U.S.

Pizza Restaurant Industry

Robert Carroll
Carrie Esch
Cara McGarry

Background

Historical Background
The 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 1960s

Source: www.aboutpizza.com/history.php

Traditional Types of Pizza

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.
Source: www.aboutpizza.com

Four Channels of Distribution

Sit-Down Dining - custom pizzas made for in-restaurant diners

Typical Pizza Restaurant Establishments: Pizza Hut Red Roofs, Independents

Delivery - custom pizzas made, baked and delivered by restaurant personnel to

call-in customers
Typical 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 convenience
Typical 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 billion

2001 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, 2002
Less than 30,000 pizza operators own all of Americas 60,000+ pizza stores
One pizza store for every 4,330 U.S. residents

Pizza restaurants make up approximately 7.7% of the nations total restaurants

Industry sales for pizza were up 1% for 2001, which gave the pizza industry
overall sales of $29.4 billion
Total 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. Independents

Independents
Independent restaurants own 59.48% of all pizza restaurants (37,992 restaurants)
Average unit sales was $366,720 per year between June 2001 and May 2002
Sales represent 47.38% of the industrys sales
Independent operators holding ground in the North East portion of the U.S.
Chains
Average unit sales for the top 25 pizza chains increased to $598,000 to $583,000
the previous year
The Big Four pizza chains (Pizza Hut, Dominos Pizza, Papa Johns and Little
Caesars Pizza) represent 36.8% of industry sales at $10.81 billion
Pizza 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 Population

Source: www.pmq.com/pizzastorecensus.shtml

2002 Year-End Sales Trend

Weeks 43 through 52 - 2002
4%
2%
0%
-2%
-4%
-6%
-8%
43

44

45

46

48&47*

49

50

51&52*

QSR P izza

QSR Sandwich

QSR Specialty

M idscale F amily Style

M idscale Specialty
QSR Pizza: Domino's Mazzio's Papa Gino's Papa John's Peter Piper Pizza Pizza Hut Pizza Inn Round Table Pizza

Source: SalesTrac Weekly

Competition

U.S. Market Share: $29.4 billion

Little
Caesars
4.25%

All other
Chains
15.85%
PJs
5.94%

Independents
Pizza Hut
Independents
47.38%

Dominos
9.58%

Domino's Pizza
Papa John's
Little Caesars

Pizza Hut
17%

Source: www.pmq.com/mag/2002summer/pizza_power.shtml

All other chains

U.S. Share of Pizza Stores

63,873 stores
Little
Caesars
4.8%
PJs
4.05%

All other
Chains
12.05%

Independents
Pizza Hut

Dominos
7.54%

Independents
59.48%

Pizza Hut
12.08%

Source: www.pmq.com/mag/2002summer/pizza_power.shtml

Domino's Pizza
Papa John's
Little Caesars
All other chains

Top Chain Growth Trends

10
8
6
4

Domino's

Pizza Hut

Papa John's

-2

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

-4
-6

Source: www.dominos.com
www.yum.com
www.papajohns.com

Company Synopsis
Stores
% Franchised
Public/Private
Headquarters
CEO
Employees
2001 Sales
International
Internet Ordering

7,100
Most
Private
Ann Arbor
David Brandon
12,600
$1,258
Yes
No

3,400
80%
Private
Detroit
Michael Iiitch
90,000
**
$600
# **
Yes
Yes

2,800
75%
Public
Louiville
John Schnatter
16,336
$971
Yes
Yes

12,200
*
80%
Public
Louiville
A. Pearson
210,000 **
$6,953
**
Yes
Yes

Additional Products
other than Pizza

Breadsticks
Buffalo Wings
Cheesy Bread
Buffalo Chicken Kickers
CinnaStix
Dots

Antipasto
Salad
Cinammon Sticks
Crazy Bread
Italian Cheese Bread

Breadsticks
Cheesesticks
Chicken Tenders

Breadsticks
Buffalo Wings

* Pizza Hut specifically

** includes all subsidiaries not just the specific Pizza Subsidiary
# 1999 Sales

Top Chain Financials

December-01

Dominos

Little Caesar's

Papa John's

(llitch Holdings)

Revenues
Cost of Goods Sold
Gross Profit
Gross Profit Margin
SG&A Expense
Depreciation & Amortization
Operating Income
Operating Margin
Net Income
Net Profit Margin

Cash
Net Receivables
Inventories
Total Current Assets
Total Assets
Short Term Debt
Total Current Liabilities
Long-Term Debt
Total Liabilities
Total Equity

Source: Hoovers Online

Yum! Brands
(Taco Bell, Pizza
Hut, KFC, Long
John Silver's)

1258.3
937.9
320.4
25.50%
193.3
0
127.1
10.10%
36.8
2.90%

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

244
122.2
121.8
49.90%
66.6
35.2
20
8.20%
11.5
0.51%

2202
1021
1181
53.60%
784
111
286
13.00%
164
7.40%

34.8
54.2
22.1
131.4
382.3
43.2
154.1
611.5
807.2

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

17.6
23.2
12.7
65.1
387.4
0.2
66.4
105.1
191.8

110
175
56
547
4388
696
1805
1552
4284

-424.9

n/a

195.6

104

Market View
December-01
52 week high
52 week low
Market Value
Shares Outstanding
Price/Sales Ratio
Price/Earnings Ratio
Return on Assets
Return on Equity
Current Ratio
Long-Term Debt/Equity
% Institutional Owned
12 Month Revenue Growth
36 Month Revenue Growth

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

$35.19
$23.37
$522.60
18.7
0.55
12.55
12.80%
34.70%
0.27
0
69.60%
-3.50%
6.10%

33.17
20.35
7,326.40
295.5
0.98
13.33
11.10%
107.90%
0.43
4
76.50%
8.10%
-2.30%

Pizza
Customers

Who Eats Pizza?

Source: Chain Leader, June 2000

Fun Facts About the

Pizza Customer
94% of Americas population eats pizza.
Each man, woman and child in America eats an average of 46 slices (23 pounds)
of pizza a year
93% of all Americans eat at least one pizza a month
37% of kids say pizza is their favorite food
Children between the ages of 3 and 11 prefer pizza over all other food groups for
lunch and dinner

Americans 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 trends

www.aboutpizza.com - history, types of pizza
www.pizzaprosperity.com - industry statistics
Pizza Today, August 2002 - sales information
SalesTrac Weekly - weekly sales growth
Hoovers Online - financial outlook
www.dominos.com - sales growth
www.yum.com - sales growth
www.papajohns.com - sales growth
www.franchisehelp.com - pizza facts
www. pizzaware.com - pizza facts
Chain Leader, June 2000 - customer profile