When “big box” stores like Wal-Mart and Target came along years ago, “mom-and-pop” stores quickly felt their sting and went out of business by the hundreds. Today the newest “big box” store isn’t even brick-and-mortar, it’s online. For example, Amazon.com has managed to put all sorts of different stores out of business because, let’s face it, when you can purchase something right from your computer and have it sent right to your door without having to even leave the house, the convenience factor is a tremendous selling point.
Up until the last few years this problem wasn’t really felt by local restaurants, including local pizzerias, but today major national chains like Papa John’s international and Domino’s pizza are crushing smaller pizza shops. The reason? The newish capacity to offer customers a robust online ordering system that, just like Amazon, makes it easy to order a pizza with all the toppings right from your computer.
Now, to be sure, if you look at the dominance that other big chains in the restaurant category have, including Subway, Taco Bell and international giant McDonald’s, Domino’s and Papa John’s still have a long way to go. Still, since these growing pizza chains happen to be ferociously competitive, with customers frequently switching loyalties when they find a newer, better deal. It’s certainly making it extremely difficult for local pizzerias to keep up and match prices.
Papa John’s pizza is currently the number one with 45% of their domestic sales through either desktop computers or mobile devices. They have an excellent chance of holding their lead because, as of today, they’re still the only major pizza chain that’s developed a loyalty program for their customers. By allowing them to accumulate redeemable points for free products, Papa John’s is following in the footsteps of Starbucks coffee and ramping up the competition.
The loyalty that they are developing will certainly make it easier for Papa John’s to expand their operations internationally, even if they go into other markets where there’s already a presence by their competition. For example, while Papa John’s has about 3000 domestic stores, Domino’s has approximately 5000 of them and would seem to have the advantage. So far, only about 10% of Papa John’s operating profit comes from international restaurants, of which they own about 1000. Domino’s has been increasing their international stores at roughly 10% per year, and now has 6000 international restaurants.
Big numbers, to be sure, all of which mark the death knell for your local pizzeria. The shame of it all is that, if you’re from the New York, Chicago or even Seattle area, you realize that the average Papa John’s or Domino’s pizza doesn’t hold a candle to most pizzas made at your mom and pop pizzeria. Their prices and ordering platform might be convenient and cheap, but if you’re looking for delicious pizza you probably should run out and buy some now, from your locally owned pizzeria, before they’re gone forever.
