Who owns a slice of the Pizza?

16 May 2023 , 10:06 AM

Analysts at IIFL Capital Services have analyzed the dynamics of Pizza market along with their usual checks. Key highlights: 1) Pizza market is highly cluttered with cumulative number of outlets (13 chains analyzed) far outpacing other QSRs. 2) It also has a long tail with regional chains forming ~30% of total outlets, per IIFL estimate. 3) Home-grown brands like La Pino’z have scaled rapidly, more than doubling stores in 3 years. 4) Price differential between Dominos and other chains is not that significant. 5) KFC took 3-4% price hike in April. 6) New launches – 10 new pizzas by Pizza Hut, Classic chicken roll by KFC and Piri Piri McSpicy chicken/paneer burger by McDonalds.

Pizza market analysis

• Crowded Pizza market: Based on IIFL’s research of 13 organized and regional Pizza chains in India, analysts at IIFL Capital Services estimate total Pizza outlets of 3,524 far higher than the estimated burger or fried chicken QSR (only KFC and Popeyes) outlets of 1,459 or 869 respectively.
• Long tail of regional chains players: Within IIFL’s estimated universe excluding the top-2 players Domino’s and Pizza Hut, other players represented ~30% share of total outlets.
• Scale-up of home-grown Pizza brands: Within regional chains, brands like La Pino’z have expanded rapidly; more than doubling its store count over the last 3 years to more than 500 outlets currently. (Domino’s: ~1,800, Pizza Hut: ~750). Other brands that have increased relevance are Ovenstory and Mojo Pizza, which are deliveryonly brands.
• Price differential of Domino’s not that significant: Based on the comparison of delivery price of select SKUs for all major Pizza chains, analysts at IIFL Capital Services find that there is no direct conclusion that Domino’s is more economical than the others. Even on Pizza Mania, other chains have entry-level pizzas at comparable price points with Domino’s. Moreover, Domino’s is not the most economical even on combos.
• Fragmentation or consolidation: Analysts at IIFL Capital Services are not sure whether the market is likely to get more fragmented or consolidated; however, in tough times, large players tend to benefit.

Pizzas

• Price hikes: No price hikes were taken by both pizza players compared to IIFL’s last survey.
• Promotions: Domino’s on its app increased cash discounts compared to schemes focused on offering free dish during IIFL’s last survey. On Zomato, cash discounts by Pizza Hut increased to Rs. 100 from Rs. 80 earlier.
• New launches: Pizza Hut launched 10 new pizza variants (6 veg and 4 non-veg) along with a new campaign.

Fried Chicken

• Price hikes: KFC took further price hike of 3-4% in April 2023.
• Promotions: On Zomato, KFC introduced cash discount (TRYKFC coupon) of 20% off up to Rs. 50, on minimum order value of Rs. 300.
• New launches: KFC launched Classic chicken roll at a price point of Rs. 119. However, analysts at IIFL Capital Services could not locate KFC’s previous launches like Chizza, popcorn nachos and Maggi popcorn chicken on 3^rd party applications.

Burgers

• New launches: McDonalds launched Piri Piri McSpicy paneer and chicken burger at Rs. 209. However, Chicken Big Mac burger, which was launched in January 2023 was not available on McDelivery app.

Casual dining

• Promotions: On its app, Barbeque is offering higher discount of flat 20% off versus cash discount of Rs. 75/100 on order value of over Rs. 499/599. On Zomato, discounts on minimum order value of Rs. 700 are similar to IIFL’s last survey of 15% off. But below Rs. 700, the discount has been reduced to 40% up to Rs. 80 from 50% up to Rs. 100 last time.