The rise of build-your-own pizza is reminiscent of the explosive growth over the past five years of the better-burger segment. But there is an important difference. Unlike traditional quick-service burger chains, which have struggled to defend their traffic and market share from this new fast-casual competition, most of the giant pizza chains are growing sales just fine as fast-casual pizza is taking off.
The growth rates for many of these build-your-own pizza brands are staggering, albeit off a very small base. Only Pieology has grown big enough to land in the Top 500 Chain Restaurant Report, which tracks the nation’s largest restaurant brands. Pieology’s systemwide sales of about $45 million in 2014 were 230% higher than in 2013, on a 180% increase in unit count.
Technomic also is tracking a handful of pizza chains that surely will rank among the Top 500 in the next few years, given their meteoric unit and sales growth. MOD Pizza and Pie Five more than doubled their sales in 2014, while PizzaRev more than tripled its unit count and nearly tripled its sales. Blaze Pizza increased sales 450% on the strength of 400% growth in its unit count, leading all fast-casual pizza players in sales growth.
Meanwhile, the four largest pizza brands—Pizza Hut, Domino’s, Little Caesars and Papa John’s—still hold 70% of the market share for the $21.9 billion in pizza-chain sales among the Top 500. It’s true that Pizza Hut has struggled and lost 1.7 percentage points of market share, ending up with a still enviable 25.1% of the segment. However, its biggest competitors weren’t similarly afflicted and in fact gained market share: Domino’s share increased from 17.7% to 18.8%, Little Caesars’ rose from 14.4% to 14.7%, and Papa John’s grew from 11.7% to 12.2%.
Why aren’t the fast-casual chains eating Domino’s and Papa John’s lunch at the moment? Mostly because the traditional chains are not focused on lunch the way fast-casual brands typically are. The traditional pizza segment and the fast-casual sector are going after different pizza occasions, with the big national brands using their digital-ordering and advertising clout to go after dinner, group and delivery occasions and fast-casual brands chasing the workday lunch crowd. Interestingly, Little Caesars competes more directly with a Pie Five or PizzaRev, but it is making big sales gains with its aggressive value and convenience focus.
In future years, this market share picture might change dramatically if more build-your-own pizza brands crash the Top 500. This fast-casual expansion story is familiar, if a little different, but it’s only just begun.
This post was updated May 7 to correct Blaze Pizza’s sales growth percentage.