Pizza, as a deli category, is at a crossroads. After years of program start-ups and expansions at companies big and small, the pressures of profitability are bearing down. Labor issues have forced many retailers to rethink how important the "fresh" factor is to their customers compared with how much they are willing to pay on a regular basis.
Deli program managers are also casting a more critical eye on the scope of their selections, questioning which of their varieties are really earning their way in the cramped deli case.
All this re-examination is producing some strategic responses. Among them:
Operators -- not all, but enough to mark a pattern -- are cutting back substantially on the varieties routinely offered, sometimes throwing in a rotated special gourmet item to spice up the case.
Production is shifting toward more profit-oriented alternatives, such as relying on central kitchens to do a lot of the work, or contracting with outside vendors to provide frozen product components or even the entire pie.
Program structures are becoming more flexible as retailers mix and match different versions on the take-and-bake and ready-to-eat formats in an attempt to keep both their customers and their corporate bean counters happy.
Minyard Food Stores, Coppell, Texas, is developing a niche that will make pizza fit "nicely with our company," said Jack Murdock, deli director. "We have restaurant-quality pizza that is not frozen, and is priced comparable to those found in the frozen food case."
At Minyard, pizza is offered either hot or take-and-bake, in both 8-inch and 12-inch sizes. Prices range from $4.98 to $5.98.
"We are using a frozen shell that we thaw and top," said Murdock. The pizzas are then baked in-store, in pizza ovens.
Murdock said that using a good quality shell supplied by an outside vendor is freeing a great deal of labor that can be reallocated to other deli areas.
"Our pizza shop limits the service of hot pizza to between 11 a.m. and 1 p.m., and then again from 4 p.m. to 8 p.m.," Murdock explained. "When the staff is between 1 p.m. and 4 p.m., or when they are ahead of keeping up with the demand, they are used in other areas of the deli."
At one prominent chain in the upper Midwest, a source who was knowledgeable about the pizza program said the company's experience with pizza points to the fact that today's deli operator has to play to the local marketplace and stay flexible.
In its basic program, the chain offers refrigerated pizzas for baking at home in all of its 25 units. However, at three units where the chain operates a cafe, it adds to the basic line-up by selling hot pizza by the slice and in full pie sizes.
The cold cook-at-home version comes into the stores frozen from the chain's central kitchen. Prebaked shells are used to relieve the pressure on production labor.
The hot pizza, on the other hand, begins with a dough ball crust that is tossed by hand in the store. The pizzas are then sauced and layered and put through a tunnel oven to cook.
Rini-Rego Supermarkets has altered the character of its pizza program as part of an overall evaluation of its food service departments.
"We started out with a scratch crust 19 months ago, but now have it made for us by an independent local baker, for consistency's sake," said Fred DiQuattro, director of deli for the 39-unit division of Riser Foods, Bedford Heights, Ohio. "We have also cut back on the varieties and sizes we display every day."
The changes started when the operator launched a total quality management program. Ninety percent of Reni-Rego Supermarkets' pizzas are sold chilled as a take-and-bake item, from the self-service case.
"We want the crust and topping to taste as good after being wrapped for 24 hours as it would if it were made and put right in the oven," DiQuattro said. "We are working on a sauce that holds up, that doesn't water down after a day or two; and we're looking to improve our crust formulation."
The chain has reduced its varieties from eight to three, and its available sizes from six to three.
"This reduction has helped profitability tremendously by reducing shrink," DiQuattro said.
But pizza lovers cannot live by plain cheese alone, so the operator also offers a special pizza of the month, as a departure from the basics.
"We took a lesson from McDonald's," DiQuattro said. "They do McRibs once in a while, or a new Mexican item for a month or two. We'll have one special pizza in addition to our basics."
Rosauers Supermarkets, Spokane, Wash., is relying on quality-oriented vendors. George Jenkins, deli director, said Rosauers dropped a scratch program to save on labor costs in the store. What's more, Jenkins found that the vendor's program has the dividend of product consistency. He added that at this point he does not envision going back to pizzas made in-store.
As for selection, the chain offers four varieties -- pepperoni, sausage, combination and supreme -- in a single 12-inch size. Rosauers has opted to keep the program's tight display space full with products that move, Jenkins said.
"These varieties, and that size, are simply the most popular," said Jenkins. "You can sell a few others, but the people always come back for the favorites."
A&P, Montvale, N.J., is one chain that has not sliced off any of its pizza selections within the last year, according to William Vitulli, vice president of community and government relations.
"We see pizza as a growing category in the deli," Vitulli said. Pizzas at A&P are displayed as a self-service deli item. The chain offers a white pizza and a Mexican variety, along with the basics such as cheese and pepperoni. Movement is kept high by frequently including pizza as a line item in A&P's weekly ads, Vitulli said.
Labor's drain on the bottom line caused one Midwest operator of more than 50 stores to scale down pizza significantly as a category. "When labor is tight, pizza is the first to go," said the chain's deli director. "There is no money to be made in labor-intensive programs. We were putting out 80% effort for 20% results."
The chain recently moved to purchasing frozen pizzas from a vendor and slacking them out, as needed, at store level.
