ahhh...they are switching to my dim sum....
-- Pizza business pie shrinks as America ages --
By Lauren Weber
CHICAGO, April 9 (Reuters) - The weak U.S. economy and
stiff price competition sliced into pizza sales in March,
squeezing a segment already hurting from the changing tastes of
an aging population and the defection of affluent customers for
more upscale options.
"The outlook for delivery is pretty dismal," said Mike
Smith, restaurant analyst at Fahnestock & Co.
Pizza Hut, the top U.S. pizza chain and a division of Yum
Brands Inc. <YUM.N>, said sales at stores open at least a year
fell 2 percent in March and 4 percent for the whole first
quarter. No. 3 pizza chain Papa John's International
Inc.<PZZA.O> said comparable store sales fell 5.1 percent in
March.
The numbers contradict earlier speculation that takeout and
delivery would spike in March, catering to an American public
mesmerized by TV images of the war in Iraq.
Papa John's company, based in Louisville, Kentucky, blamed
its results on competitive pricing and promotional offers for
carry-out and delivery pizza, along with overall weakness in
fast food.
"There's no pricing flexibility whatsoever. Everyone's
probably having slowed traffic, and you can't pick it up with
price," Smith said.
Pizza makers and other fast-food restaurants have suffered
as lower-income Americans, their biggest traditional customers,
have absorbed the pain of the economic downturn while
higher-income customers choose healthier or fancier meals.
"People have been surprised it's been impacted as much by
the economy as it has," Barry Stouffer, restaurant analyst with
BB&T Capital Markets, said of the fast-food market.
No. 2 player Domino's Pizza is private and does not release
monthly sales figures. Representatives of the company were not
available for comment.
Consumer research firm NPD Group said carry-out traffic
rose almost 7 percent in the winter quarter during the last
Gulf War in 1991. But the trend is not repeating itself.
"Much to our surprise, preliminary indications in the first
two weeks are that the carry-out business is not providing what
Americans wanted versus the last war," said Harry Balzer of
NPD.
Shares of Papa John's closed down 6.9 percent while Yum
stock fell 1.3 percent.
The whole segment is not expected to lift until the economy
begins a substantial recovery, raising the incomes of fast
food's traditional consumer base, Stouffer said.
But even an upturn may not cure pizza makers' woes. "On a
longer-term basis, they probably suffer more than other fast
food companies from the aging of America," Smith said.
FAMILIES VS EMPTY-NESTERS
In the late 1980s and early 1990s, Balzer said, pizza sales
grew rapidly because pizza is an easy option for families.
"But the fastest-growing segment of the population is now
empty-nesters. They don't need family food as much," he said.
"It may be just a basic, fundamental shift in the role of pizza
in the American diet."
Market experts say the problem may not be pizza itself,
just the boring versions that turn up at your door.
Affluent consumers now have more pizza choices -- local
restaurants and upscale chains offer gourmet pies with toppings
like goat cheese, wild mushrooms and barbecued chicken.
California Pizza Kitchen Inc.<CPKI.O>, which serves pastas
and salads along with pizzas, last month said it expects
first-quarter same-store sales to rise about 2 percent.
Gourmet pizza is popping up on other casual dining menus.
Cheesecake Factory Inc.<CAKE.O> offers them, and Applebee's
International Inc.<APPB.O> has a pizza appetizer on the menu.
Frozen pizzas are also competing for the attention of pizza
lovers who are tired of the same old fast-food pies. "Now there
are restaurant-quality frozen pizzas, so the market share
battle is not only restaurant versus restaurant, but also
restaurant versus frozen," Balzer said.
((Reporting by Lauren Weber; editing by Toni Reinhold; Reuters
Messaging: lauren.weber.reuters.com@reuters.net;
312-983-7347)) |
