Pizza by the Numbers

FM Staff

Pizza is ubiquitous in the noncommercial market. It appears on nearly every menu, every cycle and in every daypart— including dayparts that have yet to be named! It is America's favorite comfort food.

Beyond the obvious reason—that pizza's flavor profile simply appeals to almost everyone—it has much else going for it, including virtually every trend cited in the average onsite food guru's "Top 5" list:.

Pizza is convenient, ethnic, portable, infinitely customizable (even for those looking for vegetarian and wellness options) and nutritious. For the operator, add pizza's attractive margins, easy merchandisability and seemingly endless potential for sales growth, and pizza's story would seem to be not only patently obvious, but explored in full.

But it turns out there is indeed more to know about the ways pizza is produced, served and menued in the variety of noncommercial foodservice environments served by our readers. To dig a bit deeper into this area, FM commissioned a proprietary survey earlier this year that looked to explore some of those sometimes surprisingly wide differences

FM's 2004 Pizza Usage Study was administered by mail, with a questionnaire sent to a random sample of 1600 noncommercial operators taken from selected segments in FM's circulation. (While we've broken out results for FM's "core" segments—K-12, college/ university, healthcare and B&I—the "Other" category includes sports, entertainment, conference, convention center and other operations).

Overall, the survey achieved a 22 percent response rate before the 30-day cut-off date last May. After sifting through and analyzing more than 350 returned surveys, here are some of the highlights that we found.

A booming business
Pizza, it is no surprise, turns out to be a booming—and growing—business in virtually every segment surveyed. Eleven percent of the noncommercial operations surveyed reported selling over 500 pizzas a day, and over 40 percent say they serve over 100 pizzas each day. Further, more than a quarter of all respondents said they expect demand for pizza to increase in their operations in the next 12 months.

Franchise pizza operations are an option used by a small but significant number of respondents, with about 11 percent of the surveyed colleges, 7 percent of schools and 6 percent of B&I facilities saying they had such an operation onsite. The remaining respondents, whether self-operated or contract-operated, said they instead prepared pizzas onsite to match their own station or servery concepts.

Although operators in every segment offer pizza, the preferred methods of preparation can vary significantly. Although many respondents, especially large ones, reported using multiple techniques, clear preferences occur depending on the segment (see tables on p.44).

Our survey results also suggest that the trend toward "freshprepared" foods in response to more sophisticated customer demands has helped drive the much wider variety of speed-scratch crust component products available in the market today, as well as encouraging a smaller but still significant number of operators to still produce completely-from-scratch pizza offerings.

While most respondents indicated they rely on some convenience components, about 10 percent of all operators (and 20 percent of college/university operators) said they still make their pizza pies entirely from scratch.

Slightly more than half of all respondents indicate they use frozen, prepared pizza in their operations, although many of these also make customized pizzas using frozen or refrigerated dough products. As one might expect, the use of frozen, prepared pizzas is highest in K-12 schools (89 percent) and lowest in B&I (9 percent).

Among colleges and B&I operators, the use of frozen dough balls or refrigerated crusts predominates, with custom toppings added to match menu cycle or customer preference needs.

Business dining operators in particular seemed to prefer these options.

Diverging dayparts
Lunch remains the time when a majority of pizza is ordered and consumed; nearly 70 percent of pizza sales occur at this time. But when one looks closer, one finds that consumption patterns vary significantly by daypart in the different segments (see tables, page 46).

For example, K-12 schools and business dining operations reported ringing up 9 percent of their pizza sales as breakfast choices. Breakfast pizza appears to be offered more commonly in the Northeast, South and Midwest, with colleges/university and healthcare operations reporting that 37 and 36 percent, respectively, of their pizza sales occur at that time.

In schools, this illustrates pizza's universal appeal to kids; in healthcare it likely reflects late-night-shift employee preferences; and in colleges, it is likely a form of "extension" to late night dining. In fact, colleges specifically say they ring up another 8 percent of their pizza sales in definitely identified late night dining, with numbers suggesting that the larger the school, the higher the percentage of late night pizza sales.

Pizza packaging options are viewed as a significant issue among our readers, with over half saying it is important to their sales and merchandising efforts and 11 percent overall saying packaging is "extremely important." Concern about packaging was especially notable among respondents from public venues such as stadiums and conference and convention centers, where 90 percent indicated it is an important issue, and 40 percent said it is "extremely important."

What's on top?
When it comes to toppings, noncommercial operators are no slackers in terms of variety (see tables, page 48). The widest variety of premium toppings is available in college/university and B&I operations, while schools rely most heavily on traditional pepperoni, cheese and sausage varieties. Despite the continuing strength of these traditional items, it is clear the vegetarian trend has made significant inroads into pizza operations. Half of all respondents say sales of vegetarian pizza have increased over the past two years.

Specifically, among all noncommercial segments surveyed, 58 percent offer vegetarian pizza. In addition, 33 percent of all pizza sales were "non-meat" pizzas, with 16 percent of sales classified as vegetarian (percentages of vegetarian pizza sales were somewhat higher in colleges, B&I and healthcare, and lower in K-12 schools).

Full line distributors are the dominant suppliers of these ingredients in most cases, with 83 percent of respondents saying that is how they source their pizza ingredient needs. The remainder indicated they used specialty distributors for this purpose or obtained their ingredients from commodity allocations.

On the financial side, the cost of pizza ingredients represents about 30 percent of sales for noncommercial operators overall, with a somewhat higher percentage typical of schools (see table on p. 50). Labor costs are similar for most operators, regardless of segment, typically running about 22 percent.

On display
Finally, one of the most interesting findings of the survey was the much greater variety of ways noncommercial operators look to promote pizza sales, at least when compared to the typical commercial operation. Noncommercial operations regularly employ a promotional arsenal that ranges across the marketing mix available to them.

Menu boards are the most universal promotional tool (see table, p. 50), but display prep, display cooking, display cases, promotional merchandising programs and the internet all are used as support strategies, depending on the type of operation involved. Other promotional techniques included school announcements, sampling, and "taste test" promotions.

This comes as no surprise to those who understand how much "reach" pizza provides into the customer base, venue diversity and catering opportunities available to noncommercial operators.

Pizza popularity makes it a ready "problem solver:" it enables extended and after-hours services, a convenient takeout alternative, an instant party or department celebration menu solution, and an all-purpose menu-substitution solution. Experience also shows pizza may be the perfect low-cost "bonus" offering to make up for the occasional but inevitable "we'll make it up to you" service failure. Summed up: pizza may be the most flexible and all-purpose offering in a typical noncommercial operator's menu mix, and FM's research suggests that, if anything, the importance of this role has no place to go in the future but up.