Higher restaurant prices have consumers turning to frozen pizza
A survey from the marketing firm Vericast shows a growing number of diners are choosing to get frozen pizza from the grocery store over one of the big chains. And prices are a huge reason.
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Pizza consumers frustrated by inflation are turning to the grocery freezer aisle.
Frozen pizza sales jumped 11% last year as retailers have increased their promotions of frozen pizza. The result: 13% of customers at pizza restaurants bought frozen or non-restaurant pizza because of inflation, according to a report this week by the marketing firm Vericast.
The four big pizza players lost 3% wallet share last year, the firm said.
“The pizza battle is on, and grocery stores are winning,” Dana Baggett, client strategy director in the restaurant division at Vericast, said in a statement. “Consumers are shifting to at-home pizza.”
Consumers are increasingly concerned about restaurant prices. A downward shift in grocery prices in recent months, even as restaurants continued to steadily increase menu prices, has shifted pricing concern to restaurants. Sixty-four percent of consumers told Vericast in a survey that rising prices are making restaurant dining too expensive.
That number increases to 69% for “pizza lovers.”
One of the hallmarks of the pizza delivery business is the heavy price consciousness and lack of loyalty among consumers. While consumers generally prefer those brands, “when we dig a little deeper, we found that the top choice is actually ‘no preference,’” Baggett said.
As prices at restaurants have increased, in other words, pizza customers have shifted to one of the numerous frozen options available in grocery stores, which have increased their pizza brand promotions 214%.
The survey results back up a contention from Domino’s that the pizza delivery segment is losing share overall, and that its problem with delivery sales reflects that broader weakness.
“Our research shows that a relatively higher delivery cost during inflationary times leads some consumers to prepare meals at home instead of getting them delivered,” Domino’s CEO Russell Weiner told analysts in February.
The Vericast survey, which included nearly 2,000 U.S. adults, found that nearly half are eating out less due to inflation. And 18% of consumers are opting for less expensive brands of pizza or restaurants. Frequent pizza consumers are among the most price-conscious, with 25% selecting less expensive pizza options.
This story was originally published in WGB sister publication Restaurant Business.