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Pizza-wars

Stage set for spicy SA pizza war

South Africa’s two new challengers for the lucrative pizza market – Domino’s Pizza and Pizza Hut – had better hold on to their mozzarella, because established operators will not take the competition lying down, reports MoneyWeb.co.za.

These include smaller privately-owned chains like Roman’s and Butler’s, Panarottis – owned by Spur Corporation – and the big gorilla, Debonairs, owned by Famous Brands.

It’s easy to see why Yum! Brands, also the parent company of global brands KFC and Taco Bell, would want to introduce Pizza Hut into the South African market, and why Carlo Gonzaga, CEO of Taste Holdings, hopes Domino’s Pizza will grow faster than his Scooters and St Elmo’s brands have to date.

The pizza category is the fastest growing franchise sector in the South African market and this growth can be attributed to the urbanising black middle class embracing the cheesy Italian flatbread.

In 2009 roughly 6.3 million South Africans enjoyed pizza, and research house Analytix Business Intelligence estimates that by 2018 about 10.1 million will eat pizza. This reflects a compound annual growth of 6.7%, well ahead of GDP growth, but frankly pedestrian when one compares this to the growth of Debonairs.

With around 500 stores around the country Debonairs compound annual growth over the past ten years has been 16%. Store openings have stepped up from roughly 30 per year, to an anticipated 69 this year.

While the number of openings has increased, so have the formats – from sit downs in malls, to pure take-away, to the pizza express model at taxi ranks and stations, drive-thrus and service stations. Being a master at different trading formats makes Debonairs less dependent on new shopping centre openings.

While formal statistics are hard to come by, Kevin Hedderwick, CEO of Famous Brands, estimates that the branded pizza category (for quick service restaurants) is worth about R3-billion a year.

This is quite a prize…..

Moneyweb.co.za: Read the full article

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