Pizza takes substantial slice of industry piePizza takes substantial slice of industry pie

Pizza continued to take a sizable slice of the Top 100 U.S. restaurant sales pie, with digital innovations and delivery giving the segment muscle over independent and regional players.
“It’s always a very competitive segment,” said industry analyst Mark Kalinowski, managing director at Nomura Securities International Inc.

“There’s still room for millions of Americans who haven’t started to order pizza digitally or only have done so sporadically to do so,” Kalinowski said.

“There’s the opportunity to do that more and more. That plays into the strength of big chains like Domino’s, Papa John’s and Pizza Hut. 

“It makes it more difficult for the regional players and the mom and pops — which have some barriers that the national chains that do pizza delivery don’t face.”

In overall U.S. Systemwide Sales, Pizza Hut again led among the category brands, reaching $5.8 billion in sales. Domino’s ranked No. 2, at $4.8 billion, and Little Caesars Pizza was No. 3, with $3.5 billion.

The sales of the nine Pizza brands made up 8.1 percent of sales in the Top 100’s Latest Year. 

In the ranking of share of sales among those nine, Pizza Hut continued to dominate with 29 percent of total sales, though it lost share from 30.2 percent in the Preceding Year. Only two brands gained share in the Latest Year: No. 2 Domino’s and No. 9 Marco’s Pizza.

“Certainly when you look at Pizza Hut and its 5-percent same-store sales growth in the first quarter from this year — I believe that’s the best showing in the U.S. in the last 14 quarters — they are still the biggest out there,” Kalinowski said. “And given their size, that makes it a little more difficult in a category that’s already competitive.”

Greg Creed, CEO of Pizza Hut parent Yum! Brands Inc., said in an April earnings call that the brand benefited from promotions. 

“Our $5 Flavor Menu helped drive system transactions, with company stores leading the way, up 8 percent in the quarter,” Creed said.

He also credited the Pairs promotion — two medium pizzas with any toppings for $6.99 each.

“Our discipline around making it easier to get a better pizza is holistic and driving traffic,” he continued. “We are focused on the entire customer experience, from ordering, payment and delivery tracking, to our assets and menu.”

In the ranking of U.S. systemwide sales growth, Marco’s Pizza was No. 1, with a 23.7-percent increase in the Latest Year over the Preceding Year. Domino’s ranked No. 2, with 16.9-percent growth in systemwide sales and Round Table Pizza was No. 3, with a 6.2-percent increase in the Latest Year over the Preceding Year.

“Domino’s resurgence last year was a big story,” Kalinowski said. “Their U.S. same-store sales were up 12 percent.... Our annual model goes back to 1994, and that was the only year for which annual same-store sales were up double digits.”

Moderating commodity prices also helped the Pizza segment keep its pricing in check and appeal to more consumers, Kalinowski said.

“Cheese prices are low, and that gives some room for competition to be more aggressive on the promotional front,” he said. 

The Pizza segment’s average estimated sales per unit was $915,500 in the Latest Year, up 4 percent from a Preceding-Year average ESPU of $880,600.

Chuck E. Cheese’s, owned by CEC Entertainment Inc., led the pack with $1.6 million in estimated sales per unit.

In ESPU growth, Domino’s was a clear leader, with an increase of 14.5 percent in the Latest Year over the Preceding Year. Round Table Pizza was No. 2, with ESPU growth of 6 percent. Papa John’s Pizza was No. 3, with ESPU growth of 3.7 percent.

Contact Ron Ruggless at [email protected]
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