In the face of rising inflation, more pizza consumers are opting for less expensive in-home options. With the right incentives, restaurants can win them back and heat up sales.
Promotions have always been the heart and soul of restaurant marketing, and they have never mattered more – particularly when it comes to pizza. As menu prices continue to rise, consumers aren’t just looking for deals, they’re using them to make purchasing decisions. And with increasing frequency, they’re choosing less expensive grocery store options over pies from their favorite chains.
Freezing the competition
Inflation is the highest it has been in decades, and consumers are feeling the pinch. According to a recent study conducted by Vericast, 64% feel dining out has become too expensive and 35% say they simply aren’t doing it as much. To capitalize on this trend and attract shoppers, grocery stores are upping their game and increasing deals – especially on the pizza front.
In 2022, Numerator found that leading retailers served up 214% more pizza promotions. Aldi stepped up its game with a 2200% increase, followed by Publix at 620%, Kroger at 367%, Costco at 286%, Target at 200% and Albertsons at 99%.
This strategy paid off. Consumers took them up on their offers, with 13% trading down to frozen/in-home pizzas. Sales jumped to $322 million – an 11% increase over 2021, according to IRI, and the big four pizza players (Dominos, Pizza Hut, Papa John’s and Little Caesars), lost 3% share of wallet.
The ‘no preference’ pizza consumer
Consumers love and want their pizza. In the United States alone, roughly three billion are consumed every year. That’s the equivalent of 100 acres every day or 350 slices per second.
But inflation has given rise to a new kind of pizza consumer – one that has no preference as to whether their pies are fresh or frozen or who serves them up. For the “no preference” pizza consumer, it all comes down to cost and convenience. About 18% are selecting a less expensive brand of pizza today, especially millennials, millennial parents, parents overall and heavy pizza customers.
In taking a page from the retail playbook and amping up the discounts and rewards they offer, pizza chains can sway the no preference pizza consumer and recapture a significant chunk of the money they’ve lost. If they convert just 5% of their guests who purchase frozen pizza each month, for instance, they could collectively earn close to $500 million collectively.
And there are three ways to do so:
Double down on coupons
Today’s cost-conscious consumers don’t just clip coupons. Vericast’s research shows 50% use them to choose between restaurants, including 42% of frequent pizza consumers (1+ pizza restaurant visits per week) who rely on Save, a coupon circular received via mail. In the past 30 days, 58% of this same group said a coupon or discount changed where they decided to eat or order, and 53% were enticed to try a new place.
Reward loyalty
Now more than ever, customers want to be rewarded for their loyalty. In fact, if a restaurant doesn’t offer coupons and discounts, 30% will switch to one that does. Nearly a quarter of consumers won’t order from a restaurant without a promotion. The good news is that when given deals, 80% say they spend more because of the savings they achieve.
Spread the love
The key to earning loyalty – and dollars – lies in offers that stretch across channels. While most consumers still prefer print coupons, many also want to receive them digitally via email, restaurant apps, websites and loyalty cards.
As no two customers are identical, offers must be targeted. A customer who visited a month ago may require greater incentives to make a return visit than one who ordered last week. And campaigns must be delivered at the right time. It’s critical for restaurants to reach out when the hunger strikes, promoting deals when consumers are purchasing – or thinking about purchasing pizza.
The pizza battle is intensifying, and grocery stores are winning. By understanding how consumer tastes and spending habits have changed and revamping coupon and discount programs to accommodate them, restaurants can fight back and reclaim their piece of the pie.
Dana Baggett is Director of Client Strategy for the Restaurant Category at Vericast. With a strong focus on data-driven campaign performance and innovation, Dana provides actionable insights and strategic direction to restaurant clients as well as franchisees.
Since starting at Vericast in 2008, Dana has used her 25-plus years of experience and proven track record to launch consumer insight initiatives and media comparison tools, while also leveraging her expertise in such areas as category intelligence, analytics, and competitive analysis. She has been recognized for her marketing leadership, including the company’s prestigious Pillar of Excellence Award. Prior to joining Vericast, Dana worked in the media and marketing departments at The Home Depot as well as several advertising agencies.
