WORLD PIZZA MARKET

The news wasn’t that much better for many in the restaurant industry. While politicians in D.C. bickered and postured over COVID-19 relief packages, municipal and state leaders faced well-nigh impossible choices for dealing with outbreaks. At a loss, they resorted to ofttimes draconian restrictions and lockdowns that put a choke hold on restaurateurs already barely getting by on the thinnest of margins. Many stores planned to shut their doors only temporarily but never reopened. Others made a go of it by pivoting to delivery and carryout while also innovating with meal kits and even groceries for their stuck-athome customers.

It has been our spring, summer and fall of discontent, with winter coming on. Yet most pizzeria owners bounced back, and many thrived, displaying a fighting spirit and resilience that powered communities through an unprecedented period of crisis. Independent operators in particular proved their mettle, as this year’s sales figures show. While their non-pizza restaurant counterparts struggled to deliver food that simply wasn’t meant to travel, pizzeria operators stood at the ready with the world’s most delicious comfort food. Many saw their sales hold steady or even shoot up.

Yes, 2020 was bad, and it was scary. But it could have been much worse for the pizza industry. Let’s take a closer look at the numbers.

Holding Steady

Back in May, when dine-in service had been shut down around most of the nation, market research company Sense360 reported that pizzerias had experienced a 5% drop in year-overyear sales while recording a larger per-dollar order increase compared to quick-service and fast-casual competitors—an 11% jump for pizza vs. 9% for quick-service and 8% for fastcasual. Around the same time, a Datassential survey found that 63% of consumers said they were seeking out pizza during the pandemic—comfort food indeed.

Sales figures from research firm CHD Expert show that pizza sales rebounded as the country reopened for business. Total U.S. pizza industry sales for the period from October 2019 through September 2020 came to $46,247,156,519, a mere 0.20% decline from $46,337,969,390 for October 2018 through September 2019. That’s barely a smidgen of difference.

And here’s the better news: Total sales for independent pizzerias actually went up by 0.58%, from $18,531,653,876 in the October 2018 to September 2019 period to $18,639,852,788 this year. Sales for the pizza chains didn’t fare quite as well, dropping 0.72%, from last year’s $27,806,315,514 to $27,607,303,732 this year.

At the same time, average pizza store sales went down a wee bit across the board. Total average store sales ended up at $592,214, down 0.67% from the October 2018 to September 2019 figure of $596,181. Average store sales for independents fell 0.15%, from $445,762 to $445,088. The chains’ average store sales took a slightly harder hit, dropping from $769,171 to $762,359.

Closures of hometown pizzerias often made headlines this year, but newcomers waited in the wings. CHD Expert found that the total number of pizza locations nationwide actually went up—from 77,724 to 78,092, a nudge of 0.47%. The number of independent pizzerias rose from 41,573 to 41,879, while the chains added a few stores, too, from 36,151 to 36,213.

In other words, the pizza industry as a whole turned out to be both recession-proof and pandemic-proof. Sadly, we can’t say the same for non-pizza restaurants. A National Restaurant Association (NRA) survey released in September found that, across all segments of the restaurant industry, nearly one in six stores had closed either permanently or for the long term since March. That comes to nearly 100,000 eateries erased from their communities six months into the pandemic. Nearly 3 million employees were still out of work at that time, and the restaurant industry as a whole was on track to lose $240 billion in sales by the end of 2020.

“Technomic projects that the pizza category will register the strongest sales performance of any menu type in 2020,” says Kevin Schimpf, Technomic’s senior research manager. “Going into the pandemic, the pizza category was clearly better positioned to deal with dine-in restrictions than other menu categories.”

Fastest Growing Sales Per Unit

Top Total Sales

Worse news: Forty percent of restaurateurs surveyed in September said their restaurants would likely shut down in the next six months if they didn’t get help from the federal government. And that help never came. “This survey reminds us that independent owners and small franchisees don’t have time on their side,” said Sean Kennedy, NRA’s executive vice president of public affairs, in a statement. “The ongoing disruptions and uncertainty make it impossible for these owners to plan for next week, much less next year.”

The Unbreakable Chains

Pre-pandemic, to no one’s surprise, the major pizza chains continued to lead the nation’s independent and small-chain pizzerias in total sales. According to 2019 year-end sales figures (the latest available at press time) from Technomic, the big chains accounted for $27.6 billion in overall national sales, while independents and small chains raked in $18.6 billion. The top performers among the chains were the usual suspects—Domino’s at No. 1, followed by Pizza Hut, Little Caesars, Papa John’s and Papa Murphy’s.

But Seattle-headquartered MOD Pizza has the edge in terms of fastest growth, Technomic reports. MOD’s sales climbed from $390.7 million in 2018 to $483.5 million in 2019, an increase of 23.75%. MOD added 52 units, growing from 395 to 467 stores. Founded by Scott and Allie Svenson, MOD Pizza is known as much for its philanthropy and focus on social change as for its pizza—an important consideration for socially conscious millennials. The company and its franchisees donated nearly $2 million to more than 9,000 local and national charities in 2019 while deepening its commitment to hiring low-income youths, the formerly incarcerated, and people with intellectual and developmental disabilities.

Domino’s remained at the top of the heap in terms of overall sales, with more than $7 billion, followed by Pizza Hut ($5.58 billion), Little Caesars ($3.77 billion), Papa John’s ($2.63 billion) and Papa Murphy’s Pizza ($748.35 million).

Pandemic or no pandemic, Domino’s fared so well in 2020 that it went on a hiring spree, adding 10,000 workers shortly after the crisis began and 20,000 more in the late summer.

Papa John’s also took on 30,000 more employees in 2020 while mounting a comeback for the ages. After a prolonged slump that started with scandals surrounding founder John Schnatter in 2018, Papa John’s sales stats have steadily grown this year. For its second quarter in 2020, the company reported that its margins and profits were “the highest they have been in several years,” while unit closures remained low.

For Pizza Hut, 2020 brought good news and bad news. The company reported a record-breaking week of off-premise sales in early May and, like Domino’s, added 30,000 employees to meet increased demand. But it had to temporarily close more than 1,000 Pizza Hut Express units due to the pandemic. Perhaps the hardest blow came when NPC International, Pizza Hut’s largest U.S. franchisee, with more than 1,200 stores, filed for Chapter 11.

TURNING ON TO OFF-PREMISE

If 2020 taught us anything, it’s that offpremise dining—Domino’s and Papa John’s bread and butter—is the way of the near-future. “COVID-19 has accelerated the growth of the delivery space [by] several years,” says Alex Blum, founder and CEO of Relay, a back-end delivery service that offers an alternative to third-party giants like Grubhub and Uber Eats. “Both customers and merchants that were reluctant [about] delivery are now accustomed to it. This behavior will likely continue, even after COVID-19.”

Demand for delivery had been surging long before the pandemic hit, even among fast-food chains. According to research firm Euromonitor, global delivery sales more than doubled between 2014 and 2019. “Five years from now, it will be rare to find a restaurant that does not offer delivery in some capacity,” Blum says.

That means smaller pizza operators need to get up-to-date on ordering technologies, stat, or risk losing to the Taco Bells and Burger Kings down the street. Tech company Bluedot’s “The State of What Feeds Us” survey, released in August, found

TECHNOMIC SURVEY: RESTAURANT CUSTOMERS CONTINUE TO PREFER OFF-PREMISE

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Ask us how we can make your life easier and improve your customer ’s experience during these difficult times. Our rapid response support team averaged almost 500 custom changes per week in April-June. As “the rules” changed for our clients, we updated messaging and call flow to minimize impact, maximize revenue. Let PizzaCloud do the same for your stores.

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If you have any interest in call centers call us to discuss options or visit www.pizzacloud.net to register for a webinar.