Global Pizza Industry: Trends and Insights for 2019
The worldwide pizza restaurant industry showed growth in 2019, with a significant increase in sales, particularly in Latin America, Eastern Europe, and Asia Pacific. Dominos outpaced Pizza Hut in sales, while independent pizzerias experienced a slight decline in market share. There is a shift in focus towards catering to Generation Z consumers and adapting to the preferences of vegetarian, vegan, and flexitarian customers.
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Pizzas Global Pizzazz Euromonitor International estimates worldwide pizza restaurant sales for 2019 of $154.8 billion, or a 7.0% increase from 2018 s $144.68 billion, with the largest increases occurring in Latin America, +8.3%; Eastern Europe, +7.5%; and Asia Pacific, +7.4%. As the most mature pizza market in the world, the increase in the US was a bit more modest, or 1.3%, from 2018 s $45.73 billion to an estimated $46.34 billion for 2019. The total number of US pizza restaurants increased 731 units, or just less than one percent (0.09%) from 2018 s 76,993 to 2019 s 77,724.
Dominos Outpizzas the Hut For the year ending September 2019, total sales at all pizza restaurant chains (10+ units) were $27.8 billion, or an increase of 3.17%, and a 60% share of total sales. The number of chain locations increased 3.51%, to 36,151 units. Although Pizza Hut was the #2 chain by 2019 sales, or only $1.06 billion less than Domino s, at $6.59 billion, Domino s sales increased 11.2%, compared to Pizza Hut s very modest 0.3%. California Pizza Kitchen was #6 among all chains, with $639.5 million in 2019 sales, but it was first in average unit sales of more than $1 million, or $3.12 million, while #32 Papa Gino s Pizzeria ($98.5 million in 2019 sales) was the fastest growing chain.
Independent Pizzerias Share Slips Independent pizza restaurants market share continued to erode, decreasing from 41.07% during 2018 to 40.0% for 2019 (for the year ending September 2019). Total 2019 sales for independent pizza restaurants were $18.53 billion, a slight decrease of 1.33%, from 2018 s $18.78 billion. The number of locations decreased even less, or .47%, to 41,573 locations, or 5,422 more than the chains. Independent pizza restaurants average sales per unit for the year ending September 2019 were $445,761, compared to $446,885 for 2018, a change so small as to be negligible. By comparison, the chains average was $770,808, also a negligible change.
Its Time To Pay Attention to Generation Z Eventually, all retail businesses must adjust to the next generation of adults and the next generation for pizza restaurants and all others is Generation Z, which is predominately teenagers and the youngest college students today. Interestingly, they may be entirely digital natives, but they are also socially and environmentally conscious and more financially conservative because as children they experienced their parents financial struggles during the Great Recession. Despite their young ages, Gen Zers are already responsible for 24% of all foodservice traffic and visited restaurants 11 billion times during the year ending July 2019. They rely heavily on reviews and online ordering when deciding where to spend their money.
Toppings Makeover Adjusting to the range of consumers who consider themselves vegetarian, vegan or flexitarians is a major challenge for all restaurants, including pizzerias. A 2019 Gallop poll found only 5% of American adults are vegetarians, and 3% vegans. Approximately 25% of Americans are flexitarians, however, and they will consume plant-based and animal-protein foods. A separate Technomic survey found 50% of Americans will eat both vegetarian and vegan dishes at least once a month. Pizza Hut tested the use of a plant-based meat option, Morningstar Farm s Incogmeato Italian sausage, in its Garden Specialty Pizza, during just one day, October 23rd, 2019, in one Phoenix location.
Technology Is the Future of Pizzerias The technological disruption of restaurants is fully engaged, and the National Restaurant Association reports significantly fewer meals will be cooked at home during the next 10 years, resulting in more deliveries, subscription services and other new options. Cloud kitchens are one of these options, which are defined as multiple restaurants using a single kitchen to improve speed and convenience. These trends will also cause restaurants to be smaller, primarily with the use of more automated equipment. It s the mobile connection that consumers expect with restaurants, which is probably the greatest disruption (and opportunity). The NPD Group reported during June 2019 that restaurant digital orders increased 23% since 2015, and 60% of them are mobile orders.
Advertising Strategies Whether a major chain or local independent, all pizzerias must quickly adjust their menus according to consumers rapidly changing food preferences, such as vegetarian and plant-based meat options, and then promote these changes to differentiate their brands. Suggest independent pizzerias ask customers to judge the pizzeria according to the Customer Experience Benchmarks on page 2 of the Profiler via a link printed on the delivery box and a table tent with a link for in- store patrons. Pizzerias that have made a major commitment to new technologies should highlight those additions in their advertising, emphasizing how they benefit customers, especially making the ordering and delivering process quicker and easier.
New Media Strategies Social media is clearly where pizzerias must engage with young adults, especially Gen Zers. Short videos will generate the most attention, with content that focuses on the pizzeria s efforts to be environmentally conscious, e.g., removing plastic straws, local ingredients, etc. Independents can also gain some traction on the major chains by having a proactive online review program. Not only are reviews very important to young adults, but also responding to every review within 24 hours or less is what consumers expect. Pizzerias can consider a Birthday Pie Contest. Ask customers/consumers to nominate someone who deserves a birthday pie celebration, with maybe a short video explaining why. Choose a winner quarterly, with an in-restaurant or in-home party package.
