The pizza industry is facing a significant downturn, as confirmed by executives and industry data. Major chains like Papa John's and Pizza Hut, as well as smaller pizzerias, are struggling with slowing sales growth and increasing competition. George Holm, CEO of Performance Food Group, which has a strong presence in the Italian and pizza markets, noted that "pizza is slow." This decline comes after a period of substantial growth, with Papa John's seeing a 29% increase in same-store sales between 2020 and 2021, creating difficult comparisons for subsequent years.
The primary factor contributing to this struggle is the rise of third-party delivery platforms such as Uber Eats and DoorDash. Historically, pizza was a leader in food delivery; however, these platforms have revolutionized the market by making virtually every type of restaurant available for delivery. This means pizza now competes with a vast array of cuisines, from sushi to steak, and even offerings from casual dining giants like Chili's and Olive Garden, which are now leveraging delivery as a growth driver for their own businesses.
This new competitive landscape has eroded pizza's long-held advantage. While consumers are still spending on delivery, a significantly larger portion of that spending is now directed towards non-pizza categories. Ravi Thanawala, CFO and North America president at Papa John’s International, stated, "Pizza is disrupted right now. That’s what the consumer tells us." The industry's sales growth has lagged the broader fast-food market for years, and pizzerias, once the second-most common U.S. restaurant type, are now outnumbered by coffee shops and Mexican food eateries.
Despite the challenges, most pizza operators, including large chains like Pizza Hut and Domino's, continue to list on these third-party platforms to gain visibility and capture customers. This creates a hybrid delivery model where companies balance the exposure and volume from aggregators with the benefits of in-house delivery, such as avoiding fees and maintaining customer loyalty. However, the sheer number of options on these apps can lead to pizza restaurants getting lost in the crowd or being forced to lower prices to stay competitive, further impacting profitability. Independent pizzerias face even greater difficulty in this new environment.
