When he signed up with Hunt Brothers Pizza, customers were quick to respond.
“We immediately started selling 150 pizzas a day,” Kahn said.
New equipment, such as high-speed convection ovens, are also making it easier for retailers to offer made-to-order pizzas that can be ready in minutes. Self-rising crusts and other short cuts are also helping pizza prep time get speedier. Chains like 7-Eleven and Nice N Easy are using this state-of-the art equipment to push pizza sales around the clock. Both chains offer fresh pizza on demand 24 hours a day.
Though pizza sales slowed in recent months due to extreme regional economic downward movement, they appear to be picking up again now, said Sandy Arrasmith, operations manager for J & H Oil Co., the Wyoming, Mich.-based operator of 43 convenience stores.
Arrasmith also noticed that one burgeoning trend in the pizza business over the past few months has been the switch from individual mini pizzas to what she described as a mega-wedge. “It’s a little more cost effective, and the retail is lower as well,” she said. “We felt that converting to a smaller retail package would serve everyone better. Otherwise, we’re sticking to what’s tried and true.”
Sales Still Strong
QSR pizza sales have hovered at $33–$36 billion the past few years, according to Litz, and the grim economy of the past couple of years has not crushed the spirit of folks who like to eat out. In a research report from Market Force, 25% of survey respondents reported in June that they thought they’d be eating out more than in prior months.
Only 8% said that they think they’re going to be eating out less. In December of 2009, 52% of consumers answering the same question said they’d eat out less over the coming months, and just 5% thought they would increase spending.
To attract a wide range of customers, operators are sprucing up their pizza menus to include gourmet items, specialty items and the flat out bizarre. For example, toppings such as bacon and clams, macaroni and cheese, sour cream, crushed tortilla chips and steak and fries are becoming more commonplace.
Of course, businesses that aren’t foodservice-first, like convenience stores, can’t afford to stock a whole bunch of ingredients that might be used sparingly, if at all. The main departure from traditional pizza in convenience stores is breakfast pizza, and that left turn is mainly because of the daypart. Breakfast pizzas typically offer popular toppings like eggs, sausage, no sauce and a cheddar cheese.
Mike Barry, a two-store operator and Hot Stuff franchisee in Thief River Falls, Minn., can customize breakfast pizzas in Hot Stuff’s 100% grab-and-go model. The regular breakfast pizza features no sauce, sausage, bacon, egg, mozzarella and cheddar. For the customers who want a Denver omelet, Barry’s staff will make some with ham, onions and green peppers.
“Our specialties are 50% of our business,” Barry said.
One of those specialties is Hot Stuff’s Big Stuff pizza, a 52-inch, 15-pound party meal divided into five unique sections with favorites such as cheese, everything, pepperoni and sausage. Barry said it takes a half-hour to make and a half-hour to bake.
Hunt Brothers likes to drive innovation with limited time offers. Last year it began selling buffalo-chicken pizza for an eight-week stretch. There is some Frank’s Red Hot in the sauce, a little flavoring in the cheese to mimic the ranch dressing that is often used as a dip for wings, and grilled chicken.
Franchisors are traditionally strict on ingredients used to control costs, but independent retailers have the freedom to experiment. Freedom does not mean free to waste money, however. Pizza Marketplace suggests that retailers who have a proprietary food program that includes pizza should first try to make specialty pizzas using ingredients they already have for other parts of their operation, like sandwiches, salads, etc.
It also advises using regional and seasonal ingredients. Fiery peppers, for example, are popular pizza toppings in the Southwest. If you have a Hispanic customer base, substitute chorizo sausage for Italian.
Stay Health Focused
Veering from the traditional can satisfy two marketing weapons: differentiation and the appeal to customers’ desire for better-for-you food. Between the second quarter of 2009 and the second quarter of 2010, menu items labeled “healthy” grew 65%, according to Mintel Menu Insights. And the Pizza Marketplace 2010 Pizza Industry Study found that chicken rose in toppings popularity from fifth in 2007 to third.
“The health trend has affected the industry in a subtle way,” said Litz.
Chicken is seen as a healthy topping, and many people joke that the vegetables on their pizzas—olives, peppers, mushrooms, onions, etc.—make it healthier than cheese only or a red-meat-laden pie. But there are pizzas featuring crusts that are pro-biotic, gluten-free and made with multi-grain flour; fruit toppings, all-natural and low-calorie toppings.
While fresh vegetables are more time-consuming to prepare, Con Agra Foods, for one, sells a line of frozen vegetable toppings. The J.R. Simplot Co. markets flame-roasted vegetable and fruit toppings, including apple and peach.
Even if a retailer chooses to stay traditional, there are tricks to using toppings to increase margins. According to the Pizza Marketplace, the margins multiply with each topping a customer adds. For example, a $7.99 one-topping pizza will have a good margin built in, but each additional topping adds to the margin because the original ingredients of the pizza are paid for in the base price.
So-called “garbage” pizzas, those with several toppings, are the most profitable, even if there is only one set price, which is usually higher than a one- or two-topping pizza. The secret to the profitability of such pizzas is that fewer toppings are required to cover them. For example, four ounces of any topping might be necessary to cover a 14-inch pizza, but three toppings wouldn’t require 12 ounces of topping—to put on so much would make the baking very difficult because of the different times necessary for the cheese, toppings and crust.
Other maneuvers of veteran pizzeria owners include separate lists of toppings, on a board or menu, so customers have fun searching for combinations to build a custom pizza; having some higher-
priced toppings; and using smaller-size ingredients, such as diced pepperoni or crumbled sausage, to cover the pizza with less ingredient yet still satisfy the customer with ingredient in every bite.
With Hot Stuff, Barry doesn’t have as much freedom to experiment, but that also means that part of his business—20% of inside sales—is simplified.
“We have quality and freshness built right in,” Barry said. “It makes such a difference.”