Canadian Pizza Magazine

Features In the Kitchen Ingredients
Cheese Reaction

Pizza operators from across Canada try to understand the prospect of another increase in cheese prices, despite all indications of a necessary decrease.


March 7, 2008
By Cam Wood

Topics

The latest news regarding a price hike for industrial
milk – which will no doubt affect Canadian cheese prices – was met
disdain by the pizza industry.

The latest news regarding a price hike for industrial milk – which will no doubt affect Canadian cheese prices – was met disdain by the pizza industry.

Already embattled in a saturated market and fierce competition from grocery stores, independent pizzeria operators across Canada feel there’s a new ending to an old adage: the only certainty in life is death, taxes and higher cheese prices.
While comparatively small at its origins – a mere 1.06 per cent rise in support prices for industrial milk used in making common dairy goods like butter and cheese – the price is almost guaranteed to go up more drastically by the time the provincial milk agencies and processors are through with passing along their costs.

Val Preston, Wedges Pizza, Terrace, B.C.
Val Preston said she had enough things to worry about than another cheese price increase. Preston spoke with Canadian Pizza in between mopping up water that had seeped under her front door from the torrential rains, and sandbagging to keep anymore out. Dealing with the west coast’s unusual weather these days has just added to her routine.

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“But we focus more on our product and the flavour,” she said of the cheese issue. “We use a mixed mozza to create a unique flavour … and we try not to buy a lot of pre-made items. It’s more prep time for me, but I can take some pride in what I serve.”

In this small city nestled in the Rocky Mountains, Preston says she sees the advantages of distinguishing herself through specific marketing strategies. With Terrace being home to the Kermode Bear – a unique white-coated bear from the black bear family, and a major recreation destination – her competition tends to be chain restaurants, and fluctuating seasonal demographics.

“I’m the only one in town with an 18-inch pizza, which when you slice it serves a pretty good crowd. And if people stop and compare, I’m probably on the less expensive side, especially against the chains.”

Preston prefers to educate her customers about rising food costs, and relies on tested marketing techniques to maintain her “share of mouth.” By creating her menu in-house, she can tweak it to the seasons, and has also found branded magnets have worked really well. Being in front of the customer with these techniques has helped build her reputation, which in turn has its rewards in word-of-mouth advertising.

Tony Hannona, Ital Pizza, Barrie, Ont.
“Are they short of cows, or something?” Tony Hannona jokingly asked when told of the increase in prices for industrial milk.

Hannona, who owns Ital Pizza in Barrie with his wife Monti, said since he started at the pizzeria in 1996 there have been increases every year – and he still doesn’t understand why. “Canada is the most expensive country for dairy products, and it’s not the first time (prices) have gone up. But, it still doesn’t make sense.”

Although still waiting to here from his cheese supplier if there will be any impact, Hannona knows that he won’t be raising prices on his fresh pizza to compensate. With heavy competition in his city already, he admitted there’s no reasoning behind trying to compete with the $6 pizza deals others are offering.

“I would never raise my prices for the whole pizza, but we sell the large slices. Those are more like promotion, really, so we might have to increase the prices on those.”

Hannona sees the need to continually educate his customers on selecting quality foods over discount foods, and also raise awareness as to why certain price adjustments need to be made.

Robert Hamman, Jessy’s Pizza, Halifax, N.S.
Hamman just bought this franchise operation in mid-2006 after a move from Newfoundland. His take on the increase, while small compared to other years, is still one of bewilderment.

“It’s already crazy now. It’s too much, going up every year,” he said.

“With fresh pizza, profit is going down. It’s not just cheese prices that are going up, it’s everything.”

Hamman said he didn’t see an awful lot of alternatives. With an already saturated market, raising prices is pretty much out of the question. The only way he foresees that happening is if all pizzerias agreed to increase their prices – but knows that isn’t going to happen any time soon. The prospect of raising prices isn’t realistic.
“I’m not happy, but what can you do? We can’t just change our prices whenever,” he said. “People would not like that.”•

EDUCATING CUSTOMERS
Sharing news with your customers can be a key ingredient to continued success. It may help them better understand the challenges you face in your business – and could be a major factor in building brand loyalty.

Moving into a new year is a good time to sit back and ask yourself: If the people in my area knew what I know about my pizza, would they pick mine over the competition?

And knowing what you already know, what are some of the ways that independent pizzerias can educate customers on issues such as nutrition or cheese prices and, in turn, increase market share?

DIRECT MAIL
Many are quite familiar with direct mail. This is the same idea as your flyers, newsletters, door hangers and the like. But while most direct mail has a “call to action” component – weekly specials, coupons, etc. – sometimes direct mail can have an equally significant impact when it is used just for education.

Now it’s your chance to be seen as someone who understands these basic issues and can address them by countering with information on how pizza can be a healthy part of the Canadian diet.

Make all of your marketing materials more informative and educational. Work to ensure your customer will learn something from reading your piece.

THE INTERNET
The Internet has also become a vital tool in our culture today.

E-mail campaigns and online ordering have replaced the direct mail marketing in some Canadian operations.

Once again, this tool is an excellent resource for keeping customers in the loop when it comes to awareness. That “stay in touch” moment might help keep your pizzeria in the forefront of their mind when the time comes to purchase a meal.

And it’s not just for moments like increases in cheese prices. Every week it seems like the mainstream media are pounding Canadians with messages about nutrition and obesity.
These messages are often filled with very minimal information other than the “scary bits.”

Are consumers really concerned about how cheese prices have been affected again this year? Let’s be honest, it’s not their top priority these days.

But consumers have shown themselves to be more willing to accept things like price hikes when they know the reasons behind them. Consumers like to know as much as possible before they part with their ever-shrinking disposable income. That education helps your customer perceive a higher value in the pizza you might be selling.

And, it’s likely that the competition from the major chains won’t be following suit.