Here in Western Australia we have the usual big chains, Pizza Hut and Domino’s, plus a couple of Aussie groups, Eagle Boy’s and Pizza Haven.
Pizza Haven all but disappeared but are now advertising for franchises. The state manager recently even left a card under our door asking if we were interested in selling or re-assigning our lease. They have been the lower end brand for some years and have just about disappeared off the market. Poor product, branding and marketing.
Eagle Boy’s have beeen around for some time and do $4.95 large (12")advertisied specials and have similar price points to Domino’s. There have been a number advertisied for sale for some months without being sold. One just south of our area was advertisied for $115,000 then went down to $95,000 and then after 6 months advertised for sale went down to $85,000. Apparently it was doing about $6k - $7k per week. It is now going to close at the end of their lease and they have contacted me through their leasing agent to see if I want to buy their ovens.
Eagle Boy’s had a store site (an old KFC style chicken store) for drive through pick up concept about 200 metres up the road from us advertsised 2 years ago and were asking $365,000 for the franchise entry (equipment etc) but have not been able to get any takers. They stopped advertising this site about 6 months ago. They are having trouble getting franchisees for other new sites as well.
Pizza Hut started advertising their stores for franchising about 6 weeks ago for their sites. This follows major declines in Australia of sales and profits for Pizza Hut. They have sold off their New Zealand division and have sold most of their Victoria stores in Australia and are now doing the same over here. They only run delco’s here after closing down their dine-in’s years ago.
Domino’s are the only one of them that seems to be holding their own, but like all in the hospitality industry are suffering from lack of staff. They seem to be getting more aggressive and this may be to try to lift sales back, take it from their ailing co-big ones or just Domino’s being Domino’s.
Anyway you look at it the majors / franchises are declining at the expense of the indies. From what I hear from suppliers most indies are holding their own, some doing well and some are experiencing strong growth. I know we are just going from strength to strength going from $8k per week 6 months ago to now constantly hitting high $9k and even hitting $11.1k three weeks ago and then following up with $10.8k and $10.2k the following two weeks.
With the extra disposable income from the high wages fuelled by the mining boom and record low unemployment (3%) maybe people are spending on quality rather than quantity and us indies are reaping the reward. Once they try ours we know we have got them so maybe the extra income has been our catalyst for them to try ours. We are also seeing customers purchase more frequently as they are becoming money rich / time poor.
I feel for the guys who have invested in franchises with these declining chains as they go out the door backwards. It goes to show that it doesn’t matter how much you pay for a store and how much the franchiser puts into advertising and promotion, if you haven’t got a good product you won’t be selling enough pizzas to pay your way.
Go the indies