Take dough, cheese, tomato sauce, herbs, bake in a hot oven and what have you got? A recipe to make millions of pounds. Actually, make that billions. Since the first chain opened in the mid-1960s, the UK’s pizza, pasta and takeaway restaurant sector has become so successful that market analyst company Mintel estimates it is worth £1.52bn, with predictions this will rise to almost £2bn by 2016.
Given the constant expansion plans of the major chains such as Pizza Hut, PizzaExpress, Zizzi, Prezzo, and the plethora of small niche and independent operators flooding the market, this is hardly surprising.
Just how this Italian creation cemented itself so firmly in the hearts of British business people and consumers is easy to explain, says Paul Bishton, of Birmingham-based retail agency Redleaf. “The attraction about pizza is that it is a relatively cheap product to make from a sales point of view, and it’s an easy choice for customers because they get it, like it and you don’t have to educate them about what it is.”
Or as Richard Wilcox, director at Harper Dennis Hobbs, puts it: “You will never get fed up with pizza: it always changes. From thick crust to thin crust and all the topping variations mean it will always work.”
Pizza chains as we know them were first introduced into the UK mass market in 1965 by Peter Boizot with the opening of PizzaExpress in London’s Wardour Street, W1. The chain now has roughly around 400 restaurants, with Pizza Hut on around 400, Prezzo 150, Zizzi 126, and ASK 120.
These numbers, which do not include smaller chains or independents, clearly show a love for pizza. Even so, the past five decades have not exactly been plain sailing for these well-known names.
“The market has struggled somewhat in terms of positioning and brand differentiation in recent years,” says Savills’ director, leisure, David Bell. This, says Bell, has led to several modernisation programmes, such as PizzaExpress’s ‘Living Lab’.”
He adds: “In addition, ‘light’ menus are increasingly prevalent in this market, despite the fact that four in 10 pizza users don’t care how many calories are in each dish. Furthermore, upfront offers like BOGOFs are the most popular price promotions/incentives for visiting pizza restaurants, while fewer than one in 10 are drawn by loyalty cards.”
New competitors
The continuing arrival of new competitors such as Jamie’s Italian, which Bishton says has “blown turnovers out of the water and demonstrates the power of ‘cool’,” and the raft of independents means the established chains have to keep evolving.
“The restaurant sector is doing well, and that is attracting investment and interest, which means there are new brands emerging and if you are an established brand you can’t afford to sit on your laurels,” says Bishton.
Investors seemingly can’t get enough of the dough-baking eateries. “We get asked for a lot of occupational advice on investment transactions and ultimately an investor is always reassured by what they can understand – and they can understand pizza and why people go there,” says Thomas Rose, Cushman & Wakefield partner and head of leisure & retail. “If there are customers then [clearly] the tenant will be able to pay their rent and that’s what it comes down to. So if people see a pizza restaurant they are happy to invest in it because they know it’s a safe-ish investment – as safe as anything can be these days.”
As well as attracting investors, landlords are keen to get pizza operators onto their schemes. Or, at least, keen on some of them. According to Rose, some chains are more attractive to landlords than others. “Between Zizzi, Prezzo and PizzaExpress which brand is better, which brand is perceived as being the stronger brand in terms of covenant and menu? I would say that Gondola is still winning that battle with ASK, ASK/Italian, Zizzi and PizzaExpress at the moment.
“Prezzo, from the landlord’s perspective is slightly less attractive, but it is really marginal. Zizzi is perceived as being the best brand because of its menu and fit-out: It’s more intimate and cosy, whereas Prezzo feels less of an all-day offer. If you had a scheme I would say landlords would be looking at Zizzi first, then Prezzo.”
Growth potential
Rose believes the market still has huge growth potential. “There is still the scope for a town of 40,000 to have two national brands because it is such an accepted product in the UK, and so well loved. And I think the independents are reinventing the pizza at the niche end.”
And for the bigger chains, Rose believes an as-yet relatively untapped market is retail and leisure parks. Using PizzaExpress as an example. He says: “Its first was at Teesside Shopping Park . And certainly, there’s a top tier of retail parks and shopping parks which will start to roll out more pizza restaurants. PizzaExpress has signed to a couple of British Land schemes – Chester’s Broughton Shopping Park and The Fort in Edinburgh – so they are starting to do it and it will continue.
“As we have seen with British Land they are trying to add more leisure on to their shopping parks, and pizza more so than ever. I don’t see the likes of Mexican operators going on to the parks, but pizza, yes, because customers know and love the products and for the pizza operators it’s their way of expanding.”
Rose says pizza operators prefer shopping parks above leisure parks because of higher all-day footfall. “In leisure parks you only have the cinema trade dominated from 6pm to 11pm.”
Whether on the high street, shopping centre or retail park one thing for sure is that the market is growing. As Tracey Mills, development director at Davis Coffer Lyons, puts it: “Far from being dead, the pizza market which transcends everything from cost to appeal to all consumer groups is only going one way at the moment and that is up.”
