Papa Murphy’s takes market share as delivery, buffet chains struggle

Papa Murphy’s takes market share as delivery, buffet chains struggle

VANCOUVER Wash. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

Papa Murphy’s International Inc. [3], the franchisor of more than 1,100 Papa Murphy’s Take ‘N Bake Pizza locations, said its 2008 U.S. systemwide sales totaled $585 million, a 17-percent increase from the year earlier. The jump reflected 102 new store openings and an annual same-store sales increase of 8.5 percent, the company said late last month. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

The rapid expansion for the chain, which is 98-percent franchised, is in stark contrast to most restaurant brands that have reported slowed sales and reduced unit openings in 2008. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

To view charts featured in this week's print issue, click here.) [4] —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

“Our brand has found its sweet spot in this economy,” said Clarice Turner, president and chief operating officer. “Papa Murphy’s is a high-value, quality-oriented solution for families who are evaluating their out-of-home dining purchases.” —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

The largest pizza delivery chains have struggled recently against higher food costs and reduced customer visits. Domino’s Pizza [5] said that U.S. same-store sales fell 6.1 percent in the third quarter, its most recent. Papa John’s posted a 1.7-percent domestic same-store sales increase for its latest quarter. Yum! Brands Inc. said same-store sales at Pizza Hut were most recently positive, but did not disclose a figure. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

Others, including CiCi’s Pizza and Pizza Inn, are wooing new and existing franchisees with deals on fees and royalties to spur expansion during the downturn. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

CiCi’s Enterprises Inc., which operates or franchises about 650 restaurants, is waiving the franchise fees on the purchase of any closed unit that is reopened by another CiCi’s franchisee. The company normally charges existing franchisees $25,000 for subsequent units and said the fee would be waived on deals completed in 2009 so that healthy franchisees aren’t deterred from expansion. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

Pizza Inn Inc., which operates or franchises more than 300 locations, is waiving the sales royalties for a franchisee’s first year of operation and will collect only a 2-percent royalty in the second year to ease startup costs. The chain’s standard royalty rate is 4 percent. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

The take-and-bake market differs from the pizza-buffet or pizza delivery markets in that customers order and take out a custom pizza pie that is then cooked at home. Some industry sources say the category competes head-to-head with supermarket chains rather than restaurants, although all agree that all camps are in a heated race for share of customers’ dining dollars. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

Recent research has shown that consumers are spending more on meals that are eaten at home and less on dining out during this recession. For many years the spending trends were reversed, with more being spent on dining out and less on eating at home. According to the Bureau of Economic Analysis, the restaurant industry’s share of dining dollars slid from peak levels hit in 2006, while consumption of food at home rose in 2008 after falling almost each year since 1970. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

At a recent restaurant industry conference in New York, a veteran operator who asked not to be identified said that supermarkets and take-home-focused chains, like Papa Murphy’s, are the largest threat to restaurants right now. —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.

“They are tops when it comes to convenience and choice,” he said. “The better they do, the more challenging it is for us.” —The list of winners during this downtime is short, yet as consumers continue to cut back on dining out, the largest player in the take-and-bake pizza category is seeing sales skyrocket.