Anyone in the restaurant industry will tell you it’s a difficult business to operate, even in the best of times. It is said 60% fail within their first year, and 80% within their first five – now a pandemic has been thrown in for good measure. The restaurant industry has been one of the most affected during COVID-19 with numerous brands announcing major layoffs and furloughs amid the COVID-19 pandemic. Back in April, The National Restaurant Association estimated that about 3% of restaurants had already closed permanently, with another 11% anticipating closure within the following month. According to the association, there are about 1 million restaurant locations in the U.S., so effectively 110,000 storefronts could be empty when the dust clears.
However, while restaurants that depend on customer-provider interactions are shutting down all over the world, within the declining restaurant market, the humble pizza is faring the best. An April restaurant industry report, looking at the month of March 2020, from management consulting firm Bain and Company, reported that nearly all sectors of the restaurant industry had slowed in growth during the pandemic, except for pizza, which had a 29% growth rate among quick service restaurants since the start of the pandemic.
Pizza chains are seeing demand skyrocket. While major companies like The Cheesecake Factory announce furloughs, and other companies like Union Square Hospitality announce layoffs, Domino’s, Papa John’s, Pizza Hut and Jet’s Pizza have announced hiring sprees yielding tens of thousands of new employees to handle increasing demand for delivery and carryout during the COVID-19 crisis. Pizza Hut announced that it is hiring 30,000 positions including delivery drivers, cooks, shift leaders, restaurant managers, and virtual call center agents; Papa John’s said it plans to hire 20,000 new workers, and Domino’s is planning to hire 10,000 new employees – the list of jobs include delivery drivers, pizza makers, customer service representatives, managers, and drivers for supply chain centers. And it’s not just the industry’s top brands that are hiring; Detroit-based Hungry Howie’s have made the decision to create 2,000 employment opportunities and Jet’s Pizza, another chain based in Detroit, said it too was now hiring at each of its locations.
So why, despite a global pandemic, is Pizza booming in popularity while so many other are struggling, even failing to survive? Well, it’s due to a combination of factors that have merged together insulating pizza companies from much of the coronavirus-induced damage that is happening. For starters, (pre-COVID) according to a report from the Department of Agriculture, on any given day about 1 in 8 Americans ate pizza. And a pandemic it seems has done nothing to curb our appetite for pizza as it remains at the top of consumers’ minds when it comes to takeout and delivery. A recent Datassential report revealed when asked what foods consumers want from restaurants during the COVID-19 crisis, 63% said they want PIZZA! And there’s a reason for this love. Pizza is not only delicious, but it is also high-value in terms of the number of people it can feed for a low cost. The ease and accessibility of pizza, paired with the limited options for making pizza to fit special diets and healthy lifestyles, means pizza has limitless appeal and growth potential.
In addition to consumer sentiment, pizza companies core product and operating model is simple, a benefit for any company in a time of financial crisis. Further to this, for pizza players, delivery isn’t new – and this is important because digital orders are up due to the abrupt shift to off-premise operations thanks to COVID. Digital orders now represent 13% of all off-premise dollars, which bodes well for the large number of restaurants that proactively invested in such channels prior to the outbreak – something that pizza companies have long prioritized, competently offering various delivery options such as online ordering, drive-thru, and take-out. Pizza companies have over time perfected their delivery infrastructure and pizza delivery has become instinctual for customers or, as Domino’s CEO Richard Allison said in a press release, “normal.”
While dining dropped sharply early into the pandemic, with Pizza companies emerging somewhat unscathed, the distribution of traffic among restaurants is beginning to stabilize. However, “it’s highly probable that this crisis will define winners and losers by their digital proficiency since consumers may prefer the contactless delivery protocol that digital ordering offers,” David Portalatin, NPD food industry advisor and author of Eating Patterns in America, said in a statement. “Now that we’re living in a world where the entire industry is an off-premise business, digital orders gain importance and provide an edge to those who already lead in that space.”