WORLD PIZZA MARKET

As we reflect on the past year in the pizza industry, the old Chinese curse, “May you live in interesting times,” comes to mind. For the record, there’s no evidence that the expression originated in China, but, wherever it came from, it packs a punch. For pizza restaurateurs, these are, indeed, “interesting times.” We all thought this crazy pandemic would be over by now—no such luck. Now we’re begging people to come work for us. Most customers are happy and grateful to grab a table in your pizzeria once again and order a pie from their favorite servers. But many of those servers have quit and moved on to new jobs—or they’re holding out for something different. And if you can find kitchen staff, you can’t find ingredients, or you’re paying a lot more for them, an added expense that you can either absorb or pass on to your customers, who might get a little peeved about it.

But here’s something even more interesting: Despite a slight decline in overall pizza sales this year, average sales per store went up a bit in 2021, for both independents and chains. So, although not everyone survived—the total number of pizza stores went down—the demand for your food is as high as ever. “Nationwide, we have seen an increase of 24% in foot traffic this year to pizza and Italian restaurants, which bodes well for our economy,” says Megan Wintersteen, vice president of marketing for Adentro, which specializes in marketing for brick-andmortar restaurants. “With indoor mask mandates starting to lift, Adentro expects these numbers will continue to increase.”

What could be more interesting than that? Moreover, QSR magazine in August hailed “the invincibility of the pizza industry.” It noted that pizza “entered 2021 with an energized

The Wide World Of Pizza

Pandemic aside, the global pizza market will keep growing in 2022, according to the latest data from Euromonitor International. The worldwide pizza market should total $141.1 billion in sales in 2022, a 6.7% increase, according to Euromonitor’s projections. The biggest explosion will happen in Eastern Europe (12.7% growth) and Latin America (12.2%). In North America, where the pizza market is more mature, Euromonitor projects overall sales growth of 5.3% to $56.5 billion. Full-service restaurants should experience a hefty sales jump of 9.7%, reaching $19.3 billion, next year, while limited-service pizza enjoys a 3.3% bump to $37.2 billion.

stride. The category has not only kept pace with its 2020 momentum, but it has accelerated.”

In other words, the pizza industry is well-positioned for 2022. “After reviewing the past year’s data, I keep thinking two words: stability and opportunity,” says PMQ publisher Steve Green. “We’re down a little, but we’re not mired in quicksand. The trends from the beginning of the pandemic up to the end of 2021 show that Americans want comfort and convenience, and they know that’s what pizzeria operators deliver.”

As for the labor crisis, help is on the way—and that’s where things get really interesting. For 2022, some pizzeria operators are considering an option that once felt unthinkable: minimizing

Mike’s Hot Honey started out of a pizzeria in Brooklyn 11 years ago, creating a whole new category of pizza topping that has been called a ‘game changer’ by pizza fans and spawned best-selling menu items for pizzerias nationwide. Request a sample today to see what all the buzz is about: www.mikeshothoney.com/sample the human touch in the pizza making process through automation. As this month’s cover image (created by PMQ art director Eric Summers) hints, a bunch of robotics companies—and several pizza chains—from around the world are counting on their Jetsons-style tech to change our industry in dramatic fashion. Will robots soon begin taking over the jobs that people don’t want and offset labor costs?

We’ll get to that in a bit. Meanwhile, take heart: This year’s Pizza Power Report demonstrates that pizza is power in the restaurant industry. So let’s look at the numbers and count our blessings.

THE NUMBERS GAME

We’ll just get one thing out of the way now: Yes, according to research firm CHD Expert, total U.S. pizza sales for the period from October 2020 through September 2021 were down by about 1.5%, from $46,247,156,519 last year to $17,940,959,384 in 2021. The chains enjoyed a tiny bump of 0.14%, up from $27,607,303,732 last year to $27,645,018,457 this year.

The industry’s total number of pizzeria locations dipped from 78,092 last year to 75,117 in 2021. On the independent side, we saw a 4.95% drop in store count, from 41,879 stores to 39,808 this year—a loss of 2,071— while chain locations declined by 2.5%, from 36,213 in 2020 to 35,309, or 904 stores shuttered in 2021.

On the plus side, per CHD Expert, average sales per pizza store actually climbed by 2.5% industrywide, from $592,213 last year to $606,866 in 2021. That includes a boost for independents—from $445,088 last year to $450,687 per store in 2021—as well as for chains, from $762,358 to $782,945 per store in 2021.

How has the restaurant industry as a whole fared this year? In a midyear update report issued in September, the National Restaurant Association projected that overall food and beverage sales will total $789 billion in 2021,

Top 20 by Fastest Per Unit Growth

Top 20 Per Company Sales

35,309 locations up 19.7% from 2020. “In the first half of ’21,” the report states, “restaurant sales were bolstered by rising vaccination numbers, healthy household balance sheets, and consumers’ pent-up desire to socialize and dine out.”

The national pizza chains, like Domino’s, Pizza Hut and Papa John’s, aren’t exactly hurting either. However, their growth mostly slowed down in 2021, with Domino’s finally breaking its 41-quarter same-store sales growth streak in the third quarter of this year. The country’s No. 1 chain saw its same-store sales growth drop by 1.9% in that quarter, due, it said, to labor issues and the COVID-19 Delta variant.

“Looking at the U.S. quarterly year-over-year same-store sales results for the three largest pizza players, we’re definitely seeing a slowdown in sales growth through the first three quarters of the year,” says Kevin Schimpf, senior manager of industry

39,808 locations research for research firm Technomic. “Of course, some of that has to do with tough year-over-year comparisons from 2020, but there’s also the effect of consumers having significantly more options for dining out, now that restrictions have eased across the country.”

Domino’s did booming business once the pandemic hit in 2020, with same-store sales growth of 16.1% in the second quarter of that year, 17.5% in the third quarter and 11.2% in the fourth quarter. In the second quarter of 2021, however, growth began slowing down, with Domino’s reporting just a 3.5% increase and moving into minus territory in the third quarter.

The pandemic seemed to help same-store sales growth for Pizza Hut and Papa John’s as well in 2020. Pizza Hut went from a 7% drop in growth in the first quarter of 2020 to a 5% rise by the next quarter, 6% in the third quarter and 8% in the fourth quarter. For the third quarter of 2021, however, its same-store sales growth was only at 2%—still better than Domino’s.

Read the Extended Pizza Power Report Online!

The major chain with bragging rights for most dramatic growth is Papa John’s. Talk about a comeback! The oncestruggling company saw its same-store sales grow 28% in the second quarter of 2020, 23.8% in the third quarter and 13.5% in the last quarter of that year. In the first quarter of 2021, the number rose 26.2% but has since declined, showing a 5.2% gain in the second quarter of this year and 6.9% growth in the third quarter. Still, growth is growth.

What has been the secret to Papa John’s success over the past two years? CEO Rob Lynch attributed it to menu innovation, including the roll-out of the Epic Stuffed Crust Pizza last December, as well as a solid loyalty program that has driven higher ticket averages and frequency. Papa John’s also inked the largest franchisee development deal in its history with Sun Holdings in October. Sun Holdings will oversee the opening of 100 new Papa

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But don’t weep for Domino’s. Still the king of the pizza hill, the chain opened its 18,000th store in the world in July, this one in La Junta, Colorado, and has grown its total global store count by more than 5,100 in the past five years.

Coming Up Short

But who is going to make and serve all that pizza everyone loves so much? American workers have been quitting their jobs in record numbers, according to the U.S. Bureau of Labor Statistics (BLS). Restaurants have taken the hardest hit, with 892,000 employees walking out in August alone. For that month, the restaurant industry’s quit rate of 6.8% was the worst in the entire U.S. economy, more than twice the national average of 2.9%.

Of course, “labor shortage”—a term regularly bandied about these days—is a misnomer. There are plenty of workers— they’re just avoiding restaurant jobs, due in large part to relatively low wages and lack of benefits. “I don’t think there’s a shortage of people who want to work in our industry,” Michael Lastoria, co-founder and CEO of the Washington, D.C.-based chain, &Pizza, told PMQ earlier this year. “I think there’s a shortage of people who are willing to accept the status quo.”

In a June-July survey by the National Restaurant Association, 75% of operators said recruiting and retaining employees was their top challenge. In January, that number was only