Americans love their local pizzerias and aren’t retreating amid inflation, according to the CEO of Slice, a company that aims to “modernize” independent pizzerias by offering tech and delivery services.
“It’s fascinating to see how Domino’s and Papa John’s are reporting their numbers…we generally don’t see softness in pizzas,” CEO Ilir Sela told Yahoo Finance.
Domino’s Pizza (DPZ) and Papa John’s (PZZA) both ended Thursday’s trading session in the red — down 12% and more than 6%, respectively — following fourth-quarter earnings results that largely 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 pizzerias in New York City (which have since closed), now has nearly 19,000 independent pizzerias in the company’s portfolio.
“We don’t see the independent slowdown [of local pizzerias] not at all,” Shelah said.
He says mega-chains don’t offer the charm and quality that keep customers coming to local stores because of high inflation.
“The authenticity, diversity, creativity and quality of ingredients of local pizzerias cannot be matched by the big chains. Add their unique personality and excellent service, and it is no wonder that many of these companies have been the cornerstones of be around.” he said. “When families order local pizza, they’re not getting something filled with preservatives and filler,” he added.
The average price for a large pie now costs $17.81, compared to $16.74 in 2021, according to Slice’s annual Slice of the Union report. Costs increased due to proteins and packaging such as pizza boxes and bags.
Prices do vary. In Oregon, the average cost is $26.94 per pie, and in states like Washington and Alaska, customers can expect to pay more than $23.00. Pizza fans in Oklahoma, Minnesota and Alabama fare better, with the average pie costing around $14.00.
Despite rising prices, Sela said pizza remains a family staple in the US for a number of reasons. “It’s affordable for families, designed for gatherings, and it travels well.”
Sela tells a different story than the mega fast food chains did on their recent earnings calls.
Domino’s CEO Russell Weiner called the global brand a “work-in-progress” in unprecedented times. Speaking to investors, he noted that overall consumers are ordering for delivery less as they return to pre-COVID habits such as dining in restaurants, impacting delivery pizza here in the US, where delivery accounts for about 60% of the total turnover.
“Comparatively higher delivery costs in times of inflation lead some customers to prepare their meals at home rather than have them delivered,” he said.
Meanwhile, Papa John’s CEO Rob Lynch called 2022 “a really tough year” talking to investors as sales volume normalized last year after a pandemic boost. Innovation helped the chain introduce its Epic Pepperoni Stuffed Crust and New York Style pizzas last year.
Lynch remains confident that innovation will remain a key driver in 2023, despite lower sales in North America in the fourth quarter.
“Investments in product and digital innovation, combined with strong operational excellence, will continue to improve the customer experience and contribute to healthy comparable sales in North America and the unit economy,” he said in the release.
Many pizza delivery giants were considered darlings of the pandemic as consumers ordered and ate at home. Shares of Papa John’s are now down nearly 4% compared to 2 years ago, while shares of Domino’s are down nearly 11% on a 2-year stack.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at firstname.lastname@example.org.
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