U.S. Pizza Restaurant Industry Robert Carroll Carrie Esch Cara McGarry

Background

Historical Background The lower class of Naples, Italy is believed to have created pizza in today’s familiar fashion The first pizzeria opened in 1830 in Naples, Italy--it’s still in business today Pizza made its way to the inner cities of the United States, New York and Chicago most notably, in the early 1900s thanks to the large population of Italian immigrants American soldiers further prompted the dish to become very popular at the end of World War II, having been exposed to it while serving on the Italian front Today’s largest pizza chains (Pizza Hut, Domino’s Pizza & Little Caesars) began popping up all over the U.S. in the late 1950s, early 1960s Source: www.aboutpizza.com/history.php

Traditional Types of Pizza Traditional Crust Pizza: The crust is not too thick and not too thin. Usually it is created by rolling the dough into a round circle then topping it with sauce and cheese. Deep Dish Pizza: A thick crust and dense toppings usually characterize deep-dish pizza, also known as pan pizza. New York Style Pizza: The crust of this pizza tends to be much thinner than traditional and deep dish. Source: www.aboutpizza.com

Four Channels of Distribution Sit-Down Dining - custom pizzas made for in-restaurant diners Typical Pizza Restaurant Establishments: Pizza Hut Red Roofs, Independents Delivery - custom pizzas made, baked and delivered by restaurant personnel to call-in customers Typical Pizza Restaurant Establishments: Domino’s Pizza, Pizza Hut, Papa John’s Carry Out - custom pizzas made and baked for walk-in or call-in customers to pick up Typical Pizza Restaurant Establishment: Little Caesars Take ‘N Bake - custom pizzas made for walk-in customers who then take the pizza home to bake themselves at their own convenience Typical Pizza Restaurant Establishment: Papa Murphy’s

Aggregate Industry Information

U.S. Pizza Restaurant Industry U.S. Restaurant Industry $399 billion U.S. Fast Food Industry $135 billion U.S. Pizza Restaurant Industry $29.4 billion 2001 Industry Data

U.S. Pizza Restaurant Industry 63,873 pizza restaurants in the U.S. 4,233 new restaurants opened and 4,300 restaurants closed between July 1, 2001 and July 1, 2002 Less than 30,000 pizza operators own all of America’s 60,000+ pizza stores One pizza store for every 4,330 U.S. residents Pizza restaurants make up approximately 7.7% of the nation’s total restaurants Industry sales for pizza were up 1% for 2001, which gave the pizza industry overall sales of $29.4 billion Total pizza market is projected to grow by 17% by end of year 2003 Pizza is the only food category to show consecutive growth for the past 20 years Source: www.pmq.com/mag/2002summer/pizza_power.shtml www.pizzaprosperity.com/stats.htm www.pmq.com/pizzastorecensus.shtml

Chains vs. Independents Independent restaurants own 59.48% of all pizza restaurants (37,992 restaurants) Average unit sales was $366,720 per year between June 2001 and May 2002 Sales represent 47.38% of the industry’s sales Independent operators holding ground in the North East portion of the U.S. Chains Average unit sales for the top 25 pizza chains increased to $598,000 to $583,000 the previous year “The Big Four” pizza chains (Pizza Hut, Domino’s Pizza, Papa John’s and Little Caesars Pizza) represent 36.8% of industry sales at $10.81 billion Pizza Hut, Domino’s, and Papa John’s represent a larger % of the industry total sales than they do industry total stores Source: www.pmq.com/mag/2002summer/pizza_power.shtml Pizza Today, August 2002 www.pmq.com/pizzastorecensus.shtml

American Pizza Stores Per Capita No. of Pizza Store Per 10,000 Population Source: www.pmq.com/pizzastorecensus.shtml

2002 Year-End Sales Trend Source: SalesTrac® Weekly Weeks 43 through 52 - 2002 QSR Pizza: • Domino's • Mazzio's • Papa Gino's • Papa John's • Peter Piper Pizza • Pizza Hut • Pizza Inn • Round Table Pizza • Source: SalesTrac® Weekly

Competition

U.S. Market Share: $29.4 billion Little Caesars 4.25% All other Chains 15.85% PJs 5.94% Independents 47.38% Domino’s 9.58% Pizza Hut 17% Source: www.pmq.com/mag/2002summer/pizza_power.shtml

U.S. Share of Pizza Stores 63,873 stores Little Caesars 4.8% All other Chains 12.05% PJs 4.05% Domino’s 7.54% Independents 59.48% Pizza Hut 12.08% Source: www.pmq.com/mag/2002summer/pizza_power.shtml

Top Chain Growth Trends Source: www.dominos.com www.yum.com www.papajohns.com

Company Synopsis

Top Chain Financials Source: Hoover’s Online

Market View

Pizza Customers

Who Eats Pizza? Source: Chain Leader, June 2000

Fun Facts About the Pizza Customer 94% of America’s population eats pizza. Each man, woman and child in America eats an average of 46 slices (23 pounds) of pizza a year 93% of all Americans eat at least one pizza a month 37% of kids say pizza is their favorite food Children between the ages of 3 and 11 prefer pizza over all other food groups for lunch and dinner Americans eat approximately 100 acres of pizza each day, or about 350 slices per second Source: www.franchisehelp.com/web2000/pizza2002.htm www.pizzaware.com/facts.htm

When Do Consumers Eat Pizza? Source: Chain Leader, June 2000

How Do Consumers Pay For Pizza? Source: Chain Leader, June 2000

Where Do Consumers Eat Pizza? Source: Chain Leader, June 2000

Industry Developments

Industry Trends to Watch A rise in convenience store locations A shift in delivery/sit down restaurant pizza occasions to packaged pizza occasions (frozen) New product introductions Competitive deep discounting Source: www.pmq.com/mag/2002summer/pizza_power.shtml

Industry Sources

Sources www.pmq.com - store census, market share, industry trends www.aboutpizza.com - history, types of pizza www.pizzaprosperity.com - industry statistics Pizza Today, August 2002 - sales information SalesTrac Weekly - weekly sales growth Hoover’s Online - financial outlook www.dominos.com - sales growth www.yum.com - sales growth www.papajohns.com - sales growth www.franchisehelp.com - pizza facts www. pizzaware.com - pizza facts Chain Leader, June 2000 - customer profile