Corporate Pizza Machine: negative light? (long)

[This is gonna get long and whiny.]

I’ve heard more and more people here in the TT and in bigger business circle mention that independents are negative, “down on” or critical toward the Big3 or other large corporate pizzeria entities. I wanted to start a thread about that and look directly at PJGirl’s message from a different thread. No attack on her, just an insight.

The fact that she mentions her PJ franchisee runs her shops “like an indie” seems a telling sort of statement. It bespeaks an understanding that there is a noticeable difference in the business models IN GENERAL. I think that there may be an overstatement or shift in the perception of the position of the small (1 or few location) pizzerias as we view the large, mega-shops. My marketplace conflict is with the $5 pizza machines that are trying to define the pizza market with their model of business, and drive the consumer purchasing decision by economy, low price, low cost ingredients and proliferation.

I’ll say at the outset that it has been a famously successful model. It plays to the lowest common denominator . . . people without a lot of money who aren’t that picky about their food. They serve a perfectly acceptable pizza for the price they sell, and they have a perceived value in the marketplace. They are marketing juggernauts who have sprouted like mushrooms after the rain, and can meet a huge market demand before straining the production volume. They are darned good at what they do.

My conflict is somewhat philosophical and competitive at the same time. I perceive them as “soiling” the marketplace and “dumbing down” the customer base. Again, it is a huge success for them as it reduces the appeal of the higher grade pizza products and inoculates the customers against places like mine. However, as their marketing message permeates the market, it soils the marketplace for those who don’t really want their product anyway. It creates unnecessary inertia/roadblocks for the the rest of the industry to overcome. The low cost/high volume machine model is destructive to the overall marketplace in that in commoditizes pizza into a fast-food association that should always be purchased “from the lowest bidder”.

PJ’s branding message of “better ingredients, better pizza” does sort of combat it, but it is about being the best production line food for the money. The market is artificially capped for expansion and growth because so many people won’t pay more than $11 for a 14" (or a 16") pizza. The deflated market ends up capping profits and growth for the whole industry. Think what would happen if that $5 deal were an $8 deal, and the cheapest 12" econo-pizza were $8. Trust me that we would all make a more comfortable profit. It’s the hippy in me talking about stewardship of the industry . … which competes with my business sense that respects that they are thriving in the game they are creating and keeping the competitors at a disadvantage in the marketplace.

If you aren’t going to earn the customers’ business, then leave them for the next guy positioned higher in the market. Sure, knee-cap the guys positioned where you are. That’s good business. Support the general pizza industry in public by leaving the overall perception of pizzas intact. The smaller volume, product quality driven businesses are pulling some different customers, but as well having to fight through the wake of the others to find the customers who would have no use for quicky/cheap, but are “collateral damage” of the marketing campaigns that hammer the cheap pizza message. They start thinking that good, or great, pizza has to cost less because . . . look what THEY are selling pizza for!

As rises popularity of mechanically identical pizza, in mass production shops, with less expensive ingredients possible for pricing model, so falls the value of more artisan, skilled pizza development and product. As the value of high end product falls, over time, so will fall the general market until everyone is eating frozen truck stop reheated pizzas with unlimited toppings for $8.75. The market will shrink more and more, and the dependence on that $5 will come around to devastate the entire industry . . . as it is doing to some of the Big3 again. Having to adapt to survive in the environment they themselves created.
[/long and whiny]

Nick I think if anything that as these pizza machine’s become bigger they will become more out of control by the owners of these machine’s. Their service will suffer, their product will suffer, and their customers will get mad. I see this as an opportunity to take back the customers that want our pizza. These “corporate pizza machine’s” will be their own downfall.
Ask most of them how long their employees work for them before quitting. Now that is a good indication of a bad system and a bad management.

As a franchise owner, i understand were you are comming from. I own a Fox’s. I am the first in my area and i still get people calling me Mr. Fox thinking i’m an indipendant. Most have no clue that i am a franchise. Everyone tells me im the best pizza in town and they are tired of the 5$ stuff, but i shure would love to have all the minions that still order from the big 3! The difference is in my ingridients. Even though we are a franchise, we don’t really get the buying power of a big franchise. Sure, i could buy the bulk of my stuff from the usual food folks, but the taste is what i and my customers are after. I could skimp on cheaper products but i know that it will be noticed. My new menu’s even state it on the cover…“when taste maters”. It’s a shame that America has been dumbed down in every aspect…including pizza!

It was within the last 4 years that I had the epiphany of who I am and what I provide.

I have always been committed to producing the best possible pizza, using the best possible ingredients, while at the same time meeting the price/value needs of my marketplace.

It came to me, the simple thought…

[size=5]The best will never be the biggest, the biggest will never be the best![/size]

(sort of like the the line in SpinalTap in explaining the dwindling crowds a the smaller venues “our audiences have become more selective”)

Those who see pizza simply as a commodity must either be converted or written off. It can be very frustrating to try to please them, and I’ve reached the point where I don’t really care to try.

I’ll never do the volume of a PJs or PH or Domino’s, but I can live with that. I really do enjoy a having a growing reputation for quality as well as a loyal, familiar customer base who I know and understand.

I guess we have to be honest about who we are and what we want out of our businesses. Life’s too short to be frustrated!

I think you have nailed it in one.

The way I look at it is you can please most of the people most of the time but you can’t please all of the people all of the time. The same with my shop. I can’t get all of the customers in my area but heck I give a great pizza and service to the ones I do get and they stay loyal and spend up big, and tell others. I am happy to out sell our local PH and Eagle Boys (Aussie franchise) and run second to Domino’s. I live happily with that but still strive to increase my business without “giving away the farm”.

The greatest compliment I get is when a Dominos wrapped delivery vehicle park in our carpark or they do their wobble board on the roadside outside my shop.

As pizzachop, quoted …

[size=5]The best will never be the biggest, the biggest will never be the best! [/size]

Guess I will not be the biggest.

dave

Another one goes like this…

[size=5]Instead of asking me to match their price, why not ask them to match my quality?[/size]

I would rather gradually increase my market share with long term customers committed to quality than attract them with “deals”, “specials” and what-not which only enforce the “gutter mentality” which Nick has described.

No frozen dough, no fake cheese, no cheap ingredients!

Isn’t it amazing how people can insist upon brand name medication, canned soup, etc…yet, when it comes to pizza, they go cheap.

Even though I am one of those that bargain shops constantly and purchases generics…I WILL admit…if something works…I WILL pay the extra money.

Case and point…I always get laughed at when I go to Wal-Mart and get all these Sam’s Choice brand items, yet always buy my Campbell’s Soup or Cottonelle bathroom tissue.

It works for me, and I don’t mind paying the extra dollar or so for it.

You would THINK it would be that way for dining, too…but when you have a family of 4, say, that on a better quality pizza in an independant franchise, can leave for…would $40 be reasonable as an example???

Then, you go to somewhere like Dominos, where a large pepperoni is $6.00…then the parents get them one, too…and you save $28.00.

It doesn’t matter whether they like Dominos or not…the price sealed the deal.

I completely agree where all of you owner ops are coming from, I hope you realize that.

Just consider, for someone like me…sure, I’m just a “lowly shift manager”…but I do quality work with the tools I’m given (premade dough and sauce)…and it just feels like a major slap in the face to hear PJ being downed for quality when my pizzas come out looking better than they do in our own advertisements.

Sure, I agree that many times, you DO get what you pay for in terms of the correlation between price and quality…but unless you live in an area that tends to think that way…you can be out of luck.

My town alone, we have Dominos, Mazzios, Kens, and Papa Johns (within 5 miles of each other, even)…all are chain restaurants…none are anything close to the quality of just one of your businesses, I’m sure…but we have just 18k people and a major city 15 miles over, so when you get consumers like that and an area like that…you just can’t compete with the $5.00 pizzas (of which, Dominos has gone up to $6.00 wink)

If any of that made sense…LOL

I really don’t think its any different than any other market - food or not. And I believe the reasons people resort to cheaper food is bigger than the “big 3”. Not to divert to another rant on government, but we do have one that is constantly taking more and more money out of the economy. Fuel taxes go up and the cost of all our products go up. The governments answer to that is to tax the oil companies more (and how does that bring the cost down for us?). They raise minimum wage every year which brings our costs and prices up. We have to start thinking about how we can cut labor and other costs. Its expensive to have well trained labor and quality food practices. Here in California the politicians in Sacramento just passed another law requiring all chains (starting at 20 locations) to have detailed nutritional information on every product on every menu (take-out and menu boards included). So here’s another barrier for smaller companies trying to grow and we all know this is just a small step for people to swallow before they come back and include even smaller businesses.

Suddenly all this automated equipment that was too expensive before makes sense because of the labor savings in the long run. The conveyor oven was born out of the need to cut “skilled” labor. Although I enjoy this, self-serve soda was born out of the need to reduce labor period. Now we are moving into “online ordering” – since we cannot afford to staff our stores to the point where people never have to wait to place an order. All of these practices lead to products that are less gourmet and more impersonal service.

The big three are filling a need. People have less money in their pockets and simply don’t have the money to buy better quality products on a regular basis. They buy automated equipment, cheaper ingredients and provide dumbed down products for a much cheaper price that “more” people can afford. If people kept more of “their own money”, and government did not constantly raise the cost of doing business, they could afford better products and service. And why wouldn’t they?

As we head in this direction more and more businesses are responding to providing price over service and product. Walmart, Costco, and Home Depot are not evil people running small businesses out of town. They are responses to the marketplace created. Government makes it too expensive to make a good return at low volume levels so the model changed.

I believe people perceive the difference between the “big 3” and the indies. Its just a matter of economics. I’ve been in the restaurant business my whole life and always on the gourmet side. Through the years people tell me all the time how much they like our products but its just too expensive to eat there all the time (if at all). Generally speaking, the more money people make the higher their tastes become. What does an athelete do once he signs a multi-million dollar contract? He goes out and buys a Ferrari or Mercedes and all the amenities. He did not buy one before because he did not understand the quality difference over a Hyndai.

We have our niche, and if we successfully run our businesses we can make a good living. If we don’t like our particular market or the way it is heading, I think we need to look beyond the “big 3” who are just responding to market and economic conditions.

Costco is the anti-Walmart. Costco focuses on a limited number of high-qualities delivered with superb service and backed by a solid guarantee. Our business is somewhat patterned after Costco’s model. Focus on quality over price and take exceptional care of our customers and employees.

I agree with your post, pirate. In large part, people will buy what they can afford, and purchase ‘up the ladder’ to where they lose comfort with the price. The problem comes in that the cut rate pizza machines (not focusing on big3) feed back into the marketplace. I believe that economics plays a significant role . . . but adamantly believe that PERCEPTION of economics is even more crucial. That is why our marketing is so valuable in the industry. We all pitch the value of our product in a crowded marketplace. The point about this issue being in other kinds of business sure opened my eyes to look around. Car mechanics, auto dealerships, shoe stores, veterinarians, it goes on. wow.

There is a juggernaut of a feedback loop in that cut rate machines sell pizzas for $5 (this includes working at downward wage pressures to cut their labor costs) and then people buy them. As the marketplace uses their product more, their perception of the overall market is skewed. Add in nationwide, brutally effective marketing campaigns, and the pizza market/industry begins to be redefined in very subtle ways. To the benefit of pizza machines, and to the detriment of the more ‘craft’ shops.

Part of the unfortunate macroeconomics is that the machines respond to market pressures and have sold their allegiance to volume sales to drive their success. That allegiance leads to a sort of scorched earth policy that will then leave the legions of cheap pizza groupies demanding only cheap, high volume pizza. That leaves the marketplace with continuous downward price pressures . . . leaving little chance of pricing growth as the greater economy inflates. Selling $5 pizzas today is insane when they could have let the macro-economy forces go, let prices rise, and have the public perception that $7 is the acceptable price for mass-production, cheap pizza.

PJGirl, I am not bashing any store or manager or pizza maker in the low price machine shops. The shop you work at is not the national decision making arm of PJ Inc., nor is it every pizza-machine/cut-price pizza place. There are independents out there trying to play the same volume/price game to varying degrees of success. [size=2]I will say that salt laden, sugar enhanced, preservative infused ingredients will be just that when it comes out of the oven, no matter what it looks like. It is the same with independent pizzerias. GIGO when you talk about a pizza oven.[/size] I am talking about the larger picture of the business model, marketing strategies and the macro impact on the marketplace. If we could get past the $5 marketing candy, we would all be able to make another dollar or two on a pie. :?

When Subway thinks they can get into the game with the product they were selling, and at the price they had . . . someone is not watching the door of the pizza market :slight_smile:

This forum is predominantly independent and as such take the view that independents are better than the big 3, in exactly the same way that deck oven owner take the view they are better than conveyor owners.

I’d rather take the view that we all have our place in the market, there are good franchise/independent operators, bad operators and some (the majority) who fall in between. But at least I know that I have a choice (just as every member of the public does) and that no one forces me (and everyone else) where to buy things from.

If I don’t like PH I don’t buy their food again, if they produced ‘bad’ food that no one wanted they wouldn’t be in business would they? In exactly the same way if I don’t like my local independents food I don’t buy their food again, if they produced ‘bad’ food that no one wanted they wouldn’t be in business would they?

My take on this is - the fact the big three are successful is due to filling the customer need/want/niche - either compete to fill the same niche better or focus on something else.

We don’t have any chain pizza competitors within 20 miles from us with the exception of grocery stores or bars with frozen pizza, so I view the grocery store as my “cheap pizza competition.” There is no way I even want to compete on price, so we just never started down that road. Our mantra has been “no discounting the pizzas!” We have loyal customers who come from far, far away (like 100 miles!!) just to have our pizza, so we don’t ever want to disappoint them with something they could buy in their own neighborhoods.

However, we know there are people out there who want cheap pizza because they just want something the kids will eat and will fill them up on a regular basis. I see them at the grocery store all the time with their “take&bake” from the deli, or a stack of frozen pizzas. But we also see many of these same people in our restaurant at least once a month (usually around the first of the month) when they can afford to have their “favorite” pizza. They appreciate not only the food but the ambiance of the shop, or the convenience of having it delivered. We are still “top of mind” for them when they think of great pizza (and now we’re launching into pastas). I think if I want to increase sales, I just need to reach more people with our message of how awesome our food is, not how cheap they can get it. For every pizza chain commercial on TV, I’m betting that our customers are thinking of us and if they can get us to make that stuffed cheese crust (how do you do that, by the way?) or bacon ranch combo that is up on the television screen. We’ll try anything but price!!!