Who’s Winning the Pizza Wars?
A decade ago, the pizza category was stagnant. Today, legacy brands and ambitious fast casuals are locked in an intense, innovative battle.
Quick service, fast casual, full service.
Fresh-baked, take-and-bake, buffets, frozen.
Delivery, dine-in, carryout.
Grocery stores, corner stores, convenience stores.
Established national players, celebrated regional stalwarts,
Chef-driven locals, heralded independents.
Attacked from all angles up and down stream, perhaps no foodservice category endures such an endless competitive environment as pizza. The U.S. pizza market is robust and promising, challenged and commoditized, crowded and captivating—often all at the same time.
On the legacy side, the “Big Four”—Pizza Hut, Domino’s, Little Caesars, and Papa John’s, all among the restaurant industry’s 25 biggest chains and boasting some 21,000 units combined—continue leveraging technology, deep-pocketed marketing budgets, and creative limited-time offers to capture attention and build sales. Meanwhile, legacy-oriented chains with fresh perspectives like Marco’s, Donatos, and Jet’s continue scoring
year-over-year unit and sales increases while breaking into new markets and expanding their geographic footprints.
Then there’s the upstart fast-casual pizza world, with its double-digit growth rates, trendy branding, A-list investors, and en vogue focus on customization. In fast casual, pizza has finally entered the lunch daypart with force while simultaneously inspiring added culinary flair.
Among these upstarts, it’s been particularly cutthroat. As brands like Blaze Pizza and MOD Pizza have positioned themselves to become the category’s dominant national players, others have largely settled into a calculated-growth role (&pizza), closed units (Live Basil), or consolidated (Pieology acquired Project Pie). At the same time, fresh blood continues entering a category nonexistent just one decade ago. Notably, decorated restaurateur Danny Meyer opened a fast-casual pizza joint in New York City, Martina, that some industry observers have tabbed the “Shake Shack of pizza.”
Welcome to the pizza wars, where brands big and small, quick-service and fast-casual alike face two choices: pick up the pace and earn relevancy through definitive, clear marketplace differentiation or step aside.
Setting off the pizza wars
No brand characterizes the escalating pizza wars and the category’s evolution quite like Domino’s, a once-stagnant enterprise that has become the industry poster child for a resounding rebound and elevated expectations.
At the close of 2009, Domino’s was the nation’s 14th-largest quick-service chain. With just over $3 billion in sales spread across 4,900 units, its average unit volume (auv) sat under $600,000, and many of its franchisees crawled to profitability.
Around that same time, Domino’s leadership acknowledged—publicly, in fact, through an award-winning marketing campaign—that their pizza wasn’t up to snuff and launched a multi-pronged turnaround. That included a brand rallying cry—“Oh yes we did!”—now familiar to consumers.
“The question was: What could we do to reinvent the perception of Domino’s and the pizza category?” says Domino’s USA president Russell Weiner. “Then we had to do it.”
Consider Domino’s resolute reversal the first—but far from the last—notable surge in kickstarting a tired category and igniting the pizza wars. It was, to be absolutely certain, a recognition that the same old strategy would no longer get it done in the pizza game.
“At the end of the day, great pizza and great service used to be the differentiator. Now it’s the cost of entry,” Weiner says. “Brands need to look into their crystal ball and figure out what will make them more distinct.”
Over the last seven years, Domino’s focus has been relentless and uncompromising. The brand has overhauled its menu; developed novel, industry-leading ordering platforms; and tied itself to technological innovations to repair shortcomings, re-engage customers, and capture sales. With its can-do spirit, the Ann Arbor, Michigan–based company closed 2016 as the nation’s 10th-largest quick-service, fast on the heels of Pizza Hut for category supremacy. With nearly 5,400 units in 2016, Domino’s systemwide sales topped $5.3 billion while its AUV approached $1 million.
The company’s turnaround has pushed others to elevate their performance.
Rival Papa John’s, for instance, has doubled down on its core message of “better,” highlighting what makes the brand special—better ingredients resulting in better pizzas—and providing evidence to make sure perception and reality align.
“I don’t know if you have to focus on technology, innovation, or variety, but I do know you need to have a focused message on something,” says Brandon Rhoten, chief marketing officer at Papa John’s, which claims about 3,500 units across the U.S. “Papa John’s stands for ‘better,’ and we need to represent this in everything we do.”
Yet just as Domino’s was embarking upon its daring path back to relevancy and challenging other legacy players to keep pace, a fresh wave of newcomers entered the fray. With their fast-fired pizzas, build-your-own-pie orientation, and modern interiors, upstarts like Blaze, MOD, and Pieology emerged as industry darlings with their promise of artisan pizzas ready within minutes.
At MOD, customers receive one fully customized pizza with an unlimited amount of proteins and veggies for a single price of around $8. At Pie Five Pizza Co., a 100-unit fast casual overseen by Rave Restaurant Group, the parent of Pizza Inn, customers similarly build their own pizza for a single price, selecting from 28 fresh toppings, eight meats, and four made-from-scratch crusts.
The customization, perceived value, heightened quality, and, yes, speed—customers at most fast-casual pizza spots are digging into their pies within five minutes of entering the front door—delivered a fresh perspective to the pizza category. Fast, efficient, and modern with their food quality and décor, fast casuals helped make pizza hot again and raised the bar for everyone else.
“I like to say we punch above our weight,” says Jim Mizes, CEO of the 240-unit Blaze Pizza chain. “Our marketing is distinctive and different, our design is well thought out, and we own the food mantle with fresh-made dough, 100 percent clean ingredients, and recipes created by [award-winning pizzaiolo Brad Kent].”
The combination of resurgent, always-on legacy brands and fast casuals’ growing allure has pushed pizza to some 4.3 billion annual servings, according to research from The NPD Group. And now everyone’s on a mission to be better, do more, and differentiate themselves in an increasingly competitive, crowded, and unforgiving marketplace.
High-tech pizza
Perhaps more than any other quick-service category, pizza has tied its future to technology. From ordering to delivery, pizza has responded to emerging consumer demands for speed and convenience, leveraging technology to make it happen. “People want it when they want it, how they want it,” Mizes says.
MOD cofounder and CEO Scott Svenson says technology enables companies to build an efficient platform, source customer information, evolve the customer experience, and engage with guests.
“Technology’s transforming almost every touch point of our operation, and staying on top of this is something we have to do today to stay relevant and competitive,” Svenson says, adding that MOD’s technology team is the fastest-growing group at the 200-plus-unit, Seattle-based company.
Svenson points to Domino’s, whose ambitious, forward-thinking integration of technology has propelled its recent renaissance. The brand’s AnyWare campaign promotes various ways customers can order from ubiquitous devices and platforms, ranging from smartphone apps and Facebook Messenger to Amazon Alexa, Twitter, and even via text with a pizza emoji.
“Domino’s is a clear case of the impact technology can have on transforming a business,” Svenson says.
Indeed, others, like Papa John’s, are investing heavily in technology to maintain their spot among the nation’s pizza elite.
Last summer, the Louisville, Kentucky–based chain embedded its ordering experience inside Facebook, which saved customers from having to fire up a separate ordering system and resulted in a more visible and intimate ordering platform. But it’s only the beginning, Papa John’s leaders say.
Paying increased attention to how, when, and where customers are making their meal decisions, Papa John’s is investigating ways to embed ordering into platforms like Netflix, Amazon TV, and Apple TV just as it did with Facebook to create convenient, one-click ordering.
The chain is also examining and testing alternative ordering mechanisms, including everything from wearables and car dashboards to the emerging world of voice.
The aim is to create a more immersive ordering experience on digital platforms, focusing on ease of use and an experience that brings the menu to life, such as including a visual of the pizza as the customer builds it.
“We’re going to great lengths to push and enhance our digital ordering,” says Papa John’s chief information and digital officer Mike Nettles. “It’s about being present at that moment [the customer is deciding on a meal] … and making the technology seamless, almost invisible to guests, because we really want to avoid having the customer think about how to order. The whole point is to make sure our ordering platforms are set and ready to go as [different platforms] go mainstream.”
With about 60 percent of Papa John’s total U.S. sales deriving from digital channels, Rhoten says, the company can no longer behave like a restaurant company. Instead, it must function like an e-commerce enterprise.
“We have to create technology that customers want to use because you have to be respected by customers to earn their business,” he says.
Beyond technology, pizza players are also looking to gain with delivery, an engrained piece of the pizza experience.
Here again, Domino’s is pushing boundaries. The chain has about 250 of its DXP automobiles featuring a built-in oven on the road today, while the company is also testing delivery with self-driving vehicles. In the latter innovation, customers opt into the service and receive text messages as their pizza nears its destination. When the car then arrives, customers enter a four-digit code and gain access to their order.
“We have to figure these things out so we’re on the front end of disruption and not the back end,” Weiner says.
Fast casuals, largely formed without delivery top of mind, are entering the to-your-doorstep game, too. In September, Pie Five announced it would be adding delivery to all of its U.S. locations, with the rollout slated to be complete by mid-2018.
Though MOD does not deliver, the chain is testing drive-thru and pick-up windows at some locations, a natural step to extend the MOD experience and another potential evolution in the fast-moving pizza category.
“We’re not sure how this will all develop and come to life,” Svenson says, “but we know we’re going to be open-minded. We don’t want to be myopic in our thinking … and need to consider different ways to extend the high-quality experience we’re really proud of.”
Intensifying competition
Know this: The pizza wars are far from over, and brands intend to remain on the offensive.
In October, Pieology Pizzeria opened a unit in Aliso Viejo, California, designed to give its customers a first look at new items and a seat at the company’s R&D table. The company also made October headlines when basketball star Kevin Durant announced an ownership stake in Pieology (a few years after fellow NBA icon LeBron James invested in Blaze).
Pie Five, meanwhile, recently unveiled a new restaurant prototype featuring a revamped interior, logo, and menu, as well as wine and craft beer on tap.
“We’re looking at what else we can do to boost frequency and products that might work on our platform,” Rave Restaurant Group CEO Scott Crane says. “You have to stay out in front of what’s new and be asking yourself, what’s the next kale or sriracha?”
The competition is both internal and external, capable of coming from anywhere.
“We’re all competing in more than pizza and quick service,” Domino’s Weiner says. “Our competition is technology, and really anyone who sells or promotes or delivers food is a competitor, and we have to view it that way. Who could disrupt the category, and how do we get there before they do?”
As pizza chains push narratives, new offerings, and novel ideas in this competitive environment, MOD’s Svenson knows one thing is for certain: All pizza brands, including his, better execute time and time again, because consumers have more options and opportunities than ever before.
“It’s going to be about consistent execution and building culture and infrastructure,” he says. “Those things take time and work, but are absolutely necessary as we move ahead.”
