By adjusting to consumer preferences, pizza restaurants were able to ride out the recession
Los Angeles, CA (PRWEB) March 22, 2012
The Pizza Restaurants industry has felt the heat over the five years to 2012. Operators have been substantially affected by changes in consumer spending, intense external competition and an increase in health consciousness. “Despite these challenges, the industry still expanded as pizza restaurants adjusted their products to adapt to consumer preferences,” says IBISWorld industry analyst Mary Nanfelt, and consumer spending returned in 2010, which increased the demand for overall restaurant food. From 2007 to 2012, industry revenue is forecast to grow an estimated 1.5% per year to $42.8 billion. In 2012 specifically, revenue is projected to grow 4.5% as consumer confidence in the economy improves and people indulge in luxuries such as eating out.
As the economy continues to improve, consumers will increase their purchases of nondiscretionary goods, such as restaurant pizzas. However, the Pizza Restaurants industry will continue to be negatively affected by increased competition from grocery stores and increased health consciousness from consumers. Grocery stores will continue offering a variety of unique goods, such as made-to-order pizza, which will entice customers away from pizza delivery shops. Also, says Nanfelt, consumers will steer toward healthier foods, so pizza restaurants are expected to use fresher ingredients and add products on their menu that cater to the more health-conscious diners, such as entree salads. In line with greater competition, the industry will face higher ingredients costs as the price of milk and wheat rise. Higher costs will hamper profit margins in the next five years.
As revenue continues to expand in the next five years, establishments' numbers will follow. More players will enter the industry as revenue grows steadily and Americans keep demanding pizza. While there are well-established and well-known pizza brands in the industry, there is also a large number of small, independent and locally focused pizza restaurants across the United States. Over the five years to 2012, concentration has increased slightly. As unprofitable operators have exited the industry, survivors have captured a larger portion of demand, increasing their presence in the Pizza Restaurants industry. Most of the industry's largest operators have also grown by successfully introducing new products and expanding their marketing and promotional activities. Major companies include Yum! Brands Inc. (Pizza Hut), Domino’s Inc., Papa John’s International Inc. and Little Caesar Enterprises. For more information, visit IBISWorld’s Pizza Restaurants report in the US industry page.
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IBISWorld industry Report Key Topics
This industry is comprised of establishments that primarily prepare and serve pizza and other related items.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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