SPECIAL REPORT: Who’s claiming the biggest slice of the pizza market?

Pizza chef and kitchen

Chain outlets increasing dominance in delivery sector but independents have room for manoeuvre in restaurant segment. Read on for our analysis of the UK pizza market.

It’s no secret that operators are beginning to see the value of cashing in on the £5 billion pizza market. Combined, pizza and Italian restaurants account for more than half of the market value (59%) and have continued to grow in spite of turbulent economic cycles. But in particular, the pizza delivery market has seen massive growth as consumers increasingly demand convenience and speed.

The power of Just Eat can substantially help the independents who are finding it more difficult to combat the marketing power of chains”

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It will probably come as no surprise to hear that the three granddaddies, Domino’s, Pizza Hut and Papa John’s, dominate the delivery market. With around 1,600 outlets between them, the big three account for a whopping 55% of the UK home delivery pizza market. What’s more, with an average turnover per outlet of £500,000, chains eclipse the turnover of independents by half. But a recent PAPA (Pizza Pasta and Italian Food Association) report claims to have found that chains are still holding their ground. This comes despite data showing chains averaging £16 per sale as opposed to nearer £10 for independents.

paps-pie-chart-1 Pizza Market Analysis

Chairman of PAPA, Richard Harrow, insists that aggregators such as Just Eat are helping to keep independents in the delivery game. Although pizza is one of the only examples in the delivery sector where chains out-perform independents, Harrow believes there is still room for smaller operators in the pizza delivery market.

He outlines: “Just Eat’s UK turnover in 2015 was £169.6m, 49% up on previous year sales. The power of these aggregators can substantially help the independents who are finding it more difficult to combat the marketing power of chains.” All the same, PAPA expressed concern over independents attempting to diversify and becoming generalists in the face of pizza chain domination. It expects chains to continue to increase their dominance in the next five years with a steady 2% growth per annum.

Not only this, but the effect of Brexit is likely to present extra challenges for smaller operators in particular. For a start, Harrow warns of an expected rise in foodservice equipment costs. On top of this, given that UK pizza operators source most of their ingredients from the EU, and employ a high percentage of European staff, the strain is likely to be felt by chains and independents.

Harrow points out that pizza restaurants, accounting for 27% of the market, have recovered after taking a hit during the last recession. He comments: “Profit is actually slightly higher, driven by better control of costs. We estimate there are around 1,850 outlets in the UK but only about 7% are independent.”

There is a growing number of outlets cashing in on pizza delivery as a reduction in delivery times helps to replace the convenience of a lunchtime sandwich with pizza. This is a view supported by foodservice equipment firms that FEJ met at the show.

Ceky pizza oven
Ceky pizza oven

Richard Andrews, national sales manager of catering firm Fire & Ice, says: “It’s about recovery time — our stone oven can produce a 14-inch pizza in 90 seconds. A chef wants even heat distribution and consistency.”

Away from the delivery market, many operators and equipment firms alike are increasingly looking to capitalise on the trend of front-of-house theatre. Jenna Lewis, business development manager at Linda Lewis Kitchens, says: “Everyone wants wood-fired ovens now — and authenticity too. Our gas system is an ambient flame so you still have the theatre but don’t have to have specially trained staff to operate it.”

paps-pie-chart-2 market analysis

It would appear, then, that there is plenty of room for expansion in the UK’s ever-expanding pizza market. Delivery outlets, chains and independents: they all have the potential to take home a tasty slice of this £5 billion a year market.

paps-grey-box-out market analysis

Tags : Domino'sEuropean Pizza and Pasta ShowFire & IceJust EatLinda Lewis KitchensPAPAPapa John'sPizzaPizza HutPizza Oven
Joe Peskett

The author Joe Peskett

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