As the restaurant industry has faced a dramatic dropoff in sales and traffic during the worst of the coronavirus pandemic, not every segment has been in freefall.
The pizza segment — armed with a familiar, affordable, highly deliverable product plus a long history of investment in delivery platforms — has performed markedly better than the restaurant industry as a whole.
According to data released by market research company Sense360, while year-over-year sales dropped 20% in March for the entire quick-service segment and 33% for the fast casual, sales among pizza chains were only down 5%.
“There’s no doubt that when people are under stress, they seek comfort of some sort,” Fred LeFranc of Results Thru Strategy, said. “If the food travels well, the price is good and is satisfies the urge, people are going to go for it [even during a pandemic]. That’s why casual and fine-dining restaurants are struggling so much. It’s hard to think of your beautifully plated steak showing up in a takeout box.”
In fact, pizza topped the list of foods consumers said they were likely to order while sheltering at home, according to a March survey from Chicago-based research firm Datassential.
But the appeal of the core product is only part of the story. Years of investment in digital and delivery platforms that gave leading brands a clear edge as the industry shifted to off-premise sales this spring, while those that rose to prominence on more personalized in-store experiences scrambled to adapt.
During their first quarter earnings, Domino’s reported same-store sales growth of 1.6% in U.S. stores, which although it’s a far cry from its usually robust performance, was far better than the rest of the industry, most of which is still deep into the red. Domino’s also reported improved sales into the second quarter, with preliminary same-store sales growth of 7.1% for the first few weeks of April.
“There was a lot of pantry loading that consumers did as the pandemic first started to come to the U.S. but as we have seen that as time goes forward, people get tired of cooking,” Domino’s CEO Ritch Allison said during the first quarter earnings call. “We pivoted quickly to implement contactless delivery across our system to protect our team members and we advertised to our customers what we’re doing significantly.”
Papa John’s reported similarly buoyant numbers for the results of their first quarter, noting on March 29 that same-store sales had increased 5.3% in North America and crediting much of their same-store sales success to the early-quarter introduction of new menu items like the cheesy fold-over Papadias, and increased demand from people who are stuck at home.
Meanwhile, MOD Pizza and Blaze Pizza, two of the fastest-growing restaurant chain of the past few years, have notably struggled during the pandemic. As private companies, neither chain publishes its quarterly sales, but according to Sense360 data, their change in spend per capita (as a proxy for sales) dropped off precipitously from the beginning of March to the end of March, with a 56% decrease in spending for MOD and a 64% decrease in spending for Blaze Pizza.
Although he did not directly address the numbers, MOD Pizza CEO Scott Svenson noted the big difference between performance of fast-casual and quick-service pizza chains.
“I’ve seen a lot of commentary on how well pizza category is doing, but I would refocus that lens on brands that people are used to accessing through delivery,” Svenson said. “Consumers are trained to know that those are the occasions you go to them for because virtually all of their sales are off-premise. How the customer uses you before the crisis is consistent with how they use you during the crisis.”
Mandy Shaw, CEO of Blaze Pizza — which closed 10% of its domestic locations and furloughed an unspecific percentage of employees — echoed Svenson’s sentiments about the advantages of operating a digital, off-premise-centric business.
“Like many fast-casual brands, we had historically been primarily a dine-in concept. While our robust delivery and carry out program, led by digital, was on a category-leading growth trajectory, this pandemic forced us to go lightspeed,” Shaw said. “The QSR pizza chains were already primarily delivery and carryout based, so in a circumstance where people were ordering what they were familiar with, that makes sense.”
Both MOD and Blaze Pizza were optimistic, however, that their rapid-fire investments in digital off-premise strategies would be beneficial in the long-run.
“What will that store of the future look like and how do we adapt to a world where off-premise and digital channels are a huge part of that,” Svenson said. “How do we translate that amazing in-store experience to a delivery experience? That’s going to be a challenge for us.”
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