The pizza industry generates around $45.1 billion annually in the United States, according to PMQ Estimates, and accounts for nearly $134 billion abroad, according to Euromonitor. Thirteen percent of Americans consume pizza on any given day, and there are approximately 75,243 pizzerias in the U.S. in 2018, according to CHD Expert. While this cheesy dish is often used as a classic example in high school economics to illustrate the law of diminishing returns (the third slice rarely tastes as good as the first), there are also many unexpected but profound lessons to be learned in the business world from that slice in your hand.
Here are key lessons we can take from innovative pizza companies like &pizza and Domino’s, and some pitfalls to avoid with snafus like Papa John’s.
&Pizza: Tackling A Market Ripe For Disruption
There’s not been a company as young, rebellious, and disruptive as &Pizza in recent years. As a self-described “anti-establishment establishment,” &pizza was created in 2012 by Michael Lastoria and Steve Salis. The chain sells oblong, flatbread-esque pizzas made to order in the restaurant, with unique flavors like American Honey (spicy honey on pepperoni) and seasonal flavors like The Extra Helping (short rib, mac and cheese, and pickled red onion).
According to Lastoria, &pizza creates intense loyalty with its customers by focusing on creating a strong brand through embracing individuality and freshness. &pizza’s unique, rebellious brand image attracts young customers and millennials, as does its unusual marketing tactics, like a promotion where &pizza promised a year’s unlimited worth of pizza for the first 22 customers who got a free permanent tattoo of its logo, the ampersand.
“We’re not as buttoned-up and polished as some other companies are, but we’re uniquely us, and it’s how we see the world — that’s our vision, and &pizza’s vision of a pizza shop,” Lastoria told Fast Casual.
Domino’s: Staying Ahead of the Tech Curve
Domino’s, the Ann Arbor, Michigan-based pizza company, faces regular competition from similar chains like Little Caesar’s, Papa John’s, and Pizza Hut. However, Domino’s has made a name for itself with its love for innovation and embracement of the latest technologies. With a value proposition that emphasizes convenience for customers, Domino’s has gone above and beyond as a business to make sure those key needs are met.
The company’s willingness to think outside of the box and utilize tech to solve problems can be seen in initiatives such as Domino’s DXP vehicle, which introduced cars with warming ovens that could store up to 80 pizzas each and deliver them faster and fresher to customers. In recent years, Domino’s has also experimented with self-driving cars to deliver their pizzas. Demonstrating true ownership of the delivery space, Domino’s was also the first company to introduce an online live pizza tracker, which let people know what stage their pizza was in and when they could expect it delivered to their doorstep.
Pizza Hut: Marketing to International Customer Tastes
While pizza is a food with Italian origins and an American fan-base, it is also wildly popular around the world, from France to Indonesia. To the average American, pizza joints are a building block of the fast food landscape — simple, cheap, satisfying, and no-frills. However, these same fast food companies often have completely different brand identities, brand personality, and product offerings abroad, and it takes smart business leadership to understand and target these markets properly.
Take Pizza Hut, for example — in the U.S., it’s considered your basic fast food pizza place, but in Asian countries like China or Korea, you may not even recognize the brand. In Beijing, China, Pizza Huts are full-service, sit-down restaurants, with elaborate plating and menu items like fig cranberry pizza, roe stuffed shrimp balls, and even Durian pizza. Families might go visit a fast food restaurant like Pizza Hut or Kentucky Fried Chicken as a fun excursion or a treat on weekends, rather than just for your average Wednesday night meal when you don’t feel like cooking.
American fast food brands often translate to a more upscale dining experience in developing countries, as they serve as a passport to a foreign mode of cuisine, and a sort of novelty. Pizza Hut’s willingness to embrace market differentiation teaches a good lesson on how understanding different markets is the key to successful expansions. Different target groups, such as Chinese customers versus U.S. customers, may require a completely different approach to product design, marketing and execution.
Papa John’s: A PR Disaster Hurts Sales
Papa John’s has had a pretty rough year in 2018, thanks to a negative news scandal that surfaced about the company. In July, the pizza chain’s founder, John Schnatter, was reported to have uttered a racial slur in a private meeting, leading to national boycotts of the brand. In November, Papa John’s is still struggling to bounce back according to CNN, with same-store sales in North America falling by “9.8% in the three months ending in September.”
In a corporate landscape that is becoming increasingly political, Papa John’s mess-up shows clearly the steps that all companies, even pizza stores, must take to ensure a clean brand image that does not alienate customers in any way or destroy the unity of company values. CEOs and founders play an integral role in representing a company, so when they fall from grace, the business’s bottom line suffers.
Schnatter resigned after the scandal, and Papa John’s has since attempted to mend its image with an inclusive ad campaign highlighting diverse employees, as well as a mandatory bias training program for its 14,000 team members.
- Americans Love Pizza
- Fast Casual: How &pizza CEO Has Inspired Customers
- Forbes: Papa Johns CEO John Schnatter Allegedly Used N-Word
- CNN: Papa Johns Earnings
- Nation’s Restaurant New: &pizza Receives $25 Million Investment
What would you have done if you were in charge of improving Papa John’s image after its PR disaster, and do you agree with the steps that the company took?
What’s your favorite pizza place? What innovation have they introduced that makes their brand appealing? Share your stories in the comment section of this article.
What are three key business takeaways from this article?
“We’re not as buttoned-up and polished as some other companies are, but we’re uniquely us, and it’s how we see the world — that’s our vision, and &pizza’s vision of a pizza shop,” This is how Lastoria, the founder of &pizza, describes his company. To my understanding, this quote along with the different lessons learned from numerous pizza chains discussed in this article shows the importance of the utilizing the identity of being unique and different to a company’s advantage. Each company or person has a different background, yet this does not determine success. What is important is that one need to realize his advantage through his uniqueness to others.
This article described numerous pizza chains such as &pizza, Domino’s, and Pizza Hut. Being a kid who finished primary school in China, and then came to America for private boarding school ever since, I can say I have had quite a few encounters with each of the pizza chains mentioned, especially Domino’s and Pizza Hut as I am a big fan of these two pizza chains in both countries. While each pizza chain differs in their revenue, it is safe to assume that all of the chains are doing well based on the description in the passage and the staggering amount of money generated by pizza industry annually: “$45.1 billion in the United States, and nearly 134 billion abroad.”. Not all chains, however, developed their company in the same way. Let’s take a look at how each of the company was able to succeed. &pizza, being a young brand not restrained by conventions, was able to use this to their advantage. They created many new pizza flavors unseen before from other chains, such as American Honey and The Extra Helping, and also interesting soda flavors such as mango-and-passion fruit, and white birch soda. Being able to try out new, mouthwatering flavors, and experiment with different kinds of soda combinations, give customers a reason to choose &pizza over traditional pizza chains such as Pizza Hut. Shifting over to Pizza Hut, it is not doing as well as many Chinese would think. Why I mentioned Chinese, is because in China, Pizza Hut is THE biggest Pizza chain. You can see more than a hundred Pizza Hut in each big city, and in total China currently has more than 2,000 Pizza Huts. Pizza Hut discovered foreign market as their road to success. As one of the first foreign pizza chains to enter the Chinese market, they understand what the Chinese want. They not only transformed Pizza Hut from a fast-food chain to more like sit-down restaurant, but also invented new pizza flavors that catered towards Chinese appetite. Understanding the desires of Chinese people allowed them to become the top pizza chain in China. As a kid who grew up in China and use to eat Pizza Hut almost once every two weeks, I was astonished to find how “unpopular” Pizza Hut is in America. The same thing goes for KFC. While Pizza Hut is no longer the go-to when it comes to fast-food pizza in America, Pizza Hut is able to still gain millions in profit through their foreign market.
Domino’s and Costco are two other examples. Domino’s, as described in the passage, is innovative and willing to utilize new technologies. They developed online trackers and use new types of vehicles to ensure that their pizza get to their customers fresh and warm. Costco, on the other hand, is able to use its advantage of bulk buying. They are able to keep their price low, while also providing sizeable, tasty and uniform pizzas in every store. A fresh out of the oven 16-inch pizza that only cost ten dollars is quite hard to match from other pizza chains.
All these pizza chains understand their advantages compared to each other, and were able to expand on that to achieve success. This extends beyond pizza chains, but into all areas of business. Through my personal experiences, I was able to dive deep into analyzing how each of the pizza chains succeeded, and I am constantly looking at what makes me unique and how that can help me succeed in the future. For example, being a Chinese student who came to the United States much earlier than most of the other students, I was able to gain a better understanding of both the U.S. and Chinese culture than many other students. This allowed me to have the knowledge and experience to help new Chinese students assimilate into U.S. culture, and also help American students understand who we really are as “Chinese” and “Asians”. By realizing these advantages of mine, I was able to become the International Ambassador and one of the leaders of the Diversity and Inclusion Club in my school. As a conclusion, success will come when you realize how you can turn your uniqueness into your advantage.
I feel like they see the world by making sure that people no about them so costumer can have it on there mind all the time and always remind about pizza. So when they drive by or see the store they’ll want to go inside it because they’ll remember about how it looked like in the commercial. Honestly thats why a lot of the pizza shops like to have commercial or billed boards because the more it shows the more people they’ll attract they just see the it by masking the business more noticeable.