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U.S. Pizza Restaurant Industry
Robert Carroll
Carrie Esch
Cara McGarry
Background
Historical Background
The lower class of Naples, Italy is believed to have created pizza in today’s
familiar fashion
The first pizzeria opened in 1830 in Naples, Italy--it’s still in business today
Pizza made its way to the inner cities of the United States, New York and
Chicago most notably, in the early 1900s thanks to the large population of Italian
immigrants
American soldiers further prompted the dish to become very popular at the end of
World War II, having been exposed to it while serving on the Italian front
Today’s largest pizza chains (Pizza Hut, Domino’s Pizza & Little Caesars) began
popping up all over the U.S. in the late 1950s, early 1960s
Source: www.aboutpizza.com/history.php
Traditional Types of Pizza
Traditional Crust Pizza: The crust is not too thick and not too thin.
Usually it is created by rolling the dough into a round circle then topping
it with sauce and cheese.
Deep Dish Pizza: A thick crust and dense toppings usually characterize
deep-dish pizza, also known as pan pizza.
New York Style Pizza: The crust of this pizza tends to be much thinner
than traditional and deep dish.
Source: www.aboutpizza.com
Four Channels of Distribution
• Sit-Down Dining - custom pizzas made for in-restaurant diners
Typical Pizza Restaurant Establishments: Pizza Hut Red Roofs, Independents
• Delivery - custom pizzas made, baked and delivered by restaurant personnel to
call-in customers
Typical Pizza Restaurant Establishments: Domino’s Pizza, Pizza Hut, Papa John’s
• Carry Out - custom pizzas made and baked for walk-in or call-in customers to
pick up
Typical Pizza Restaurant Establishment: Little Caesars
• Take ‘N Bake - custom pizzas made for walk-in customers who then take the
pizza home to bake themselves at their own convenience
Typical Pizza Restaurant Establishment: Papa Murphy’s
Aggregate
Industry
Information
U.S. Pizza Restaurant Industry
U.S. Restaurant Industry
$399 billion
U.S. Fast Food Industry
$135 billion
U.S. Pizza Restaurant Industry
$29.4 billion
2001 Industry Data
U.S. Pizza Restaurant Industry
 63,873 pizza restaurants in the U.S.
 4,233 new restaurants opened and 4,300 restaurants closed between July 1,
2001 and July 1, 2002
 Less than 30,000 pizza operators own all of America’s 60,000+ pizza stores
 One pizza store for every 4,330 U.S. residents
 Pizza restaurants make up approximately 7.7% of the nation’s total
restaurants
 Industry sales for pizza were up 1% for 2001, which gave the
pizza industry overall sales of $29.4 billion
 Total pizza market is projected to grow by 17% by end of year 2003
 Pizza is the only food category to show consecutive growth for the
past 20 years
Source: www.pmq.com/mag/2002summer/pizza_power.shtml
www.pizzaprosperity.com/stats.htm
www.pmq.com/pizzastorecensus.shtml
Chains vs. Independents
Independents
 Independent restaurants own 59.48% of all pizza restaurants (37,992 restaurants)
 Average unit sales was $366,720 per year between June 2001 and May 2002
 Sales represent 47.38% of the industry’s sales
 Independent operators holding ground in the North East portion of the U.S.
Chains
 Average unit sales for the top 25 pizza chains increased to $598,000 to $583,000
the previous year
 “The Big Four” pizza chains (Pizza Hut, Domino’s Pizza, Papa John’s and Little
Caesars Pizza) represent 36.8% of industry sales at $10.81 billion
 Pizza Hut, Domino’s, and Papa John’s represent a larger % of the industry total
sales than they do industry total stores
Source: www.pmq.com/mag/2002summer/pizza_power.shtml
Pizza Today, August 2002
www.pmq.com/pizzastorecensus.shtml
American Pizza Stores
Per Capita
No. of Pizza Store Per
10,000 Population
Source: www.pmq.com/pizzastorecensus.shtml
2002 Year-End Sales Trend
Weeks 43 through 52 - 2002
4%
2%
0%
-2%
-4%
-6%
-8%
43
44
45
46
48&47*
49
50
51&52*
QSR P izza
QSR Sandwich
QSR Specialty
M idscale Family Style
M idscale Specialty
QSR Pizza: • Domino's • Mazzio's • Papa Gino's • Papa John's • Peter Piper Pizza • Pizza Hut • Pizza Inn • Round Table Pizza •
Source: SalesTrac® Weekly
Competition
U.S. Market Share: $29.4 billion
Little
Caesars
4.25%
All other
Chains
15.85%
PJs
5.94%
Independents
Pizza Hut
Independents
47.38%
Domino’s
9.58%
Domino's Pizza
Papa John's
Little Caesars
Pizza Hut
17%
Source: www.pmq.com/mag/2002summer/pizza_power.shtml
All other chains
U.S. Share of Pizza Stores
63,873 stores
Little
Caesars
4.8%
PJs
4.05%
All other
Chains
12.05%
Independents
Pizza Hut
Domino’s
7.54%
Independents
59.48%
Pizza Hut
12.08%
Source: www.pmq.com/mag/2002summer/pizza_power.shtml
Domino's Pizza
Papa John's
Little Caesars
All other chains
Top Chain Growth Trends
10
8
6
4
Domino's
2
Pizza Hut
0
Papa John's
-2
Qtr 1 '01 Qtr 2 '01 Qtr 3 '01 Qtr 4 '01 Qtr 1 '02 Qtr 1 '02
-4
-6
Source: www.dominos.com
www.yum.com
www.papajohns.com
Company Synopsis
Stores
% Franchised
Public/Private
Headquarters
CEO
Employees
2001 Sales
International
Internet Ordering
7,100
Most
Private
Ann Arbor
David Brandon
12,600
$1,258
Yes
No
3,400
80%
Private
Detroit
Michael Iiitch
90,000
**
$600
# **
Yes
Yes
2,800
75%
Public
Louiville
John Schnatter
16,336
$971
Yes
Yes
12,200
*
80%
Public
Louiville
A. Pearson
210,000 **
$6,953
**
Yes
Yes
Additional Products
other than Pizza
Breadsticks
Buffalo Wings
Cheesy Bread
Buffalo Chicken Kickers
CinnaStix
Dots
Antipasto
Salad
Cinammon Sticks
Crazy Bread
Italian Cheese Bread
Breadsticks
Cheesesticks
Chicken Tenders
Breadsticks
Buffalo Wings
* Pizza Hut specifically
** includes all subsidiaries not just the specific Pizza Subsidiary
# 1999 Sales
Top Chain Financials
December-01
Dominos
Little Caesar's
Papa John's
(llitch Holdings)
Revenues
Cost of Goods Sold
Gross Profit
Gross Profit Margin
SG&A Expense
Depreciation & Amortization
Operating Income
Operating Margin
Net Income
Net Profit Margin
Cash
Net Receivables
Inventories
Total Current Assets
Total Assets
Short Term Debt
Total Current Liabilities
Long-Term Debt
Total Liabilities
Total Equity
Source: Hoover’s Online
Yum! Brands
(Taco Bell, Pizza
Hut, KFC, Long
John Silver's)
1258.3
937.9
320.4
25.50%
193.3
0
127.1
10.10%
36.8
2.90%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
244
122.2
121.8
49.90%
66.6
35.2
20
8.20%
11.5
0.51%
2202
1021
1181
53.60%
784
111
286
13.00%
164
7.40%
34.8
54.2
22.1
131.4
382.3
43.2
154.1
611.5
807.2
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
17.6
23.2
12.7
65.1
387.4
0.2
66.4
105.1
191.8
110
175
56
547
4388
696
1805
1552
4284
-424.9
n/a
195.6
104
Market View
December-01
52 week high
52 week low
Market Value
Shares Outstanding
Price/Sales Ratio
Price/Earnings Ratio
Return on Assets
Return on Equity
Current Ratio
Long-Term Debt/Equity
% Institutional Owned
12 Month Revenue Growth
36 Month Revenue Growth
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$35.19
$23.37
$522.60
18.7
0.55
12.55
12.80%
34.70%
0.27
0
69.60%
-3.50%
6.10%
33.17
20.35
7,326.40
295.5
0.98
13.33
11.10%
107.90%
0.43
4
76.50%
8.10%
-2.30%
Pizza
Customers
Who Eats Pizza?
Source: Chain Leader, June 2000
Fun Facts About the
Pizza Customer
94% of America’s population eats pizza.
Each man, woman and child in America eats an average of 46 slices (23 pounds)
of pizza a year
93% of all Americans eat at least one pizza a month
37% of kids say pizza is their favorite food
Children between the ages of 3 and 11 prefer pizza over all other food groups for
lunch and dinner
Americans eat approximately 100 acres of pizza each day, or about 350 slices per
second
Source: www.franchisehelp.com/web2000/pizza2002.htm
www.pizzaware.com/facts.htm
When Do Consumers Eat Pizza?
Source: Chain Leader, June 2000
How Do Consumers Pay For Pizza?
Source: Chain Leader, June 2000
Where Do Consumers Eat Pizza?
Source: Chain Leader, June 2000
Industry
Developments
Industry Trends to Watch
 A rise in convenience store locations
 A shift in delivery/sit down restaurant pizza occasions to
packaged pizza occasions (frozen)
 New product introductions
 Competitive deep discounting
Source: www.pmq.com/mag/2002summer/pizza_power.shtml
Industry
Sources
Sources
 www.pmq.com - store census, market share, industry trends
 www.aboutpizza.com - history, types of pizza
 www.pizzaprosperity.com - industry statistics
 Pizza Today, August 2002 - sales information
 SalesTrac Weekly - weekly sales growth
 Hoover’s Online - financial outlook
 www.dominos.com - sales growth
 www.yum.com - sales growth
 www.papajohns.com - sales growth
 www.franchisehelp.com - pizza facts
 www. pizzaware.com - pizza facts
 Chain Leader, June 2000 - customer profile