The Best Ways To Sell Pizza

Who doesn't love pizza? It is arguably one of the most loved foods in America, generating $30 billion in revenue annually via sales of approximately three billion pizza pies.

It's no surprise that kids love pizza, but adults love it, too. Americans love it so much that they consume more than 100 acres of pizza daily, according to the National Association of Pizza Operators. And every man, woman and child in America eats an average of 46 slices (23 pounds) of pizza a year, according to Packaged Facts.

While the popularity of pizza makes many convenience store operators want to offer delectable Italian pies, the business is fiercely competitive, and quality and execution are tricky. There are approximately 61,250 pizzerias in the United States, 51 percent of which are franchise operations. That doesn't include the many other retail outlets that sell pizza as well, including mass merchandisers, grocery stores, cinemas, sporting venues and, of course, some convenience stores.

The bottom line is: the extremely price-competitive pizza business is not for the faint of heart, but when done well, it can yield strong sales and margins.

THE OPTIONS

Pizza can be offered in various forms in convenience stores — hot by the slice, whole pies or take-and-bake pizza offered in cold merchandisers. Some operators offer all three options, while others focus only on slices and avoid the whole pie business because it is so price competitive.

Retailers must consider whether to offer pre-cooked frozen dough; fresh dough; commissary-delivered pizza fully topped and ready to bake; or branded turnkey pizza kit options. Which program(s) operators choose depends entirely on the type of store for which they are considering pizza, the neighborhood, customer base, area competition, as well as the labor and foodservice skills of the store's staff.

For example, one Convenience Store News How To Crew member, whose company offers a blend of all offerings mentioned above, recommends take-and-bake for stores that have a strong grab-and-go business, strong night business and/or a high Supplemental Nutrition Assistance Program (SNAP) customer base. With 47 million people currently on food stamps, this can be an important client base to serve.

Fresh dough and from-scratch programs work best in stores that have a lot of labor available and have strong custom-made food programs. Fresh dough programs also require more store space for preparation — a luxury many c-stores don't have.

Turnkey kits and manufacturer-branded programs are another option many operators choose to keep labor costs down, while offering a quality program at the right price point. In this case, suppliers such as Hot Stuff Foods or Hunt Brothers Pizza provide all of the components, and the operator assembles the pizza in stores and bakes it. "It gives the customer an appearance everything is from scratch with a great-tasting product," one retail expert said. "Overall, this would be my No. 1 choice for labor savings, quality and price point."

Other branded options to consider are Pizza Hut, Godfather's Pizza, Pizza Inn and Domino's, where convenience stores operate franchise locations.

For slower-volume stores, commissary-delivered pizzas that are already made and topped and just require baking are an option to consider. Most arrive at the stores frozen. "The margins are always very consistent…but they lack somewhat in taste," one How To Crew member noted.

Most of our experts warn operators to steer clear of fresh dough programs, especially at the beginning stages. They agree the easiest way to get into the pizza business is with pre-prepared programs. "Chains doing a good job with pizza usually start with a raw dough product, but this is a tough product line to be very successful at. There are several canned programs out there that can get you started much easier than trying to do it yourself, and there is very good product available today," another retail expert said.

An additional challenge with pizza — a volume business — is that it has to be ready before the meal rushes. If too much pizza is prepared, the product sits and the quality suffers. If pizza is made to order, then customers have to wait. Advances in cooking and merchandising equipment, though, are helping to make cooking and selling pizza a bit easier.

SPACE & EQUIPMENT

Most operators recommend impinger/conveyor ovens to cook pizza and get the right crispy quality with the dough, along with the melted and lightly browned cheese. On average, it can take only five to seven minutes to cook a pizza in this type of oven. Other operators use convection ovens, which they also use for a wide variety of other foodservice products.

And, of course, good merchandising cases must be acquired in order to properly display the pizza, keeping it warm and making it look as fresh and appealing as possible. The oven and merchandisers combined can cost between $7,000 and $12,000, depending on the brands, capacity and capabilities of the equipment.

Bake-off programs are more flexible than fresh dough programs — which also require proofers — and can be cooked in a variety of oven types. "Overall, I think the pizza suppliers have helped this more than the equipment. Pizzas now can be baked off in different varieties of ovens and still taste like they came out of a conveyor pizza oven."

While there are new ovens available that can cook pizza in two to three minutes, experts agree the price point of this equipment is still too expensive for convenience store pizza volume, especially for operators that are new to the pizza category.

PRICE COMPETITION

A big challenge for any convenience store pizza program is competing on price against the likes of Pizza Hut, Domino's and Little Caesar's. For example, c-stores will have a tough time competing with the current $10 price per pie that the large pizza chains are offering. These operators also make great use of coupons and bundle deals, which c-store operators will have to adopt as well to stay competitive in certain markets.

Pizza ingredient costs are considerably elastic and subject to commodity price inflation and market conditions. Recent increases in the price of flour, due to drought, and cheese have hit the pizza industry quite hard and compressed margins.

One way to avoid the price war is to not to sell pies and instead sell higher-margin slices. "Even with the big QSRs [quick-service restaurants] going after the $10 pizza price point, we have been able to hold our own in slices and take-and-bake products," one retail expert said.

Another strategy is to target the breakfast and lunch crowd instead of dinner, where QSR competition is hottest. C-stores often overlook the breakfast pizza opportunity, this same expert noted. "For a large group of our stores, this is the No. 1 slice we sell," this expert said, noting it does particularly well in stores that utilize sampling and promotions to boost trial and volume.

If operators go into the pie business, it is hard to compete without offering home delivery — a sticking point for convenience stores that don't want the liability of delivery services. Despite this obstacle, some c-stores do quite well with their pizza programs sans delivery.

A very important component of successful pizza programs are strong branding and merchandising. Make sure to brand all the program components from the pizza boxes, napkins and cups, to the menus, in-store signage and display cases. The branding and merchandising communicate to the customer that you are fully in the pizza business, according to the experts, who said a professional look is critical.

Promotions and marketing are also vital. Marketing through all avenues available — in-store advertising and signage, billboards, radio, social media, and couponing and bundle offers — must all be a part of a strong pizza program. "Our '2 slices and a fountain drink' promotion is the most successful pizza promotion we have and makes up about 35 percent of our volume," one expert said.

Sometimes, the simplest programs are what connect with the customers.

Convenience Store News' How To Do World-Class Foodservice report is researched and written by Maureen Azzato, a freelance content developer and editor with more than 20 years of business publishing experience, with a primary focus on foodservice and retailing. Previously, she was the founding publisher and editorial director of On-the-Go Foodservice, a publication for cross-channel retail foodservice executives, and publisher and editorial director of CSNews, where she worked for 17 years.