The hospitality industry is one of the worst hit industries during COVID because of the resulting economic slowdown.
Domino’s, Pizza Hut and Papa John’s, however, have seen tremendous growth in sales during the same time, and their stock prices are up significantly.
Similar trends have been observed for these pizza chains across most economic downturns in the past (mostly at the cost of other eat-outs) and analysts believe there are various reasons why this is so.
Reason 1: It doesn’t take much to eat a pizza.
When we are feeling sad, we don’t feel like doing much.
With recessions or lockdowns, such a mental state is common; people are stuck at home, feeling fatigued and pizza becomes a preferred choice for home delivery or takeaway.
This is because pizza is easy to eat, doesn’t require much crockery or cutlery, and tastes better than most foods even at ‘not-perfect’ temperatures.
Reason 2: It is comparatively cheaper to make a pizza.
Labour and overheads being equal, this lets pizza chains take full advantage of the drop-in-advertising-rates (common during recession because of low demand) to promote its products.
At times when media consumption is high because people are stuck at home, this is a huge advantage.
The low-cost, high margin advantage also helps pizza chains offer huge discounts and offers to the cash-strapped public.
Reason 3: Pizza is highly customizable.
The pizzerias can experiment with/reduce the toppings, play around with the amount of dough to create different crusts, reduce the size, etc. and without impacting their profits, create pricing or an offer that is ‘just right’ for the consumer.
During the 2008-09 recession, for example, Pizza Hut introduced a $10 large pizza in the US with up to 3 toppings, while Dominos launched a ‘2 medium pizzas for $11.98’ offer.
On the other hand, there is only so much customization, a restaurant can do to a burger or a burrito.
