The pizza segment remains a competitive landscape, with a growing number of fast-casual restaurants continuing to enter the space. Though quick-serve restaurant pizza chains remain dominant, fast-casual operations continue to grow at a significantly greater pace.
“There has been somewhat of a boom of build-your-own fast-casual pizza concepts in recent years,” says Annika Stensson, director of research communications for the National Restaurant Association, based in Washington, D.C. “This type of concept lends itself well to a wide audience, as there are countless crust-sauce-topping combinations to keep repeat customers engaged as well as bring in new diners.”
Technomic reports fast-casual operations have grown pizza entree menus by 17 percent since 2013. Millennials continue to drive this growth: 44 percent of those 18 to 34 years of age said they wish there were more fast-casual pizza restaurants offering build-your-own pizzas near them and would order pizza from a location if they could customize their pies.
“Current food trends lean toward wider concepts and ideas more than single-ingredient-based items these days,” says Stensson. “It stands to reason that this also applies to pizza, including locally sourced items, eco-friendly food and nutrition- and diet-conscious items.”
According to Chicago-based Technomic Inc.’s 2016 Pizza Consumer Trend Report, sales among the top 500 QSR pizza chains totaled $21.5 billion between 2013 and 2014 compared with for $4 million fast-casual chains. However, QSRs’ year-over-year growth rate was slightly less than 3 percent compared with fast-casual’s 11.8 percent. The fast-casual pizza segment grew sales 22 percent and store count grew 27 percent in 2014 — more than any other category.
Healthy sides are a leading area of interest for those visiting pizza restaurants, in addition to preservative-free ingredients, whole grain pizza crust and organic ingredients.
Along with variety, convenient dining options remain a driving force in the popularity of this segment. Close to half of consumers surveyed are more likely to call the restaurant and pick up the pizza, according to Mintel. That compares to 42 percent who would order online through the restaurant’s website and 41 percent who would dine in.
“Off-premise options are the largest growth area for the restaurant industry overall, and about three-quarters of restaurant traffic is now off-premise,” says Stensson. “This is especially true in the limited-service restaurant segment.”
A Concept Evolves
When Pizza Ranch opened its doors in northwest Iowa back in 1981, the concept was quintessential pizza. However, 35 years and 200 locations later, Pizza Ranch has evolved into a buffet restaurant that also offers chicken.
With locations in 13 states from Montana to Michigan, and more on the way, it’s the variety that makes Pizza Ranch attractive to its core customer base of families, says Justin Point, the brand’s vice president of marketing. Also, pickup and delivery services have been advantageous to its growth.
In addition to pizza and chicken, the menu’s core includes a variety of potato incarnations, vegetables, a salad bar, soup, ice cream and dessert pizza. In January, the chain launched a new pepperoni pizza that includes two unique pepperoni types, riding the coattails of its most popular topping. “We have restaurants in communities with 1,000 people and in regions with more than 150,000, so each site has a unique approach due to the market,” says Point. Sites in stand-alone locations, strip malls and those attached to other businesses average between 4,300 and 6,600 square feet and seat as few as 5 to more than 100.
Pizza Ranch also unveiled a new prototype in Sterling, Ill., that incorporates a new flow both in the front of the house, specifically looking at a better approach to how customers order and pay, and the back of the house to improve efficiencies. The protoype also includes an update to decor.
“We’re taking a leaner design approach to give guests a more convenient experience getting in and out of the restaurant,” says Point. “Our goal was to create a warm, inviting environment for everyone from Millennials to seniors, changing our neutral color scheme to a more vibrant hue.”
Kitchens also have been part of the updates. The 1,500-square-foot back of the house includes pizza ovens, pressure fryers, make lines, coolers and freezers.
“Moving forward, we’re looking at a [leaner] kitchen design that incorporates different technology that can help streamline our process,” says Point. “We’re currently evaluating what we have and what we’d like to have.”
Pizza Ranch also plans on introducing a new pizza lineup this year with more upscale ingredients, such as spinach, balsamic glaze and various spices.
NYC Style in Texas
Since he learned to make pizza at his parent’s upscale Italian restaurant at 12 years of age, Anthony Russo knew his future was in the pie business.
In 1982, Russo opened his first pizzeria in Houston at only 20 years old. Anthony’s Pizzeria was a 1,400-square-foot restaurant that offered New York-style pizza, along with sandwiches and salads.
“At that time, no one was doing pizza by the slice in Texas,” says Russo. “And most of my customers were from the East Coast.”
Despite his dad pleading with him to continue working in the family’s fine-dining restaurant, Russo saw a huge opportunity and was determined to franchise his pizzeria concept. Fast forward to 1994, after much research, trial and error, and buying and selling of his stores, Russo figured out how to expand and profit from his franchise business. “Since then, I’ve improved it, learned a great deal and worked on SOPs [standard operating procedures] to fine-tune it,” he says.
What was working from the get-go was the food. Consequently, throughout this process, Russo kept the menu consistent, staying with the same recipes, ingredients, sauce and dough. Everything is fresh and prepared from scratch. The majority of ingredients are imported from Italy. Olive oil trumps canola oil; pizza toppings are natural and hormone free; and high-protein flour is a key crust component. Gluten-free pizza and pasta also are offered.
Russo’s New York Pizzeria has 48 locations, including 6 company-operated restaurants. Seven years ago, the chain opened its first international location in the Middle East and now has seven sites in Dubai, one in Riyadh and seven others planned for the region.In the late ’90s, after hiring his first franchise lawyer and rewriting the franchisee agreement, Russo’s business began to take off. Today,
Sites are custom built and range in size from 1,500 to 4,000 square feet. Although all have open kitchens, the decor varies by location. Common elements include granite counters, old Chicago brick walls, photos of New York City and hardwood floors.
Equipment remains consistent at all sites and includes stone and brick pizza ovens, dough mixers, a saute station with open burners for preparing sauce and a small grill for preparing chicken and vegetables. Prep tables with refrigeration for toppings also are a key component.
“[In terms of equipment], I’ve tried it all and stick with the best,” says Russo.
Every four to five years, the chain refreshes its brand with the help of an architectural team.
“What everyone is doing in the segment today is what I’ve been doing all along,” says Russo. “As a chef, I know the importance of using fresh ingredients, yet our food costs are reasonable, which is attractive to franchisees.”
Turning Coal-Fired Turnkey
1000 Degrees Neapolitan Pizza was created about eight years ago and included a goal to develop a coal-fired pizza that was essentially turnkey. To some, the challenge may have seemed insurmountable. But to CEO Brian Petruzzi, who describes himself as entrepreneurial by DNA, his idea seemed destined for success.The original business plan for
“I started four companies while still in college, and wrote the coal-fired model at the same time as I was launching a frozen yogurt franchise,” Petruzzi says.
Realizing the pizza concept required more time than froyo, Petruzzi concentrated on his dessert venture and expanded that to 24 stores before retailoring the pizza model for franchising in 2014. “I knew the pizza concept would grow at a faster rate, but I needed to find a way to scale the coal-fired franchise,” says Petruzzi. He knew a turnkey concept was necessary and what most companies look for when choosing a franchise. The plan included attracting multi-unit groups interested in the Neapolitan pizza niche.
Petruzzi worked with an equipment manufacturer for several months in research and development and eventually invented a custom 7-foot oven that includes a cooking platform situated on top of a rotating motor. “This unit takes the skill of moving pizza during cooking completely out of the picture,” he says. The pizza rotates twice around while baking to create a perfect Neapolitan pie.
“It was a major endeavor to do Neapolitan pie in a gas-burning oven,” says Petruzzi. “We had to retrofit the heat source as gas, and also modify the oven, burner size and location of the burners. We also fitted the unit with touchscreen control, which allows users to manipulate rotation speed within one second and temperature within one degree.”
A single 1000 Degrees oven can produce between 23 and 250 10-inch pies in an hour. Unlike a traditional pizza oven of this type, it’s a one-person, rather than a two-person, show. And the consistency of this product is exact from location to location.
The business model has evolved to fit in a wide range of markets, but rather than hitting the 12 to 15 major pizza regions, 1000 Degrees has focused its growth in middle America. Surprisingly, its South Dakota site is one of the busiest in the franchise.
“We look to find the right location and value engineer to keep it as functional as possible,” says Petruzzi. “We take a lot of second generation restaurants, provide a facelift if needed, or typically can build for as low as $200,000 with value engineering.”
1000 Degrees operates 22 locations in the U.S., with two sites planned for Malaysia. Sizes range from 600 square feet for the express model up to 6,000 square feet. Its menu centers on high-end ingredients, including flour, cheese and meat, and franchisees buy at the same price point as corporate-owned sites.
“We haven’t built food as a profit machine. Instead, we’ve sacrificed profit so franchisees get the best food costs,” explains Petruzzi. “We have margin built in, so we can use the best ingredients we can get. All rebates go to the franchisees.” The result is a different model that requires a lower level of investment than a typical franchise.
Signature pies include Margherita, cheesesteak, Johnny the Meatball and Buffalo chicken pizzas. A number of out-of-the-box offerings, like smoked bacon mac and cheese, started as limited time offers and were popular enough to become menu staples. Regional favorites abound as well, including Mexican pizza in Texas and a chili pepper topped pie in Colorado.
The basic equipment package for a pizza franchise includes an oven, three pizza tables, a bain marie, walk-ins and a fork-style mixer that helps create a light, airy dough.
Most locations offer beer and wine on tap, while some have self-serve beer and wine walls and others include full bars. The chain promotes its new locations with social media contests, giving away 1,000 free pizzas and 10 free pies a day for 10 days.
“Last year, we conducted a lot of site selections, and this year we anticipate opening two to five stores a month, with between 45 and 70 restaurants in operation by the end of 2017,” says Petruzzi.
A Speedy Experience
SPIN! Neapolitan Pizza was created in 2005 under the guise of a full-service restaurant that includes the benefits of fast-casual service. Specifically, the concept has customers ordering and paying at a cashier stand, with meals delivered to the table in an effort to get customers in and out as quickly as possible.
“This gives guests more control of their time, and they can leave when they want to without waiting to pay,” says Gail Lozoff, a partner in the business along with Richard Lozoff, Edwin Brownell and Michael Kramer.
The chain started in Overland Park, Kan., with 1 site and grew to 10 locations in the region. It now also has four Dallas restaurants, one in Omaha, Neb., and a couple of franchises in Northern California. Takeout and catering comprise about 20 percent of the business.
Not only was SPIN! created prior to the onslaught of fast-casual pizza restaurants, but it also is positioned differently. The chain gives special attention to the seasoning of its 20 signature pizzas, which tout roasted, rather than raw, toppings. This results in a distinctive flavor profile that helps set its pies apart.
SPIN! additionally has the cache of its renowned chef, James Beard award-winner Michael Smith. “Over the years, we’ve received local and national awards, in addition to stellar reviews of our pizza,” says Lozoff.
The margherita pizza is a favorite and includes roasted grape tomatoes with olive oil, rosemary and thyme. “Chicken and goat cheese pizza also is popular with our white sauce, which has an olive oil base,” says Brownell. For customers looking for a little spice on their pie, Calabrian chili peppers from Italy add some extra heat.
Unlike its pizzas, SPIN! locations are similar in appearance and range from 3,000 to 4,000 square feet. Seating accommodates between 100 and 140. The design is more akin to casual dining than fast-casual, with an open kitchen as the centerpiece.
The stone oven serves as the chain’s workhorse, as it’s used to cook all pizza toppings, as well as glazed pecans for salads. “About 90 percent of our food items come out of the oven, including the ingredients in our from-scratch soups,” says Brownell.
Still, not a lot of equipment is needed to support the SPIN! menu. In addition to the wood-burning oven, a soup kettle and gelato case with 14 varieties comprise the main pieces.
The kitchen divides into two lines, one for pizza and the other for salads and sandwiches, the latter including subs and paninis.
“With our menu offerings, mostly we have paid attention to labor profiles and also make sure anything that pops up has longevity to it,” says Lozoff. “We’ve grown the selections to include small antipasti plates that have done well.”
Other more recent additions include the Mondo Meatball, a meatball stuffed with cheese and baked in marinara, and roasted eggplant parmigiana.
“We are far different than other fast-casual pizza restaurants,” says Brownell. “We were ahead of our time when we started.”
Toppers on a Growth Trajectory
Skeptics questioning the viability of fast-casual pizza need look no further than Toppers Pizza, a Whitewater, Wis.-based chain that anticipates opening its 100th location this year.
“We’re anticipating 15 percent-plus growth this year in terms of the number of units,” says chief development officer David Biederman.
Part of the growth stems from expansion into new markets, including Colorado, Wyoming and Virginia. Toppers also plans to increase its presence in the Carolinas with two to three more units opening there in 2017. Currently, the chain has sites in 14 states.
The growth comes on the heels of a new restaurant design, currently in roll-out phase. This includes an open kitchen, or what the chain refers to as a show kitchen, that puts pizza preparation on display.
“This not only gives our customers a view of our kitchen but also access to our team members,” says Biederman.