Americans love their local pizza shops and aren’t backing down amid inflation, according to the CEO of Slice, a company that aims to “modernize” independent pizza shops by providing technology and delivery services.
“It’s fascinating to see Domino’s and Papa John’s reporting their numbers…we don’t see any softness in pizza overall,” CEO Ilir Sela told Yahoo Finance.
Domino’s Pizza (DPZ) and Papa John’s (PZZA) both ended Thursday’s trading session down — down 12% and more than 6%, respectively — after fourth-quarter earnings results that broadly showed consumer demand for both pizza chains declined at the end of 2022.
[Read more: Domino’s Pizza posts mixed Q4 earnings report, same-store sales miss estimates]
Sela, who founded Slice in 2010 to support his family’s New York City pizza restaurants (which have since closed), now has nearly 19,000 independent pizza restaurants in the company’s portfolio.
“We are not seeing any independent slowdown [of local pizzerias] at all,” Sela said.
He says mega chains don’t offer the charm and quality that lure shoppers to come to local shops amid high inflation.
“The authenticity, variety, creativity and quality of ingredients found in local pizzerias cannot be matched by the big chains. Add their unique personalities and outstanding service, and it’s no wonder many of these businesses have been cornerstones of the neighborhood for years. he said. “When families order local pizza, they don’t get anything with preservatives and fillers,” he added.
The average price for a large cake is now $17.81, compared to $16.74 in 2021, per Slice’s annual Slice of the Union report. Costs have been pushed up by protein and packaging like pizza boxes and bags.
However, prices vary. In Oregon, the average cost is $26.94 per pie, and in states like Washington and Alaska, customers can expect to pay upwards of $23.00. Pizza fans in Oklahoma, Minnesota, and Alabama fare better, with the average pie costing around $14.00.
The story goes on
Despite rising prices, Sela says, pizza remains a family staple in the US for several reasons. “It’s affordable for families, designed for gatherings and travels well.”
NEW YORK, NEW YORK – DECEMBER 09: A delivery man takes delivery of Joe’s holiday pizza boxes near Times Square on December 09, 2022 in New York City. (Photo by Alexi Rosenfeld/Getty Images)
Sela tells a different story than the mega fast food chains in their recent earnings calls.
Domino CEO Russell Weiner called the global brand a “work-in-progress” in unprecedented times. Speaking to investors, he noted that overall fewer consumers are ordering delivery as they return to pre-COVID habits like dining out, impacting delivery pizza here in the US, where delivery accounts for about 60% of the total sales.
“A relatively higher delivery fee in inflationary times leads some customers to prepare their meals at home instead of having them delivered,” he said.
Manufactured by Yahoo Finance (information in the Slice of the Union report).
Meanwhile, Papa John CEO Rob Lynch, speaking to investors, called 2022 “a very tough year” as sales volumes normalized over the past year on a pandemic surge. Innovation helped the chain last year with the launch of its Epic Pepperoni Stuffed Crust and New York-style pizzas.
Lynch remains confident that innovation will remain a key driver despite lower sales in North America in the fourth quarter of 2023.
“Investments in product and digital innovation, combined with strong operational excellence, will continue to enhance the customer experience and contribute to a healthy comparable revenue and unit economy in North America,” he said in the press release.
Many pizza delivery giants have been considered darlings of the pandemic as consumers order and eat at home. Papa John’s stock is now down nearly 4% compared to 2 years ago, while Domino’s stock is down nearly 11% on a 2-year stack.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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