In an unfavorable economic environment, food service pizza chains are working to expand their menus and make sure they offer value.
"Clearly value is a key driver right now given the economy, unemployment and the impact on disposable income," said Brandon Solano, vice-president of brand innovation for Domino’s Pizza, Ann Arbor, Mich. "That said, consumers are not ready to compromise quality for price. You have to offer both."
Despite the economy, Mr. Solano said pizza remains a good value, especially for large groups of people. He said while the overall ticket price for pizza might be higher than quick-service restaurant meals in general, the average check per eater is typically lower for parties of more than four.
Expanding beyond just pizza is also a revenue-driver for the food service pizza market. To this end, Domino’s recently introduced sandwiches. Specifically, the company entered the sandwich business because there was a need to boost lunch offerings.
"Domino’s clearly has an opportunity to win at lunch," Mr. Solano said. "Pizza is a supper business, but Q.S.R. is a lunch business. To compete in the lunch day part we needed a lunch-appropriate menu, and sandwiches are the No. 1 lunch food."
The sandwich line includes varieties such as Philly Cheese Steak, Chicken Bacon Ranch, Chicken Parm, and Italian. Domino’s also is making efforts to compete directly against Subway with its sandwich line and to appeal to consumers who are looking for sub sandwiches.
"Consumers have more choice than ever before in food, media, technology, etc.," Mr. Solano said. "We need to offer consumers what they currently expect and what they don’t yet expect but soon will. The Q.S.R. pizza category has been slow to expand menus, and we’ve got some catching up to do. Since pizza is a group occasion, it is rare for a group to agree on a meal. Menu variety allows us to compete for more day parts, more occasions, and to offer a solution more people can agree on in a group."
To expand its menu, Dallas-based Pizza Hut has the Tuscani Pastas line, which includes Lasagna, Chicken Alfredo and Bacon Mac ‘n Cheese. Pizza Hut also has been focusing on offering natural products to expand its menu with the recent introduction of a pizza called "The Natural" and the announcement the company plans a menu-wide transition to all-natural ingredients.
"Our customers have made a very clear statement — all-natural ingredients are an important part of their food choices," said Scott Bergren, president of Pizza Hut.
The newest pizza offering from Domino’s is the American Legends line, which includes six specialty pizzas featuring 40% more cheese than a regular pizza as well as cheesy crusts and various toppings. Varieties include Honolulu Hawaiian, Cali Chicken Bacon Ranch, Pacific Veggie, Memphis BBQ Chicken, Buffalo Chicken and Philly Cheese Steak.
"American Legends meet consumers’ need for bigger taste in a pizza," Mr. Solano said. "Our ‘barbell’ pricing strategy is to offer consumers both a value opening price point pizza and offerings for consumers who are willing to pay more for a bigger taste experience. Legends are truly special with premium ingredients new to Domino’s and many new to national pizza brands. Our Pacific Veggie, for instance, has fresh baby spinach, roasted red peppers and feta cheese … American Legends also introduces two new sauces to Domino’s, a white sauce used in our Cali Chicken Bacon Ranch pizza and a BBQ sauce used in our Memphis BBQ Chicken pizza."
An American Legends pizza is $12.99 for a large, and Mr. Solano said while such a price point will not attract every consumer, it still reflects value because it is a high quality pizza for the price.
CiCi’s Pizza, Coppell, Texas, is launching a tater tot pizza in mid-March in the Atlanta market. The pizza will have a ranch sauce, bacon, tater tots and a mixture of cheeses.
It also appears considerations of value and menu expansion will remain important in the future.
"I see a near-term focus on value and longer term a continued focus on menu expansion," Mr. Solano said. "Clearly expansion has a cost in operational complexity and capital cost. The value of any expansion has to be weighed against these costs."
This article can also be found in the digital edition of Food Business News, February 17, 2009, starting on Page 38. Click