This post is part of the On the Margin blog.
Fast-casual pizza chains have been growing at a breakneck pace in recent years, as several new competitors have jumped into the market and started opening new locations.
At some point, it’s a sector that could be due for some consolidation — at least according to the chief executive of Domino’s Pizza Inc.
“I’m relatively confident at some point you’ll see consolidation,” Patrick Doyle said during the company’s earnings call this week. “There’s an awful lot of players who decided it would be a good idea at roughly the same time. They have a similarity of offerings and approach. I wouldn’t be surprised if you saw consolidation at some point.”
Doyle, however, wouldn’t go so far as to predict a “shakeout,” as that implies mass closures.
Doyle had other interesting comments about fast-casual pizza chains, and other non-restaurant competitors, during an earnings call in which Domino's reported same-store sales growth of 31 percent going back three years.
For one thing, Domino’s includes fast-casual pizza chains like Mod Pizza, Blaze Pizza, Pie Five and others in the pizza category — rather than separate them out for their own sub-sector.
That sector’s growth is coming at the expense of traditional pizza concepts, Doyle said, just not big chains like his.
“I don’t view it as a new category,” he said. “I view it as new competitors, who frankly have been taking share from mom-and-pops and regional chains that simply haven’t performed well. Fast-casual players, as they’re referred to, are doing a nice job with pizza restaurants, and they’re taking share away from existing players.”
Here’s a competitor he doesn’t believe is taking share: Frozen pizza makers.
“At the end of the day, anybody feeding anybody to us is competition,” Doyle said. “As it relates to pizza, and frozen pizza or take-and-back, there is some interplay between our category and those categories, but not much.
“During the time you saw a lot of growth in frozen pizza, you couldn’t see it was affecting us directly, if at all.”
Instead, Doyle believes, frozen pizza is cannibalizing other frozen foods.
“One more sale of frozen pizza is one less sale of frozen lasagna,” he said.
The same is true, Doyle said, for the gas station: “I’m just not that sure there’s that much interplay there.”
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.
Contact Jonathan Maze at [email protected]
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