The best pizzerias in town are right here. Get the Slice App
banner
banner

What pizzeria owners should take away from the PMQ Pizza Power 2020 Report

PMQ released their Pizza Power Report for 2020 last week. If you’re not familiar with the annual report, it collects important market performance data and trends from the pizza industry from the previous year. It helps business owners understand how these figures and trends should be planned for in the year ahead. Needless to say, the report is an essential read for anyone who owns or manages a pizza business. 

Here are a few of the big takeaways from this year’s report that shop owners should be aware of, and how they can respond…

Overall industry figures are growing but independent pizza saw a small contraction in 2019.

The report noted that while overall pizza sales, location coverage and market value is up, the independent segment of the market has shrunk a little in terms of total sales (down .47%) and the number of locations (down 1.33%). 

While these aren’t huge contractions, chain pizza grew by 3.17% in sales and 3.51% locations. This shows that chains, led by the big four, will continue to drive more value to their franchisees, particularly in two areas: technology and digital marketing. Also, thanks to their negotiating power, the cost for big chains to work with third-party delivery services is much lower. These third parties can, therefore, use smaller chains and independent pizzerias to bring customers in, and push those customers to the big chains that they have partnerships with. 

The writing is on the wall: consumers are changing and that change is all digital. Customers expect their pizzerias to meet them online, either through their own digital presence, third party channels, or both. Chains are already doing this.  To compete with the big four, shops can’t continue to rely on the old school analog methods for ordering. The food can continue being the same unique, authentic, and high quality product that only smaller pizza businesses can offer, but how that product is sold and marketed needs to change.

Chains are investing heavily in technology to meet consumer demand for convenience, especially when it comes to ordering and delivery.

The report noted that consumers are looking for innovation when it comes to making orders, paying for their orders, delivery and customer service. Chains are already investing in these areas in both big (driverless delivery, anyone?) and small ways.

Pizzeria owners need to recognize that technology is the most valuable investment they can make for their business – it drives larger orders, as well as order frequency. One of the biggest misconceptions that shop owners make is that technology — such as online ordering — is purely a channel to acquire new customers.

Where big chains excel is leveraging technology to make existing customers more valuable, and this is where Slice is helping smaller chains and independent pizzerias compete. 

Gen Z is hyper-connected; they expect convenience, authenticity and personal relationships with the brands they engage with. 

Something the report covered in detail was the new generation of consumers: Generation Z. This generation was practically born with a device in their hands. They are online natives. As a result, they expect the brands to meet them where they are online. They expect online ordering, customer reviews, and a social presence. 

This generation of consumers is also obsessed with authenticity and sustainability, an advantage that independent shops are always going to have over bigger chains. Independent pizzerias have a history, product and menu variety that is unmatched. The problem is that so many of the stories are hidden behind a curtain: they happen — and stay — offline.

Shop owners have a big opportunity to get their business’ stories in front of today’s connected consumer, curating and posting them in the places where they want to engage with restaurants i.e. social media channels and review sites. Oftentimes, owners fear that tech like social media can disconnect them from personal relationships with their customers but, in reality, it actually can be used to nurture, amplify, and create even more personal relationships. 

Slice partners like Prince Street Pizza, Tony Boloney’s, Joe’s Pizza, and Johnny’s Pizza are all doing a great job of using social media to show their product, engage directly with their audiences, and show the stories and people behind the brands.

Vegan and vegetarian options are on the rise; big chains are investing in menu options that utilize meat alternatives.

The rise of companies like Impossible and Beyond is making meat-alternatives a more affordable and attractive option to customers and businesses alike. The big four chains are already incorporating meat and dairy alternatives into their menu items.

Despite the press coverage and work from the big chain restaurants to incorporate these sorts of menu items, this is one area where I’d actually encourage smaller chains and independents to exercise a little caution. It’s important to be mindful of what is mainstream, and what is just innovative. 

Continue to invest in your best selling products, but also look at next-generation food and technology to experiment with a small fraction of your menu. It’s something to spend 5, maybe 10 percent of your time on, but it isn’t yet proven to be meaningful enough in terms of consumer demand to justify larger mindshare. 

Third-party aggregators/delivery services continue to offer mixed value to independent pizzerias.

Finally, the report highlighted that third party delivery services have given some notable small chains the delivery infrastructure to compete with the big four chains (who themselves have their own partnerships with third party services). According to the report, however, their value to small chains and single-location business continues to be a point of contention.

The fees charged by third party delivery services — sometimes as much as 30% — can often carve out a big chunk of a business’ overall margin. Additionally, the quality of the delivery service isn’t controlled by the pizzeria.

Delivery is critical; clearly, there exists a growing demand in terms of what customers expect. However, shop owners should be careful about investing in delivery in the right way, especially when it comes to what percentage is done by third party delivery services. 

So, third-party aggregators/delivery services can be a good partner for generating new customers, but small businesses really need to have a strategy to turn those customers into loyal customers that are ordering through lower-cost channels, like Slice.

Leave a Reply