Americans love their local pizzerias and aren’t backing down from inflation, according to the CEO of Slice, a company that aims to “modernize” independent pizzerias by providing technology and delivery services.
“It’s fascinating to see Domino’s and Papa John’s reporting their numbers…we don’t see any sweetness in pizza in general,” CEO Ilir Sela told Yahoo Finance.
Domino’s Pizza (DPZ) and Papa John’s (PZZA) both ended Thursday’s trading session in the red – down 12% and more than 6%, respectively – after fourth quarter results that largely demonstrated that consumer demand for the two pizza chains slipped at the end of 2022.
(Learn more: Domino’s Pizza Releases Mixed Fourth Quarter Earnings Report, Same Store Sales Estimates Miss)
Sela, who started Slice in 2010 to support her family’s New York pizzerias (which have since closed), now has nearly 19,000 independent pizzerias in the company’s portfolio.
“We don’t see the independent (local pizzeria) slowdown at all,” Sela said.
He says mega-chains don’t offer the charm and quality that entice customers to come to local stores amid high inflation.
“The authenticity, diversity, creativity and quality of ingredients found in local pizzerias cannot be matched by the big chains. Add to that their unique personality and exceptional service, and there is no amazing that many of these businesses have been cornerstones of the neighborhood for years,” he said. “When families order local pizza, they don’t get something loaded with preservatives and fillers,” he added.
The average price of a large pie now costs $17.81, up from $16.74 in 2021, according to Slice’s annual Slice of the union report. Costs were increased by protein and packaging such as boxes and pizza bags.
Prices vary however. In Oregon, the average cost is $26.94 per pie, and in states like Washington and Alaska, customers can expect to pay upwards of $23.00. Pizza lovers in Oklahoma, Minnesota and Alabama fare better, with the average pie coming in at around $14.00.
Despite the rising prices, Sela said pizza remains a family staple in the United States for several reasons. “It’s affordable for families, designed for gatherings and it travels well.”
Sela tells a different story than the mega fast food chains in their recent earnings calls.
Domino CEO Russell Weiner called the global brand a “work in progress” at an unprecedented time. On a call with investors, he noted that fewer consumers are ordering delivery overall as they return to pre-COVID habits like eating in restaurants, which is impacting his pizza delivery. here in the United States, where delivery accounts for about 60% of total sales.
“A relatively higher cost of delivery in times of inflation leads some customers to cook meals at home instead of having them delivered,” he said.
Meanwhile, Papa John’s CEO Rob Lynch called 2022 “a very difficult year” on an investor call, as sales volume normalized last year following a a pandemic outbreak. Innovation helped the chain last year, with the introduction of its Epic Pepperoni Stuffed Crust and New York Style pizzas.
Lynch remains confident that innovation will remain a key driver in 2023, despite declining sales in North America in the fourth quarter.
“Investments in product and digital innovation, combined with strong operational excellence, will continue to improve the customer experience and contribute to comparable sales and unit economics in North America,” he said. in the press release.
Many pizza delivery giants were considered pandemic darlings as consumers ordered and ate at home. Papa John’s shares are now down nearly 4% from 2 years ago, while Domino’s shares are down nearly 11% on a 2-year stack.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at firstname.lastname@example.org.
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