By Stephanie Ortenzi
How the pizza chain wars are being won
By Stephanie Ortenzi
Pizza chains in Canada are duking it out for market share, growing and innovating to stay competitive.
Pizza chains in Canada are duking it out for market share, growing and innovating to stay competitive. Just how big are four big guys getting? How fast are they growing? How are they growing? (Probably the most interesting question to watch). What are they thinking about? What do they have to say about the pizza segment today? Read on and find out.
Pizza Pizza / Pizza 73
Pizza Pizza and its sister Pizza 73 brands form a publicly traded company beholden to its stakeholders, and according to vice president of marketing Pat Finelli, the company delivers, literally and fiscally.
The brand has 620 stores across Canada, plus 74 units in Western Canada under the Pizza 73 brand. Nearly 700 units puts Pizza Pizza at the number one spot nationally, and it is growing, with 35 new stores opening in the last year.
“Sales are consistently up over three years, with positive same-store sales growth year over year,” says Finelli, adding that the company’s aim is to consistently add between 15 to 25 new stores every year.
For longevity and growth at this level, good product innovation is key. “You need to innovate, but you can’t follow trends blindly. You have to stay a step ahead,” he said, pointing to his choice of adding poutine to his product line before Wendy’s made it a staple of theirs. So, once you’re on trend, adds Finelli, “If the market likes it, sell a lot of it.”
A big success for Finelli, which began in 2009, is the charitable donations to the national Children’s Miracle Network. Pizza Pizza makes a half-moon Smiley Pizza as a way to contribute $2 from each sale.
In terms of competition, Finelli points to the frozen pizza market, and how it’s getting bigger and better. Also a segment of the market that threatens the company’s sales are the new fresh variety of pizzas available in supermarkets. Survival, ultimately, says Finelli, is to have great fanchisees, to innovate, to buy the best ingredients, to make deliveries on time and to provide great value.
Boston Pizza International
Milestones, anniversaries, record sales, marketing awards, recognition for exceptional management – it’s been a great year for Boston Pizza International.
Boston Pizza opened 12 new stores this year, including its 100th in Edmonton, the brand’s home town, which also marked the company’s 50th anniversary, “where we’re making pizza in exactly the same way we always have: dough made fresh every day, hand formed and gourmet toppings,” says director of communications Perry Schwartz.
Sales hit a system-wide 2013 record of $975 million. Boston was recognized as a 20-year member of the Canada’s best-managed companies. Marketing campaigns won the company both a Cassie and a Gold from the Canadian Marketing Association.
On the bricks and mortar side, Boston requires franchisees to renovate every seven years. “It’s a proud part of our culture,” says Schwartz. That initiative is going to be just a little different this year.
The company has introduced a new store design, top to bottom, from tables and chairs to new AV packages for bars, which will currently apply to the 37 existing restaurants due for their renovation.
For growth opportunities, rather than building from scratch to support the brand’s physical model, Boston Pizza is looking at existing vacant real estate for ways to convert and serve as viable locations. “The locations aren’t traditional in size or layout for us, but they’re doing the trick,” says Schwartz.
For challenges, Schwartz says the company is looking at a sliver of the market where casual and fast food are moving together in the fast casual segment. He points to, among other brands, McDonald’s better lighting and improved ambience, with better seating and fireplaces. “We’re all fighting for a place between those two segments, and everyone is bringing up their game.”
Ultimately, innovation is where the brand has invested a lot of steam. The otherwise known as “boneless wings” by another brand, are being called “all-meat wings,” a significant spin toward the positive. At the time of writing, Boston Pizza is introducing a steak and potato pizza, Srirachi pizza and a pizza taco.
For Domino’s, the focus is on getting back to basics and homing in on good customer service, says Jeff Kacmarek, vice president of marketing and new product development, but this is the tip of the iceberg for this pizza brand.
“We had a strong 2013, with double digit sales growth due to order counts, order frequency, new products and new customers,” he said, pulling from 386 stores nationwide, which could explain how the company has stayed away from discounting ($7.99 continues to have solid pull on one level of the company’s value proposition). Domino’s has opened 18 new stores in the last 16 moths, driving by an expansion plan to see 15 new stores every year over the next three to four years.
On April 21, the company rolled out a line new chicken pizzas in four profiles: crispy bacon and tomato made with a garlic parmesan white sauce, spicy jalapeno and pineapple made with a spicy mango habanero sauce, classic hot Buffalo made with a hot buffalo sauce and sweet BBQ bacon made with a sweet and smoky barbecue sauce
What might be Domino’s biggest news actually goes back 20 months and is ongoing: a new store concept, with a new image, and a new look and feel. It’s called The Pizza Theatre, which is going to create a “bigger footprint,” says Kacmarek, taking up more room in the market as a concept of note. The plan is essentially a way to create seating and shift perception of the brand. “The focus will still be on delivery and takeout, as always, but now you can come in and sit down and eat in-store (and watch the theatre of pizza making). It’s a third option.” Some will require all new builds from scratch, but some can be transformed with existing square footage and other foodservice features.
When asked Kacmarek’s overview of the pizza segment today, he pointed to fierce competition, and the need for innovation in image, products and tech. “Still, it’s an exciting time,” he said. “In the end, innovation will ultimately win the pizza wars.”
Pizza Hut is having a good year, with 15 new locations in the first two quarters of 2014 alone, with over 300 units nationwide.
Some of the new openings highlight new thinking about the nature of how the company wants to expand. The new designs are moving toward making restaurants smaller, says company spokesperson Debra Quinn. The new designs also include fast-bake ovens, additional savings in terms of operations, important in the eyes of prospective franchisees.
“The new design makes it possible for Pizza Hut to widen our appeal and reach,” adds Quinn, “because it’s a lower cost, offers more flexible options for franchisees and opens up our brand to new venues and locations.”
A stand-out innovation for the brand is the success of the 60-cent wing promotion, created to encourage customers to try the brand’s range of wings again.
Other on-trend innovations proven successful in the past are making their way back into customer’s minds via a promotion for Cheesy Beef Poutine Pizza and Creamy Butter Chicken. The world of flavours continues to be a rich area to plumb in search of innovations to satisfy a more and more worldly customer base.