U.S. Pizza Restaurant Industry

Robert CarrollCarrie EschCara McGarry

Background

Historical BackgroundThe lower class of Naples, Italy is believed to have created pizza in todays familiar fashion

The first pizzeria opened in 1830 in Naples, Italy--its 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

Todays largest pizza chains (Pizza Hut, Dominos Pizza & Little Caesars) began popping up all over the U.S. in the late 1950s, early 1960sSource: www.aboutpizza.com/history.php

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. Traditional Types of Pizza Source: www.aboutpizza.com

Four Channels of DistributionSit-Down Dining - custom pizzas made for in-restaurant dinersTypical Pizza Restaurant Establishments: Pizza Hut Red Roofs, Independents

Delivery - custom pizzas made, baked and delivered by restaurant personnel to call-in customersTypical Pizza Restaurant Establishments: Dominos Pizza, Pizza Hut, Papa Johns

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 convenienceTypical Pizza Restaurant Establishment: Papa Murphys

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 billion2001 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, 2002Less than 30,000 pizza operators own all of Americas 60,000+ pizza storesOne pizza store for every 4,330 U.S. residentsPizza restaurants make up approximately 7.7% of the nations total restaurantsIndustry sales for pizza were up 1% for 2001, which gave the pizza industry overall sales of $29.4 billionTotal 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. IndependentsIndependentsIndependent restaurants own 59.48% of all pizza restaurants (37,992 restaurants)Average unit sales was $366,720 per year between June 2001 and May 2002Sales represent 47.38% of the industrys salesIndependent operators holding ground in the North East portion of the U.S.

ChainsAverage unit sales for the top 25 pizza chains increased to $598,000 to $583,000 the previous yearThe Big Four pizza chains (Pizza Hut, Dominos Pizza, Papa Johns and Little Caesars Pizza) represent 36.8% of industry sales at $10.81 billionPizza Hut, Dominos, and Papa Johns 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 PopulationSource: www.pmq.com/pizzastorecensus.shtml

2002 Year-End Sales Trend

Source: SalesTrac WeeklyQSR Pizza: Domino's Mazzio's Papa Gino's Papa John's Peter Piper Pizza Pizza Hut Pizza Inn Round Table Pizza Weeks 43 through 52 - 2002

Competition

U.S. Market Share: $29.4 billionSource: www.pmq.com/mag/2002summer/pizza_power.shtmlIndependents47.38%PJs5.94%All other Chains15.85%Dominos9.58%Pizza Hut17%Little Caesars4.25%

Chart1

47.38

17

9.58

5.94

4.25

15.85

Sheet1

Independents47.38

Pizza Hut17

Domino's Pizza9.58

Papa John's5.94

Little Caesars4.25

All other chains15.85

Sheet1

0

0

0

0

0

0

US Pizza Sales

Sheet2

Sheet3

U.S. Share of Pizza Stores 63,873 storesIndependents59.48%PJs4.05%All other Chains12.05%Pizza Hut12.08%Little Caesars4.8%Dominos7.54%Source: www.pmq.com/mag/2002summer/pizza_power.shtml

Chart2

59.48

12.08

7.54

4.05

4.8

12.05

Sheet1

Independents59.48

Pizza Hut12.08

Domino's Pizza7.54

Papa John's4.05

Little Caesars4.8

All other chains12.05

Independents47.38

Pizza Hut17

Domino's Pizza9.58

Papa John's5.94

Little Caesars4.25

All other chains15.85

Sheet1

0

0

0

0

0

0

US Pizza Sales

Sheet2

Sheet3

Top Chain Growth TrendsSource: www.dominos.com www.yum.com www.papajohns.com

Chart1

4.134.5

1.83-1.7

400

5.8-5-3

7.62-2

4.2-30.2

Domino's

Pizza Hut

Papa John's

Sheet1

Qtr 1 '01Qtr 2 '01Qtr 3 '01Qtr 4 '01Qtr 1 '02Qtr 1 '02

Domino's4.11.845.87.64.2

Pizza Hut330-52-3

Papa John's4.5-1.70-3-20.2

Sheet1

Domino's

Pizza Hut

Papa John's

Sheet2

Sheet3

Company Synopsis

Top Chain FinancialsSource: Hoovers Online

Market View

Pizza Customers

Who Eats Pizza?Source: Chain Leader, June 2000

Fun Facts About thePizza Customer94% of Americas population eats pizza.Each man, woman and child in America eats an average of 46 slices (23 pounds) of pizza a year93% of all Americans eat at least one pizza a month37% of kids say pizza is their favorite foodChildren between the ages of 3 and 11 prefer pizza over all other food groups for lunch and dinnerAmericans 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 trendswww.aboutpizza.com - history, types of pizzawww.pizzaprosperity.com - industry statisticsPizza Today, August 2002 - sales informationSalesTrac Weekly - weekly sales growthHoovers Online - financial outlookwww.dominos.com - sales growthwww.yum.com - sales growthwww.papajohns.com - sales growthwww.franchisehelp.com - pizza factswww. pizzaware.com - pizza factsChain Leader, June 2000 - customer profile