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As Pizza Goes Global, Some Chains Remain Grounded

August 12th, 2016

Pizza has never been hotter. A format that now represents nearly 5% of global consumer foodservice sales, pizza incorporates simple ingredients and benefits from simple preparation and cooking methods, and can be embellished with limitless varieties of sauces and toppings to co-opt local preferences. Pizza, therefore, is ideally suited for nearly universal appeal. Global chains know this, and have begun to develop strategies to appeal to consumers and expand in emerging markets, and have consequently taken a larger slice of the global pie. Remarkably, the top three global chains represented nearly one-fifth of the global pizza market by value in 2015.

The largest chains are providing a service that taps into increasingly global trends. Driven by convenience and value, chained operators such as Pizza Hut and Domino’s Pizza have dictated the pace of global expansion by forging new ground in technological innovation, efficient delivery mechanisms and new product development. Domino’s, for example, is doing much to influence the development of HDTA channels in India as a first-mover in foodservice delivery in that market. Domino’s is inspiring a culture of digital convenience, mobile ordering and effective delivery, and the company is in the early stages of repeating this process in Brazil, another large market with huge potential for growth.

In developed markets, however, in which the appeal of global chains is perhaps less novel, competitors are tapping into alternative trends that challenge the global format. In some more traditional pizza markets, such as the US and the UK, competitors are developing fast casual formats to cater to millennial-orientated demands for unique, more personal experiences, enhanced levels of customisation and craftier, more gourmet offerings. In non-traditional pizza markets, such as Mexico and South Korea, it is more about the pizza than the format, and domestic pizza operators are having success by adopting local ingredients and developing speciality combinations that incorporate elements of local cuisine, thus making pizza more palatable to local consumers. The variation in preferences is evidence of the format’s widespread appeal, and the below examples show that there is still room for growth in even the most saturated markets through concept experimentation.

Your friendly neighbourhood pizza chain

In the US, an explosion of build-your-own, fast casual concepts, such as MOD Pizza and Blaze Pizza, which offer pizzas as Chipotle offers burritos, are capitalising on millennial-driven trends that offer consumers a more personal experience than the largest chains can provide. &Pizza, for example, a Washington DC-based fast casual pizza chain, distinguishes itself by emphasising a relationship with the community and promoting an image that extends beyond pizza. &Pizza outlets are designed to incorporate influences from the neighbourhood in which each outlet is located, and the company’s restaurants play up-to-date, alternative music that a younger, hipper crowd may find appealing. This local appeal has helped the company expand to 15 outlets in the greater DC area, with another two on the way, since opening in 2012.

In perhaps the most bold, and permanent, display of community bonding, the company held an event in early 2016 in which a limited number of participants were offered a free pizza each week for a year if they were willing to get a tattoo of the brand’s ampersand symbol. Not only did the event resonate with consumers, generating a lot of buzz in the process, but many of the company’s employees willingly received the tattoo as well without any particular compensation. Creating and promoting a lifestyle that reflects the community helps &Pizza connect with consumers in a way that a large pizza chain, or even one of the newly ubiquitous fast casual chains, can’t. This – plus a uniquely oblong-shaped pizza – helps gives them that much-needed edge in the market.

Fast casual pizza formats have also challenged major chains in the UK, a large, saturated pizza market in which consumers tend to prefer chains. Chains in the UK, in fact, made up an overwhelming 87% of the market by value in 2015. Concepts such as Franco Manca, Base+Barley and Pizza Pilgrims have emerged to challenge more traditional pizza players by offering alternative casual dining formats that specialise, in subtly different ways, in artisanal pizza with an emphasis on ingredients. Franco Manca, for example, looks beyond just premium toppings and cheeses, utilising instead a slow-rising sourdough base in its pizzas which bake in ultra-hot, “Napoli-style” brick ovens. Having unearthed an ancient Greek technique that, apparently, produces a crust that can be as desirable as the rest of the pizza, Franco Manca sets itself apart from the largest chains. The company also offers an array of premium craft beverages and beers on tap, an always popular feature with millennials.

A traditional format in non-traditional markets

Not only have new pizza concepts been disrupting the industry in well-established pizza markets, but in other developed markets in which pizza is a non-traditional or more niche offering, creative concepts have emerged to challenge chains by incorporating local elements and ingredients to cater to more local preferences. Pixza, for example, an independent restaurant in Mexico City, specialises in artisanal pizzas made from a base of blue corn dough, which is a common ingredient used to make tortillas and other traditional Mexican dishes. Blue corn dough is naturally healthier than its standard white flour counterpart, and it consists of approximately 40% less gluten. The company incorporates a wide variety of traditional Mexican toppings and ingredients, including cochinita pibil, molé, jamaica flowers, nopales (cactus), chayito (grasshoppers soaked in lemon juice), and others. Like &Pizza in the US, Pixza is also committed to the community, emphasising social empowerment and programmes that benefit the neighbourhood in which it operates.

Similarly, Pizza Alvolo in South Korea makes traditional pizza more palatable to local consumers by incorporating traditional Korean ingredients. Pizza Alvolo’s purple-coloured dough is made from Korean black rice, and the company offers speciality combinations such as sweet potato and bulgogi, sweet pumpkin, and shrimp and hot chicken. Tellingly, Pizza Alvolo was the fastest-growing pizza chain in the market, increasing by 26% in value terms in 2015, and has consistently increased market share since 2011.

The largest pizza chains offer services that increasingly have more global appeal. With clear advantages in technology, financial backing, large local franchising partners and widespread reputations, global pizza chains are able to adapt menus and formats to guarantee foot traffic. This is especially true for emerging markets in which global chains are able to leverage their experience to influence the way the market develops, bringing convenience, technological innovations and delivery to a new set of eager consumers. In developed markets, by contrast, emerging concepts compete by offering services that the largest chains can’t necessarily provide, with new formats and pizza offerings that tap into local trends and provide consumers with a more novel experience.

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Stephen Dutton

Stephen Dutton is a Consumer Foodservice Associate in Euromonitor International’s Chicago office where he covers the global foodservice space. Stephen has a master’s degree in international affairs and has spent years working and traveling abroad. He enjoys exploring the world and writing about the way people dine.

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