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The Top Companies Battling For A Slice Of The Pizza Biz

Companies
The Top Companies Battling For A Slice Of The Pizza Biz

The origin of pizza dates as far back as 1,000 AD. It is one of the oldest dishes on today’s menu. To date, evidence shows that the pizza originated in Italy.  However, scientists believe that the basic combination of bread baked with other ingredients may even have gone as far back as 7,000 years ago. Pizza has come a long way, and once pizza crossed the Atlantic, it transformed from a traditional poor man’s dish into a multi-billion dollar business.

When America adopted pizza from Italy, it was originally thin and lightly dressed. But little time was wasted in transforming pizza into the multiple varieties enjoyed worldwide today: thick, deep dish, and even stuffed crust. The toppings also changed from lightly dressed grated parmesan to thick mozzarella cheese layers, with green peppers, pepperoni, and sometimes even pineapple. In Italy, pizzas were and still are served in small pizzerias with wood-fired domed ovens.  In America, commercial pizza ovens that reach over 1200 °F are used and can bake over a dozen pizzas at once using a conveyor belt. But the way pizza was made and dressed paled in comparison to the way America transformed the pizza business.

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In America, pizza sales represent over $32 billion a year. There are over 70,000 pizzerias in America, and the US represents more than half of the world’s total consumption. Pizzerias are no longer reserved for small business entrepreneurs. Today, over half of America’s pizzerias are corporate franchises and nearly 25% of them belong to the top four major chains: Pizza Hut, Domino’s, Papa John’s, and Little Caesar’s.

These four American icons battle for pizza supremacy year-in and year-out, leveraging the influence of pop culture, new technology, and even outright pizza price wars. Every year during the Super Bowl, all four franchise chains roll up their sleeves and deliver millions of pizzas and buffalo wings in super-combo and family size formats. Combined, the four major chains plan to sell an estimated 10 million pizzas during the Super Bowl.

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Pizza Hut, a subsidiary of Yum! Brands (NYSE: YUM), represents the largest pizza chain in America, with over 6,000 restaurants. Pizza Hut also has a global footprint, with over 5,000 locations in 94 other countries. The first Pizza Hut was founded by Dan and Frank Carney in Wichita, Kansas in 1958. They borrowed $600 to open the restaurant, and just a year later a second one – its first franchise – opened in Topeka. Since the 1960s, Pizza Hut has undergone several changes, including alterations to its menu, and even storefront design. However, despite its many changes, Pizza Hut is still renowned for its red roof design and stuffed crust pizza.

Pizza Hut is not alone on the journey to pizza industry supremacy. The second largest chain, Domino’s, has approximately 4,000 locations across the US and focuses primarily on take-out and delivery. Its restaurants are not a typical choice for family outings, and for the longest time, their menu only consisted of pizza.

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Now the menu includes pastas, chicken wings, sandwiches and breadsticks, and the name Domino’s Pizza was changed to Domino’s. Domino’s recent efforts in rebuilding its brand and focusing on new innovative ways to order online have led to increased sales since 2009. Today, Domino’s has restaurants in over 73 countries, for a total count of 10,500. It was 15th on the top 100 franchises list in America and its annual sales are approximately $3.2 billion.

Two other pizza rivals, Papa John’s and Little Caesar’s, are hot on Domino’s tail with approximately 3,200 locations in the US. They have used aggressive marketing tactics and have even faced legal action. In 1997, Pizza Hut filed a lawsuit against Papa John’s for ads that compared Papa John’s ingredients with Pizza Hut’s and others. Papa John’s slogan “Better Ingredients. Better Pizza” was scrutinized by Pizza Hut for misleading consumers, specifically in ads where Papa John’s compared their dough, sauce, and cheese.

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Today, Papa John’s sponsors the NFL, Six Flags, and even ESPN. Its outspoken CEO John Schnatter has been no stranger to the public eye. He has a net worth of $600 million and over the years has found himself in the center of political controversies and opinions. Not too far behind Papa John’s is Little Caesar’s, a formidable rival who struggled in the 90s, but to-date has become the fastest growing pizza-chain. Little Caesar’s market penetration has been very aggressive as of late, specifically in the North East US, a region it once held strong.

Competition in American pizza is so stifling that Pizza Hut and Domino’s were forced to shift their focus toward growing their global markets. But the domestic war on pizza is just getting started.  The demand for pizza is still rising in America, and chains are fighting for location and consumer recognition. The battle is expected to continue and likely flare up as the internet, mobile devices, and ready-made frozen pizzas add to the mix. A big success: Pizza Hut’s Xbox app, which allows consumers to order from their gaming console. The program brought in over $1 million in just four months.

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