Which means that smaller firms without the sophisticated apps that help you build your pizza as well as remember what you ordered last time, your address, phone number - and credit card are having a tough time competing for a piece of that action.
The big chains have seen their share of the market grow to over 52 percent, as the following article explains. Since the vast majority of pizzerias are smaller mom-and-pop operations, this is reducing their numbers as well as their prospects for the future.
As a result, there are firms that offering to manage online sales for smaller chains, but their cut of the orders may render that uneconomical for many. As an alternative, some smaller shops are trying to move upscale with more expensive wood-fired and gourmet pizzas.
When its founders said the web changes everything, they may not have had pizza in mind, but they werent kidding. JL
Julie Jargon reports in the Wall Street Journal:
The rise of online ordering is putting corner pizzerias in new peril.Big chains have invested in sophisticated Web-based systems that let customers order and pay for deliveries quickly without having to call. That's giving them a new edge in the battle for an ever-bigger slice of the industry pie over smaller chains and independent pizza shops that lack the capital or technological know-how to compete on the Web.Domino's Pizza Inc., Papa John's International Inc. and Yum Brands Inc. 's Pizza Hut all now derive 40% or more of their sales from digital orders, the companies say. For Geraci's Restaurant in University Heights, Ohio, the number is zero.Frannie Geraci, co-owner of Geraci's, says her sales have declined 20% in the past two years as chain pizza shops and other franchises have moved into the neighborhood. She estimates she could boost sales by 30% if she offered delivery and online ordering, but she says she can't afford the cost."I know I've lost younger customers," says Ms. Geraci, whose parents opened the restaurant 58 years ago.Large pizza chains accounted for 52% of pizza orders at quick-serve pizza shops last year, up from less than 47% in 2009, while the share for independent pizza restaurants fell to 29% from 31.5%, according to market researcher NPD Group Inc. Chains with fewer than 100 units took 19%, compared with 21.7% four years earlier. Domino's estimates that its share of the $9.6 billion U.S. pizza delivery market grew to 23% last year from 19% in 2008.Mom-and-pop pizza shops have long been under assault by the big chains, which have other advantages like marketing dollars and purchasing power for ingredients.NPD says the number of independent pizza shops has fallen 6.6% since 2001, far steeper than the 2.9% decline in overall independent restaurants. The number of outlets at pizza chains rose almost 4.7% during that period, NPD said. It declined to provide the totals.Some analysts point to a pocket of growth among smaller operations specializing in gourmet or wood-fired pizzas. Restaurant consulting firm Technomic Inc. said that helped push the number of pizza outlets among small chains and independents to nearly 33,000 in 2012, from 32,257 in 2011.It's impossible to discern exactly what's behind the closure and share loss of traditional independent pizza shops, but analysts, pizzeria owners and pizza company executives say that digital ordering is having an impact.Domino's Chief Executive Patrick Doyle says strength in digital ordering "has been a big part of" the growing market share of big chains in the past few years."Most of the small and regional chains who still continue to sell the majority of the pizza in the U.S. simply aren't able to play on these technology platforms with the level of sophistication that we have," he told investors in mid-January.While online shopping has been shaking up other retail sectors for a decade or more, change in the restaurant industry is just gaining momentum.McDonald's Corp., Wendy's Co. and Chipotle Mexican Grill Inc. are all starting to experiment with mobile ordering and payment. Starbucks Corp. , whose CEO Howard Schultz describes the move to online shopping as a "seismic shift," last week said he'll expand his role in digital retailing.Digital ordering isn't a panacea. Hackers can steal sensitive information and e-commerce sites must be able to ensure that credit-card information is secure.Still, chains have been aggressive about going online in the takeout and delivery pizza business. Domino's is running television advertisements that ridicule the hassle of phoning in orders—even at Domino's.Chains are seeking more customers like Markie Gray, a 23-year-old theater company production manager in Chicago, who likes using Domino's website to pick toppings."It takes me awhile to decide what I want and it's nice to be able to look over everything as opposed to feeling pressured to make a decision right away," she says.Companies like Chicago-based GrubHub Seamless, which typically take a cut of online sales, have tried to bridge the digital-ordering divide.David Rizzo, owner of three Rizzo's Fine Pizza shops in New York, reluctantly started taking orders via GrubHub and Seamless about 18 months ago."We're a very hands-on, customer service-oriented place, which is what distinguishes the mom-and-pops from the major chains," says Mr. Rizzo, whose father opened the first Rizzo's in 1959. "All of that is removed when you start dealing with online ordering."Still, he says most of the orders at that original shop, in Queens, now come from GrubHub and Seamless, and he credits online orders with helping him open two locations in Manhattan in 2010 and 2013."If I didn't do delivery and online ordering, we'd be in serious trouble," he says, "and I don't think the other two stores would have gotten off the ground."
0 comments:
Post a Comment