Hundreds of thousands of restaurants have permanently closed since the pandemic began and the end of this great tragedy has not yet come to pass. Restaurants have a reputation of realizing a common demise in closure and I believe that the risk of that will truly never change post pandemic. However, there has been one market segment in food service, ubiquitous and growing throughout the country, that has grabbed the pandemic by its horns and sunken their heels in the stirrups of this best to ride it into the future.
She is The Pizzeria.
Multiple restaurant industry publications and institutions have pegged the total number of restaurant closures from the pandemic to over 100,000 in the United States and the continued effect of uncertain reopening requirements, capacity limitations, reluctant workforce talent reemployment, drastic product shortages and increased pricing have yet to truly exert its grip into the industry as the pandemic begins to show signs of defeat. There is only so much a government grant or two and a low interest debt injection from the SBA can sustain for so long in our volatile restaurant industry.
Guest expectations have not changed. I recently had a seat at a local restaurant in their second floor seating area. My fiancé and I noticed that the entire floor was being served by only one bartender and a server. Guests would freely seat themselves and I saw one couple that came in and took a table across from us. After they had not been greeted by the service team for only a few minutes they decided to pout, stand up and leave.
Changing Times
Forgive the local restaurant for not being fully equipped to handle everyone’s sudden bravery in venturing out into the real world. It’s hard enough to get people to come back to work with cosy unemployment benefits and the excuse of fearing their safety from a pandemic. The few hospitality heroes that have decided to work deserve more understanding from guests – and more money.
If people are ready to begin venturing out into a restaurant once again then they should also expect to pay a whole world higher in price for the same menu items. The disturbance in price in everything across the world has hurt the food industry heavily. Last I checked from my local vendor, breaded frozen chicken wings are coming in near $200 per case! What that means to a guest is that they will need to fork over $2-3 per chicken wing on their plate in order for the restaurant to sustain their normal, thin margin expectations.
The Pandemic Proof Restaurant
Tiny footprint, quick service, little or no dining room and delivery enabled restaurants have emerged as the heavyweights through this country’s changing times. The pizzeria is the one of particular note I want you to direct your attention to.
Oliva Watson at Sense 360 has reported in the midst of the pandemic in 2020 that:
“pizza chains […] have seen the biggest year over year increases spend per customer, ranging from 22-37% up year over year.”
From Oliva’s data analysis we can see that pizzerias were pulling more money per transaction than any other quick service sector in the market. Reporting from back in the younger months of the pandemic have also shown the same data during the belly of the beast in March of 2020. The results show that year-over-year, the pizza industry out performed fast casual and quick service operations in transaction size, transaction frequency and sales volume. Although sales had decreased for the industry in the early part of the pandemic, pizza only experienced a 5% decrease in sales as compared to 20 or 30% or more in decreased sales in fast casual or quick service segments.
I would make some assumptions about the cause of the industries success throughout the pandemic. Most obvious is that the pizza industry was already spearheading the delivery and takeout marketplace before the pandemic had begun. It was far easier, less costly and less sloppy for the pizza parlor to focus their attention on takeout and delivery when the pandemic restrictions required such. The pandemic has only forced these restaurants to refine the clay already moulded into these models while other restaurant segments were only working with wet mud, struggling to hold it together.
The pizza restaurant has successfully smashed through other pandemic barriers because of their higher than average profit margins compared to a typical, full-service operation. Although their advantage in better food margins is not much more by comparison, their core menu is extremely simple compared to other QSR (Quick Service Restaurant) concepts. Simple core menus make costing and re-costing a menu faster allowing for the operator to make quick price changes before thinner margins hit the bottom line.
As the restaurant industry begins to catch their breath post pandemic and begin to analyze and realize their pricing and product cost changes, the guest will see a price increase across the board. A $22, 12 Piece Chicken Wing basket will begin to be normal and a 16” pizza priced well over $20 per pie will also be commonplace. But if the pandemic’s detrimental head decides to turn back around and bite the world again, the pizza industry will find the clearest path to survival.