| While many segments of the restaurant industry are | | | | cost, has come down in cost in recent months. |
| struggling to stay afloat, pizza concepts in large part | | | | Hurteau noted that he's "seen commodity prices |
| seem to be well positioned to weather the current | | | | improving" as "cheese and flour were as high as 50% |
| economy. There seem to be at least three distinct | | | | up in 2008." Barsness says Incredible Pizza has |
| reasons for this - sales don't appear to be slumping as | | | | "already seen that" when asked about their cheese |
| much for pizza outlets as in other segments, | | | | prices coming down. Berger of Figaro's had checked |
| commodity prices for pizza staples have adjusted | | | | cheese prices the day we spoke and saw the price at |
| very favorably, and the value-centric focus of today's | | | | $1.20 per pound, compared to a 2008 price he recalled |
| dining customer meshes well with pizza's market | | | | to be as high as $2.40 per pound. Berger does expect |
| positioning. | | | | the price to rise somewhat in the near future as "that |
| When I asked several leaders in the pizza segment | | | | price is simply not sustainable for suppliers to maintain |
| their observations on sales trends, there were varied | | | | indefinitely." While many commodity prices are starting |
| responses. Art Hurteau, President of A&M Pizza, | | | | to or have already come down from 2008 high's, pizza |
| a franchisee of Domino's with 14 stores and 3 | | | | producers in particular appear to be enjoying major |
| seasonal venues in Missouri, told me that, "While 2008 | | | | price improvements on the largest staples of their |
| was rough, as it was for most, 2009 has started out | | | | product. |
| much better for us, though not as good as 2007." Rick | | | | Another trend pizza seems to be benefiting from is |
| Barsness, President of Incredible Pizza Company, is | | | | the customer's current laser-focus on value. Pizza has |
| "hoping to have even comps...no ups, no downs...and | | | | always been a value driven product, with coupons a |
| that is where we are so far this year." That is a | | | | driving force of a major portion of sales for many. The |
| preferred position for most in the industry compared to | | | | price point of pizza, when coupled with a coupon, |
| where they are. Ron Berger, Chairman of the 125 unit | | | | seems more attractive to the consumer than ever |
| Figaro's Pizza franchise group, sees a mixed bag of | | | | right now. Barsness told me, "Mom wants a deal and is |
| sales trends from his franchisees. "Since the start of | | | | looking for the coupon." Hurteau has noticed a change |
| 2008, we have some stores up 30-40% in sales and | | | | in customer choice, driven by price point. His group has |
| some down equally as much." The variations in trends | | | | seen a good response to Domino's oven-baked |
| were seen to be "geographically sensitive" in Berger's | | | | sandwich, even after the promotion ended. He told me |
| view. Not everyone in the pizza business is as positive | | | | that research indicates the customer "likes the flavor |
| or neutral in opinion though. Jim Fox, President of Fox's | | | | profile and the price." Figaro's seems to be benefiting |
| Pizza Den, says that while he's not a "doom and | | | | more than some concepts as they offer both baked |
| gloom guy", he sees 2009 as a "total disaster for the | | | | pizzas and a Take 'n Bake product, a freshly prepared, |
| whole food industry." While he has many leads for | | | | uncooked pizza which typically sells for $1-$2 less than |
| franchisees to help him grow his brand, Fox noted that | | | | the baked version. Berger says the lower price is |
| the banks have "dried up" on financing and that people | | | | attractive to many consumers. "Since the Take 'n |
| he used to be able to help get financed are no longer | | | | Bake pizzas can be delivered and qualify for |
| qualified. Though varied, the general mood of the pizza | | | | government assistance programs, we see about 10% |
| segment seems to be less dire than many other | | | | of our business coming from this demographic right |
| segments in the industry when it comes to sales | | | | now." Berger believes his franchise is currently the only |
| trends. | | | | to offer both baked and unbaked pizzas. |
| Commodity prices have affected every restaurant in | | | | It appears that while none in the restaurant industry will |
| the nation. Of late it seems that a correction in several | | | | come out of the current market downturn unscathed, |
| product prices that matter considerably to | | | | the pizza segment appears, broadly speaking, to be in |
| pizza-makers has offered them some relief. Cheese | | | | a position to avoid much of the pain many other types |
| and flour, which makes up a large portion of a pizza's | | | | of restaurants are feeling. |