Pizza competition turns to technology, menu items

The nation’s leading pizza chains have always competed on product and price, but the use of new technology as a marketing channel is becoming just as important as the latest meal deal or promotional item.

Interactive campaigns, mobile coupons and advances in online ordering seek to reach consumers where they’re most likely to be: on their mobile phones or in front of a computer.

Domino’s Pizza, Pizza Hut and Papa John’s have made text-ordering a standard part of their operations, just as they’ve done with online ordering. Pizza Hut and Papa John’s, however, have taken online ordering a step further with the launch of widgets, which allow consumers to place orders more quickly and easily.

Ann Arbor, Mich.-based Domino’s earlier this year introduced the online Pizza Tracker so consumers could track the progress of their delivery orders. It’s “one of the coolest pieces of technology in the industry,” says Tim McIntyre, vice president of communications.

Pizza Tracker was launched in late January. By mid-March, 1 million customers had used it.

It was one of the highlights for Domino’s during the past year, as was international growth. Thanks to net store growth of 246 stores in 2007, Domino’s grew its total worldwide store count by 258, McIntyre says. The company now has more than 8,600 stores in 55 countries.

In summer 2007, Domino’s recapitalized the company, returning $13.50 per share to shareholders in a special one-time dividend. Because original investors paid $14 a share on the day of Domino’s initial public offering in July 2004, “they got nearly a 100-percent return and maintained ownership of their shares,” McIntyre says.

In late 2007, Domino’s launched the “You Got 30 Minutes” campaign, the first work from new agency Crispin Porter + Bogusky. The campaign, which continues today, doesn’t guarantee delivery within 30 minutes but hints strongly that the order will arrive within that time.

Orders of the Brooklyn Style Pizza were so strong that Domino’s placed it on the permanent menu, McIntyre says. The chain also introduced the Cheesy Garlic Pizza and Oreo Dessert Pizza as limited-time offers.

Like most pizza chains, Domino’s has had to cope with rapidly rising commodity costs.

“You name it,” McIntyre says to describe the array of segment-specific commodities that soared in price during the second half of 2007 and the first part of this year.

Because consumers also “are feeling the pinch” with high gas and food prices, he says, Domino’s introduced the 444 Deal, an offer of three 10-inch, one-topping pizzas for $4 each.

In fact, Domino’s is engaged in a battle of the meal deals with Pizza Hut, which launched the Pizza Mia Deal: three 12-inch, one-topping pizzas for $5.

The Pizza Mia Deal is an everyday-value option that is a permanent offer, says Pizza Hut spokesman Chris Fuller.

Dallas-based Pizza Hut rolled out limited-time Double Deep Pizza and Crunchy Cheesy Crust Pizza, but its most ambitious product news was the expansion in April of its delivery menu to include pasta. Pizza Hut is the first of the leading pizza chains to do that.

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Two baked pastas, Creamy Chicken Alfredo and Meaty Marinara, are available in six-portion aluminum pans and come with five breadsticks. Chief executive Scott Bergren says the chain, with more than 5,200 U.S. units, expects the new Tuscani pasta line to generate $1 billion in annual sales.

Initial sales have been “phenomenal,” Fuller says. “It surpassed all our expectations.”

Pasta delivery is one of several routes parent company Yum! Brands Inc. is taking to improve sales for the chain, which Yum chairman, president and chief executive David Novak described as the company’s “problem child.”

To generate incremental sales, Yum has added WingStreet dual-brand outlets to almost 1,000 Pizza Hut units.

Pizza Hut’s sales have been lagging for the last five years, but for Little Caesars, which never discloses specific figures, 2007 “marked our seventh consecutive year of significant sales increases outpacing industry growth,” according to a statement by David Scrivano, president of Detroit-based Little Caesar Enterprises Inc.

Little Caesars built “more domestic units than any other pizza chain in 2007” and plans to open “hundreds” of stores worldwide this year, Scrivano said. The chain has more than 2,000 U.S. units.

Domestically, the chain is focusing on growth in Boston, St. Louis, New Orleans, Philadelphia and Cincinnati, among other locations.

In 2007, Little Caesars built stores in eight foreign countries and has approved franchisees in Costa Rica, Peru and Ireland. To support international growth plans, Little Caesars promoted Michael Therrian to vice president of the international division.

International growth for Louisville, Ky.-based Papa John’s International has been “very strong,” and the chain soon will celebrate its 500th foreign-store opening, says Chris Sternberg, senior vice president of corporate communications.

Papa John’s is looking overseas as the place where growth holds the most potential, he says. There are about 3,200 Papa John’s outlets worldwide.

“For the first time, our unit openings for international will exceed domestic,” Sternberg says. “Clearly, we still have some growth left in the United States. We think there’s room for another 800 or so in the United States. Clearly, in the long term, international holds the greatest potential for us.”

Eventually, he says, China will have more Papa John’s units than the United States.

Systemwide in 2007, Papa John’s “did very well in a very competitive category,” Sternberg says, adding that the current cost environment is the “most challenging” in Papa John’s 24-year history. But the chain has stuck by its strategy of rolling out a variety of limited-time offerings “that highlight our quality standard” to keep customers coming back, he says.

“Even the most loyal users like to try something different,” Sternberg says.

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The chain recently introduced pizza made with whole-wheat crust, which contains 40 grams of whole grains per serving. Pizza made with the crust is delivered in boxes with the “100% Whole Grain” stamp from the Whole Grains Council.

“We’re very proud of that,” Sternberg says. “It makes sense for our brand. Consumers expect us to innovate with quality options.”

Papa John’s recently added six new specialty pizzas including Sicilian Classic, Italian Meats Trio, Spinach Alfredo Chicken Tomato, Smokehouse Bacon & Ham, Chicken Bacon Ranch and Papa’s White Pizza, which is a blend of ricotta cheese sauce and garlic-Parmesan sauce, topped with mozzarella cheese.

The Six Cheese Tuscan Pizza, which debuted in September as a limited-time offer, was added to the permanent menu in March.

Papa John’s also continues to look for promotional partners to provide added value for consumers, Sternberg said.

In October, the chain and Sony Pictures Home Entertainment teamed for a “Spider-Man 3” promotion. Papa John’s offered the 16-inch Super-Hero XL3 pizza for $12.99 and coupon for $3 off the price of a “Spider-Man 3” DVD.

“When you can offer a $3 DVD coupon, consumers see value in that,” Sternberg says.

Although new technology is now a standard feature of the chains’ marketing efforts, CiCi’s Pizza benefitted last year from an old standby: national broadcast ads.

“That national media campaign was no doubt a shot in the arm for CiCi’s Pizza,” says Craig Moore, president of the 600-unit chain. “We were touching some people for the first time.”

The campaign is reaching consumers in markets where Coppell, Texas-based CiCi’s penetration is not large enough to warrant a local media campaign, and it’s generating brand awareness that CiCi’s otherwise would not have received in those markets, Moore says.

CiCi’s is targeting Generation Y consumers with its “Yo Roto” campaign, featuring a young man named Roto who performs “shaker-boarding” outside CiCi’s units to draw attention to their all-you-caneat buffets. Shakerboarding consists of Roto twirling a large sign and break dancing. His skills are displayed at www.yoroto.com.

The chain is testing beer and wine in “different parts of the country” to appeal to fathers who want a cold beer when they take the family out for pizza, Moore says.

“We’re not trying to be a bar,” he says. “The test is about to try and limit the ‘veto vote’ from Dad.”

CiCi’s also expanded its buffet offerings to include three new zesty-flavored Buffalo-style wings and a Pepperoni Flip. The product is similar to a calzone and contains fresh pepperoni, spices, and Parmesan and Romano cheeses.

As it focused on giving consumers more, CiCi’s launched an initiative for store managers to help them boost sales. The chain’s senior management spent time with 1,000 managers at two separate events and presented ideas on how local-store marketing can have an impact on operations.

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Moore readily acknowledges that “all restaurants are really struggling right now” and says operators should expect a drop in customer traffic when gas hits the “psychological barrier” of $5.

When gas first reached $3.50 a gallon, he says, “we saw an immediate downturn.”

Despite economic conditions, CiCi’s is on track to open 75 to 85 new units this year and is especially interested in California and New York, which generate the most inquiries from potential franchisees and represent a “huge opportunity for us,” he says.

Top 100: Part one of a two-part report