The U.S. has a passion for pizza that seems never ending. The taste, shape, and style can be the subject of heated conversations - and don’t get started on the debate between NY thin-crust and Chicago-style deep dish pizza.
Despite differences of opinion about which style is best, Americans eat an average of 23 pounds of pizza each year – so everyone agrees that pizza is a favorite. Despite what seems like a pizza place on every corner, there is still an extremely strong demand for pizza, and ample opportunity for entrepreneurs, especially for the franchisee.
Numbers Show Franchises Outperform Independent Operators
It is estimated that the North American growth rate for the pizza industry between 2014 and 2016 was 2.35%. In 2015, there was a slight downturn in overall revenue and in same-store sales. Revenue clocked in at $38.5 billion, down 0.05% from 2014. Same-store sales were down by 2.34%.
However, these numbers hide an interesting shift in the pizza market: business seems to be trending away from independent stores and towards chains. A closer examination of the numbers clearly shows that chains are outperforming independent operators.
Independent Operators (10 stores or less)
- 2015 Revenue: $14.9 billion
- Change in YOU Revenue: -5.01%
- 2015 Same Store Sales: $384.5k
- Change in YOY Same Store Sales: -3.21%
- Change in YOY Number of Stores: -1.85%
- 2015 Revenue: $23.5 billion
- Change in YOY Revenue: +3.38%
- 2015 Same Store Sales: $655.8k
- Change in YOY Same Store Sales: +3.82%
- Change in YOY Number of Stores: +7.33%
Franchise Operators (10 or more stores)
A Shift in the Battle between Chains and Independent Operators
Chains have been eating into the independent operator’s market share for years, but 2015 is the first time there has been a noticeable shift in their direction. Franchises now have 61% of the total market.
This shift is due to the flexibility of franchises making them better able to respond to the changing pizza consumer. A majority of today’s pizza consumers want to order from their smartphone, tablet, or laptop. This technology is costly for the typical independent operator to implement.
In addition, studies show that consumers spend more when they place their order online. Once they’ve ordered online, they are more likely to order from the same place again, since the software stores their information.
Not only can they be marketed to directly, their payment information is in the system and delivery preferences are saved, so ordering from that same place again is easier. Higher sales per ticket and repeat business are crucial for year over year growth, and many independent stores are losing out on these opportunities.
Changes in Pizza Consumer Demographics
In addition, pizza consumer demographics have changed. While the football games/guys night out consumer still exists, the more typical pizza consumer is a health conscious younger female who works out at least twice a week. In fact, recent research shows that 63% of self-identified pizza lovers are female. This also reflects the broader trend among the general population to live a healthier lifestyle.
By 2017 millennials are expected to outspend baby boomers. Not only does this demographic look for healthier options, they think of themselves as foodies and are interested in interesting flavor combinations. They go for build-your-own pizzas with interesting textures, tastes, and ingredients. In addition, they prefer businesses with a social conscious, a focus on natural ingredients, or a commitment to sustainability.
Trends in Pizza Franchises
- Healthy Choices – as the American consumer becomes more focused on living a healthier lifestyle, they prefer to visit restaurants with healthier options. Even if they are splurging on pizza, they are likely to want veggie toppings and healthy salad options.
- Environmentally/socially conscious – this is particularly important to millennials who prefer to frequent establishments that do more than make money – or that make their money in a responsible way.
- Fast Casual – this is the fastest growing segment of the restaurant market overall, and the concept is very successful in the pizza market. The fast casual concept is targeting the lunch crowd, while traditional single operator pizza restaurants concentrate mainly on dinner and delivery. Fast casual chains are competing with other fast casual restaurants rather than traditional pizza shops.
- Technology – definitely a game-changer. Pizza franchises generally have a strong online presence and give their customers easy mobile and online ordering options.
While all these factors are important, there is another important factor, and that is your local market. Hungry Howie’s has been named a Top 50 Franchise and ranks in the Top 100 on Entrepreneur’s annual Franchise 500® list.
If you’re looking for a pizza franchise that is on top of the trends, join the Hungry Howie’s team.