QSR May 2023

BRAND INNOVATION

Little Caesars raised the price of its signature Hot-N-Ready Pizza platform from $5 to $5.55, but it also added 33 percent more pepperoni to sweeten the deal. The additional 55 cents is a tem porary change while the extra toppings are permanent. Beyond raising prices, Cunningham says, the brand manages macroeconomic headwinds because it controls its own foodservice distribu tion company. “The inflation portion continues to be top of mind,” he says. “But from a supply chain perspective, we’re very well posi tioned. We have a vertically integrated supply chain here that keeps the opera tors at ease and gives us an edge on the industry.” Papa Johns is taking a different approach. Instead of aiming for the lowest possible price point, it’s chan neled much of its menu innovation efforts toward premium offerings, namely its stuffed crust platform. The company earlier this year debuted its Crispy Parm Pizza, featuring baked cheese under neath the crust. “We like pushing the envelope on innovation, and customers are really responding,” Lynch says. “We’re going to keep innovating on the premium side.”

DOMINO’S IS DOUBLING DOWN ON VALUE.

“Melts over-indexed to pre-dinner time frames and individ ual occasion tickets and helped to recover more value-conscious customers due to its strong value proposition,” Graves says. “The success from Melts in Q4 2022 included driving meaningful improvement with transactions, which is a difference maker from what we’re seeing in the category.” Domino’s also is doubling down on value as it seeks to regain its momentum following one of its most challenging sales years in over a decade. The company took 5.4 percent of price last year, and it turned to promotions and limited-time offers to generate traffic. Last fall, it launched an inflation relief deal, offering 20 percent off menu-priced items ordered online. It also moved its $5.99 Mix and Match deal to $6.99 while expanding the plat form with a new Loaded Tots offering. “They’re actually the first potato items that we’ve offered on our national menu, and they perfectly complement pizza, which we’re always looking to do,” Jordan says. “They’re also part of Domino’s Mix and Match deal, so not only are we bring ing a delicious new product to customers, but at a great price.” Along with filling delivery positions, maintaining a strong value proposition while adjusting to higher food costs is a top concern he’s hearing from conversations with franchisees. “Whether it’s an inflationary environment or a non-infla tionary environment, we need to be the best relative value out there in the quick-service restaurant industry,” Jordan says.

That doesn’t mean the company isn’t courting price-sensi tive consumers. Papa John’s launched Papa Pairings to compete with Domino’s, Pizza Hut, and Little Caesars on the value front. The platform allows customers to choose two or more items for $6.99 each. Among the offerings included in the deal are medium one-topping pizzas, bread sides like cheese sticks and garlic knots, Papadias, wings, and desserts. “We’ve been pretty happy with the way our Papa Pairings platform has performed,” Lynch says. “We look at that ‘value’ platform as not just a discount, but a way to drive people to prod ucts they may not typically try or even be aware of.” Papa Johns is optimistic about its outlook for 2023, guiding 2–4 percent growth on an annualized basis. Domino’s lowered its short-term outlook but still expects sales will grow between 2–4 percent over the next two to three years. While pizza may have to fight harder for its share of the stomach going forward, Cunningham says the classic catego ry’s growth story is far from over. “I believe that this segment is one of, if not the best, seg ments to be in,” he says. “It’s seen growth for many years, and it’s going to continue to see growth for many years to come. It’s a segment that is on the top of consumers’ minds seven days a week.”

Sam Danley is the associate editor of QSR . He can be reached at sdanley@wtwhmedia.com .

DOMINO’S (3)

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MAY 2023 | QSR | www.qsrmagazine.com