Business and Operations
The pizza Chef: April-May 2014
Knowing your pizza market
I’ve said it before and I’ll say it again: Canada doesn’t need another mediocre, ordinary pizza place.
I’ve said it before and I’ll say it again: Canada doesn’t need another mediocre, ordinary pizza place. But that fact won’t stop the discount pizza chains from opening more units. In my city there are plans for more stores; likely there are such plans in your city too. The editor of this magazine asked me if I was worried that my sales would suffer and whether or not I would do things differently as a result.
My answer is no. I’m not the least bit concerned that my customers will suddenly find their way to a budget chain location, new or existing. My pizzeria doesn’t compete in the budget pizza category.
I have a mentor who has a saying: “Live by price, die by price.”
Long ago I answered a fundamental question about my pizzeria business: what is its reason to exist in the marketplace? The answer wasn’t simply that I had some free time and needed something to do.
Imagine that there are three file folders, or categories of pizza place, in Canada. One is where you’ll find the low-priced, discount “2 for 1” or “3 for 1” pizza. Grocery store chains are quickly becoming a force to be reckoned with in this category with their deli-fresh pizzas. The second category is a middle ground at around $10 to $15 per pizza place. The third is the premium, the best of the best, the gourmet category. That’s where my pizzeria exists.
I realized there was a multitude of pizza places already in the discount category and if I wanted to be another one then I would have to abandon my premium ingredients in order to compete in a price war. I chose not to enter that market space for several reasons.
Even more budget pizza chains now occupy that category than did a few years ago. Several more U.S. chains have come up to Canada and opened units. On any given day they are all competing against themselves and the other discount pizza chains.
Opening more units will simply push out the weaker of the discount pizza chains, even same store units. The better-performing units will inevitably push out the poorly performing units.
Customers who would normally patronize these discount pizza chains will choose another location, perhaps one that is a little handier on their drive home. They may choose a Canadian pizza chain over a U.S. pizza chain, but these customers aren’t my customers. My customers don’t patronize discount pizza chains.
APPLES AND ORANGES
If my pizzeria were competing in that same category, whether as an independent or as a franchisee of another chain, I would be concerned about more pizza chain units opening in my city.
I would have great cause for worry because that particular portion of the marketplace has a finite number of customers and those pizza places are all competing for the same dollars.
It’s a price war an independent will never win.
Independent pizzerias are at a distinct disadvantage on the marketing front. The chains have much, much bigger marketing budgets than do the independents.
The bigger the pizza chain, the bigger the budget. The marketplace will re-arrange itself in the short and long term with regards to which pizza chains will have the most units and then which ones will have the most sales per unit.
But as far as my own pizzeria is concerned, it will weather this expansion just fine. •
Diana Cline is a two-time Canadian Pizza Magazine Chef of the Year champion, internationally recognized gourmet pizzaiolo, co-owner of Diana’s Gourmet Pizzeria in Winnipeg, Man., and a director for the CRFA from 2009-2013. In addition to creating award-winning recipes, Diana is also a consultant to other pizzeria owner/operators in menu development, creating systems to run a pizzeria on autopilot, along with marketing and positioning to help operators grow their business effectively and strategically. She is available for consulting on a limited basis. For more information contact her at Diana@dianasgourmetpizzeria.ca.