Marketing Insights: January-February 2017
Scared? Order a pizza
I have yet to meet anybody who won’t be glad to see the backside of 2016. The world appears to be scared and angry and – politics aside – to agree it’s time to drop the mic on this wacky year. Travel has been negatively impacted by social unrest and terrorist attacks. Investors don’t seem sure as to whether they are happily anticipating a Trump presidency or not.
While many sectors are experiencing Mr. Toad’s Wild Ride as consumers run for cover, one industry seems to be on a roll: pizza. When the going gets tough; do the tough order double cheese?
Few would argue that pizza falls squarely into the comfort food category. Comfort foods are typically warm, tasty and associated with fun social gatherings and family memories. When society is agitated regarding events real or imagined, sales of comfort foods rise. Food & Wine magazine reports that on election day in Chicago tikka masala, jalapeno cheddar poppers and chicken wings enjoyed strong sales; the day after the election, sales of comfort foods such as macaroni and cheese, cornbread, meatloaf and chicken wonton soup were in high demand.
Analyst Chris O’Cull of KeyBanc reported to Forbes magazine in July 2016 that he believed the rise in pizza delivery “may be the result of consumers eating more at home amid the current political/social backdrop, which we believe could last through the November election.” Putting their money (and their pepperoni, apparently) where their mouths are, Papa John’s stock was upgraded in July 2016 largely in response to what O’Cull saw as a consumer desire to eat at home more in reaction to global political and economical uncertainty. O’Cull upgraded the stock to “overweight” from “sector weight” and raised his price target to $80, which Bloomberg confirmed was the highest among analysts surveyed. As the November election approached, the financial results proved O’Cull’s hypothesis had merit. Domino’s reported same-store sales (an effective way to measure true organic growth beyond simply opening new stores) to be up 13 per cent during the quarter versus the year-ago period.
It’s important to note that the analysis leading to this hypothesis is rooted in the fact that pizza is not only a comfort food but also one that is easily delivered, cost effective and consumed in the home. It’s how consumers react to global unrest that creates trends for businesses to focus on. The Canadian arm of Ikea reports that sales are up 15 per cent between April and September over the same period of 2015. Ikea Canada president Stefan Sjostrand believes that Canadians are redirecting travel dollars towards renovations and redecorating. With terrorist attacks a prominent aspect of 2016, it would appear we’ve replaced the “Gone fishing” sign with one that says “I’ll be in my bunker.”
Trend watchers refer to this behaviour as “entrenching,” or as futurist Faith Popcorn calls it, “cocooning.” Popcorn described cocooning as “insulating oneself from perceived danger.” However, when the term was coined in the early 1980s it also referred to homebound baby boomers caring for small children. There’s some of that at play here 30 years later too.
So what’s a pizza operator to do with all of this? Step 1 is to ask “Is this a trend or a fad”? Trends are longer-term shifts and fads come and go quickly. Following trends leads to long-term success. Following fads leads to shorter-term success. It would appear to be a trend as Echo boomer births peaked in 1990, meaning those Canadians will be starting families anytime now and for the next 10 years. Think about it – aren’t you going to more weddings these days?
To thrive as a business in these conditions, you must have delivery and takeout. Have a solid product line that includes traditional items offering value for money. Not cheap necessarily, but fresh, well made and unique. Promote your delivery and takeout aggressively to stay top of mind when consumers want to eat in. Actively court families by offering kid-friendly products and personal-sized pizzas.
As for your tone and manner around your marketing message, be authentic. The U.S. presidential election uncovered a public thirst for “telling it like it is.” Promote the fact that you’re local, a small business and invested in your community. Sponsor local teams, connect with good causes you’re passionate about and make sure your customers of all backgrounds and beliefs see that you’re doing your bit to make their lives easier and more enjoyable. It’s quite possible to make a profound statement without getting “political.”
Pizza sales also increased this year because of a historic World Series, so remember that there are as many positive trends fuelling our success as there are trends of concern. We need to stay centred and positive. We’ve been here before. We’ve got this.
But I do hope my favourite pizzeria delivers to quaint cabins in the woods without constant news feeds.
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical and financial services industries. She specializes in brand strategies.
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