Here is an article in the Orange County Register about the level of competition of Pizza. No real news but an interesting read and the CEO of CHGO was quoted in the article
Rory
Jun. 22 (The Orange County Register/KRTBN)--Meet Trish Dodash, a full-time worker and
single mother. Her son and daughter participate in five high school sports.
The family's typical dinner?
Pizza. About four times a week.
"It's a big staple for us," says Dodash, of Huntington Beach.
What used to be a simple task -- figuring out where to get pizza --
is now a dizzying exercise in brainpower.
"My mailbox is jammed with pizza coupons: The Big Foot, Thick 'n' Deep, Thin 'n' Crispy. I
mean, I just want a pizza," says Dodash, a personnel worker at Enterprise Rent-A-Car in
Long Beach. "Things should be simple."
No chance, Trish.
Not in Orange County, where mom-and-pop operators are slugging it out
with the big chains in an increasingly heated battle for market share.
Pizza operators are blasting consumers with two-for-one coupons and other discounts,
heaping on the toppings and jazzing up service.
"Pizza has always been one of the more competitive segments of the quick-service
industry, and that's even more true now," says Brea restaurant analyst Bob Sandleman.
-- Papa John's, a national powerhouse and one of the fastest-growing pizza chains, has
opened seven units in Orange County in a year, with plans for 20 more in two years.
Based in Louisville, Ky., Papa John's, which touts the quality of its ingredients, is a major
player in the growing segment of takeout and delivery pizza.
"Consumers want a quality product in addition to value," notes Tami McNamara, a pizza
industry watcher with Fahnestock & Co. in New York. "They are more finicky. Price alone
is not sufficient to draw in customers."
Most Papa John's have limited menus and no indoor seating (think Little Caesar's). It's a
different breed from the sit-down, family-style restaurants pioneered by Pizza Hut.
"We are here to win over every household in Orange County," says Alex Samios, vice
president of PJ West, a Papa John's franchisee in Corona del Mar. "Pizza Hut had their
run, Domino's had theirs, and now it's Papa John's turn."
-- Domino's Pizza, the nation's No. 2 chain, with 25 units in Orange County, is relocating
several aging stores and repainting them in brighter, bolder blues, reds and grays.
"Our sales are strong and growing, but we have to work harder," says John Lewis, franchise
operations director in Santa Ana for Domino's, which is based in Ann Arbor, Mich., and
whose roots are in college-town delivery. "Margins are getting squeezed."
-- Industry leader Pizza Hut, whose U.S. sales slipped 4 percent last year, is digging in its
heels and flexing its marketing might. The Dallas-based chain, with 65 units in the Orange
County region, recently bought a billboard ad near Edison International Field in Anaheim.
"Voted Best Pizza in Orange County," the billboard reads, citing a reader survey in this very
newspaper. Pizza Hut, known for its variety of toppings and crusts, recently battled Papa
John's in full-page newspaper advertisements in which each chain blasted the quality of the
other's product.
Is Pizza Hut worried about Papa John's?
Hah, sniff officials.
"We're the leader out here, and we plan on staying that way," says Debbie Mercer,
Irvine-based marketing director for Pizza Hut's western division.
-- California Pizza Kitchen, the Los Angeles-based chain that popularized the gourmet
pizza craze 13 years ago, launched this month its first major marketing campaign,
spending $300,000 on billboard ads.
With five units in Orange County and another on tap for Brea, CPK is branching out to the
mainstream from such upscale locations as Fashion Island and Beverly Hills.
"Our shoulders are getting broader," says chairman and co-founder Larry Flax. "People
used to run in horror when they first saw barbecue chicken pizza on our menu. Now,
consumers are more experimental."
-- What A Lot A Pizza, an independent chain based in Huntington Beach, has attracted a
growing legion of budget-minded followers.
"Consumers have been gimmicked to death, and we're all about serving the consumers,"
says owner Wayne LaVigne. His chain shuns coupons and sells only one size pizza --
large -- for $4.95 to $7.95, and offers pick-up service only.
As the big pizza companies slug it out, LaVigne is banking on high volume to get his share
of the pie. Each of the six What A Lot A Pizza outlets must sell between 90 and 100
pizzas a day to break even.
So far, the concept is working. Sales have grown to about $2 million since the first What A
Lotta Pizza opened in 1992. Two more units are planned to open by the end of the year.
"I come here for the price -- plus, it's good pizza," says Linda Adair, who recently bought
six pies for an office party from a What A Lot A Pizza store in Huntington Beach.
Despite the increased competition, pizza experts believe there is room for more players in
the nation's $20 billion pizza business -- one-fifth of the total fast-food industry.
It's not only the booming economy. Consumers also are hitting fast-food joints in record
numbers.
In the first quarter this year, the average fast-food user in the Los Angeles region went 15.6
times a month, up from 12.2 times the year before, says Brea analyst Sandleman. His
company tracks 20 major chains, including pizza chains.
The nature of the pizza business is another factor. Several large chains have a strong
foothold here, but none is truly dominant.
Unlike the hamburger business, the pizza industry is highly fragmented. Many small
independents were around before the big chains, and they maintain loyal followings in
pockets throughout the region.
That's one reason why a deep-pocketed behemoth like Pizza Hut can't saturate a market
like Orange County.
"The independents were here first, and it's been a grind and fight (for the chains) ever
since," says Ron Paul, president of Technomic Inc., a Chicago restaurant consulting firm.
Another reason for the number of players in pizza is the variety of the product itself.
"A hamburger is a hamburger, but there are so many different regional perceptions of what
a good pizza is," says Holly Graskewitz, spokeswoman for Pizza Today, a trade magazine.
"In New York, it's drippy and oily. In Chicago, you got your deep dish. There are so many
possibilities with pizza."
Which explains why a heavyweight like Papa John's can enter Orange County and make
noise but not dominate.
Several sit-down chains, such as Lamppost Pizza, are flourishing in Orange County. The
Tustin-based company, with 30 units in Orange County and 53 overall, caters to sports
fans, softball teams, Girl Scout troups and other community groups.
The average Lamppost pulls in $600,000 a year in sales, an amount growing at a clip of
about 13 percent annually, says Lamppost franchisor Tom Barro.
"There's a definite division between the takeout delivery pizza places and the dining
segment," Barro says. "The big guys are going after each other, concentrating on little
takeout and delivery places. But we offer a family dining experience, and there is less
competition for what we do."
Lamppost plans to open 30 units in the next three years, about half of those in Orange
County. And Barro is getting up to 10 phone calls a week from prospective franchisees,
compared to three or four a month a few years ago.
Another major regional player with several sit-down restaurants is Round Table Pizza,
based in Walnut Creek. The chain, known for its variety of toppings, has 25 units in Orange
County.
"We sell happy food and offer a place to celebrate," says Brian Dixon, vice president of
marketing for Round Table.
Times change.
Paul Motenko recalls moving from Chicago to Orange County a dozen
years ago. "There was incredibly little choice -- I was pizza-starved,"
he says.
Motenko now is chief executive of Chicago Pizza & Brewery Inc. in Mission Viejo. His
full-service restaurant chain, which includes four BJ's Pizza & Grills and one BJ's Pizza,
Grill & Brewery in Orange County, specializes in deep-dish, Chicago-style pizza.
"The pizza chains have come a long way," Motenko says. "And it's not just pizza
restaurants. Everyone's now serving it -- Claim Jumper, TGI Friday's. I kind of joke that the
last bastion where you can't buy pizza is at Chinese restaurants."
By Greg Hardesty
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