Reporter's Notebook
Fast-casual pizza is no threat to traditional chains

Fast-casual pizza is no threat to traditional chains

Few sectors of the restaurant business at the moment are as competitive as is pizza. There are tens of thousands of pizza restaurants in the U.S., with an unusually large number of independents operating in the business. In addition, grocery store chains and convenience store chains, Costco and others all offer versions of the Italian classic.

And now there’s another entrant into the business in the form of fast-casual pizza chains.

Those chains don’t appear to be making a dent into the business of traditional pizza players, at least based on recent sales trends at both public and private chains. And, indeed, few executives we spoke with seem concerned about the threat such chains pose.

“We’re not feeling the impact,” said Steve Jackson, CEO of Michigan-based chain Hungry Howie’s. “But it’s not really measurable.”

Indeed, Domino’s CEO Patrick Doyle said on that company’s quarterly earnings call last week that the chain won’t likely do much to respond to the growing sector — though it is watching the trend.

“If you look at the fast-casual players, it’s about food quality, environment, it’s about an open kitchen, and it’s still about giving speed of service,” Doyle said. “We think we’re doing all those things, and we feel we’re doing it better than most.

“But if you look at the specifics around the product itself, maybe they have a wood-fired oven or a thinner crust. I don’t think you’re going to see us do that. We’re going to watch. But you’re not going to see us bring lumber into the stores soon to make pizzas.”

Fast-casual chains don’t pose much of a threat to traditional players because they serve different occasions.

When I order pizza from Domino’s or Papa John’s or pick it up from Papa Murphy’s, it’s because I need a relatively easy meal for my family. Or, I might need it to feed a large group, because pizza is a good value and few items served in restaurants are as universally well liked.

Fast-casual pizza, meanwhile, is more like a sandwich concept or a burger restaurant. The pizzas are typically individual sized, making it tougher to feed a large group. Yet the quality of the fast-casual pizzas, their speed of service and their ease of customization make the restaurants perfect for a dinner out or a lunch during the workday.

The chains are more likely to compete with Panera Bread or even Chipotle than they are to Domino’s or Pizza Hut.

Bryon Stephens, chief operating officer at Ohio-based Marco’s Pizza, even suggests that fast-casual concepts could help traditional chains by getting customers to think of pizza differently.

“People are looking at and thinking about pizza for lunch like they never used to,” he said. “People who are on the go, or who are tied up at the office, are thinking of pizza at lunch.”

Contact Jonathan Maze at jonathan.maze@penton.com
Follow him on Twitter: @jonathanmaze

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