TOP PIZZERIA STATES

chains added relatively few new units compared to the so-called “little guys.”

Do these corporate chains know something the independents don’t know? Are they closing less profitable stores in anticipation of a recession? And can these new independents survive in a saturated U.S. pizza market? There’s some reason for concern. According to a November 2022 report by Alignable, an online network for small business owners, 49% of small restaurant businesses in the U.S. couldn’t pay their rent in full and on time in October. That compares to a 36% rent delinquency rate in September.

A late July report by the NPD Group might shed a little light on restaurants’ rent problem. That report found that physical and online restaurant traffic declined by 2% in the second quarter of 2022 versus one year earlier, and by 6% from the same (prepandemic) quarter in 2019. “Consumers continue to deal with rising inflation and higher prices,” noted David Portalin, the NPD Group’s food industry advisor. “They trade down to lowerpriced items, cut back on the number of items ordered, or reduce restaurant visits altogether.”

Chains: $27.21 billion in sales

35,531 locations

The Price-Hike Limit

Look, customers know what’s going on. According to Bluedot’s September 2022 “State of What Feeds Us” report, 91% of consumers have noticed price increases at restaurants. And they aren’t wrong. Per the U.S. Bureau of Labor Statistics’ Consumer Price Index, food-away-from-home (restaurant) prices increased 8% from August 2021 to August 2022. Most restaurant chains raised prices at least once over the past year, reported Nation’s Restaurant News (NRN), particularly fast-food chains like Burger King, Wendy’s and McDonald’s.

In response, the Bluedot report found, 83% of consumers are cutting back on restaurant visits, and 73% are ordering off value menus to save money. They’re looking other places for deals, too. Fifty-one percent are using restaurant apps, which should tell you something. In fact, nearly 7 out of 10 consumers are downloading more apps or joining more loyalty programs for discounts and freebies. Additionally, 43% are checking out those coupons that come in the mail, and 29% are looking to social media for high-value offers. Do you have an ordering app yet? Have you fine-tuned your loyalty program lately? What are you waiting for?

According to Portalin, restaurateurs must deliver value and top-quality food for the inflated prices they’re forced to charge. But, he added, they should also remember that “value doesn’t always translate to the lowest price.”

So, when it comes to price increases, how much is too much? Analyzing price percentage increases and how they

Independents: $19.77 billion in sales

44,644 locations

correlate with traffic, Restaurant Management Services (RMS), a consumer behavior firm, made an interesting discovery. “When price increases went beyond 10% to 13%, traffic started to severely decline, negating some or all of the net sales benefits,” Scott Foxworth, RMS’s director of consulting services, told NRN.

Most restaurants have held the line at price hikes around 9% to 10%, NRN says. That’s a good thing—if it’s enough to keep your doors open. But hitting that “sweet spot” on pricing, coupled with labor woes, will continue to be a tricky challenge in 2023.

Speaking of Labor Woes...

When one of the country’s most acclaimed pizzaioli has to cut his restaurants’ hours due to lack of workers, you know things have gotten out of whack. Chris Bianco, owner of the six-store Arizona chain Pizzeria Bianco, announced reduced hours for his stores in an Instagram post on October 18. He noted that “at least one of our restaurants will be open” Sunday through Saturday, but some stores would be closed for two days each week as he and his team looked for ways “to adjust to the world we now live in.”

Bianco received the 2022 James Beard Award for Outstanding Restaurateur, a career high point, to be sure. But that wasn’t enough to keep his pizzerias fully staffed. “It breaks my heart to cut hours, but overworking the good people we have is not a long-term solution,” Bianco stated on Instagram.

“With rising cost of goods and paying good wages, putting people deep into overtime is also not sustainable.”

According to Square’s 2022 Future of Restaurants report, 73% of restaurants said they’re dealing with a labor shortage, and 21% of restaurant positions were unfilled. “Across the industry, staffing continues to be the No. 1 challenge restaurants face,” said Bryan Solar, general manager of Square for Restaurants. Worse, this could be the new normal for the industry, even as states continue to raise the minimum wage.

Simply put, employees want better jobs than they had before the pandemic. And, no, that doesn’t mean they’re lazy. “First, put yourself in the mind of your candidate,” Thad Price, CEO of Talroo, a company that helps businesses find the right job candidates, wrote in an October article for PMQ.com. “What do they want? What are their concerns? Some concerns include quality pay and growth and security to settle the score of a teeter-tottering economy.”

And the industry is making strides. A January 2022 survey by the Independent Restaurant Coalition found that 84% of all restaurants reported raising wages, and 37% reported adding paid sick leave for employees. Twenty-one percent also began offering paid vacation for their employees. “Salary isn’t the only piece of the pie,” Price noted. “Addressing issues like childcare, health insurance and tuition chips away at the disparity that hourly workers have faced for years. Include these added benefits and you will far surpass the competition by recognizing the needs of your hourly staff.”

That’s easier said than done, as every restaurateur knows. But Solar agrees it’s the best approach. “This means that labor costs may go up, and restaurants may need to find ways to operate with more efficient labor,” he said. “This is where we believe restaurants can lean on tech—to help them better utilize their existing staff, manage their labor costs and maintain delightful customer experiences.”

Is Automation the Future?

To ease her staff’s workload, Linda Black, co-owner of Tilda’s Pizzeria in Rochester, Minnesota, is leaning on BellaBot, a robotic food runner from Pudu Robotics. BellaBot started at Tilda’s in early 2022 and has freed up servers to spend more time with their customers instead of hustling food and drinks to tables in a timely manner.

“Sixteen thousand dollars is a lot, and [Bella] could have been a bust,” Black told the Post Bulletin in early November. “But I would have rather tried it out with little success and learned from the experience than not at all.” Black couldn’t quantify the cost difference between acquiring a robot and hiring another part-time person, but BellaBot is a hit with her customers. “People love being served by Bella,” she said. “Kids run up to give her a hug when nothing is being carried…. Sometimes people are a little sad when they don’t get served by her, but still have a good time interacting [with the robot].”

Robots are still far from the norm in restaurants, but automation made headway in the pizza industry this year. Slice Factory, with 12 locations in the Chicago area, plans to