Fight is on for bigger, better slices of pizza

Big pizza chains are moving in on Hell's gourmet niche.

It's essentially a slab of dough smothered in cheese and various toppings.

Nevertheless, there's big money to be made in pizza, still a favourite fast food with Kiwis.

In the year to March, they spent close to $90 million at Pizza Hut - the largest of the local pizza chains.

But there's more dough out there and with two aggressive rivals vying for a bigger slice of the market, competition for the pizza dollar is hotting up.

However, unlike the pizza market in Australia, the competition is not likely to drive pizza prices lower, one market player says. Instead, some pizza-makers are competing for the gourmet end of the market where they see the best opportunities for growth.

In launching a new advertising campaign earlier this month, Pizza Hut set out to protect its position against fast-growing franchises Domino's Pizza and Hell Pizza.

Restaurant Brands, which owns the 107 Pizza Hut stores here, says it still holds the lion's share of the pizza market - more than double its closest rivals - but the pressures of an increasingly competitive environment were evident in its financial results earlier this month.

Total pizza sales of $89.1 million were up 3.6 per cent on the year earlier.

But same-store pizza sales dropped 2.9 per cent for the year, with trading profit dropping $1.4 million $12.2 million.

Chief executive Vicki Salmon said rising freight costs and the price of cheese were also squeezing margins.

It hopes its "Pizza Mutt" campaign, which stars a terrier-cross dog with super-hero powers in its new television commercials, will drive sales and reinforce its market leadership.

Restaurant Brands marketing general manager Michele Teague said the Pizza Hut brand had not been invested in and was "languishing a bit".

It had become "like the everyday regular guy" and needed revitalising.

Pizza Mutt is the creation of ad agency M & C Saatchi, which recently took over the account from McCann-Erikson.

Teague said leaping buildings and bursting through brick walls to deliver pizzas, the dog was a likeable character that demonstrated the more "heroic and humorous" aspects of the brand.

Mutt's exploits are also a radical departure from traditional pizza advertisements, which usually feature shots of people enjoying the food.

However, Teague said the company had not abandoned the jingle for its takeaway number, 0800 83 83 83, which had achieved "huge cut-through" as one of the best-known phone numbers in the country behind emergency number 111 and Telecom's 018.

In some of the new commercials, the website address is also sung to the tune.

Pizza Hut expects a quick uptake in online ordering after launching a new website this month.

The advantage of ordering pizza over the internet is that the menu is in front of customers, giving Pizza Hut the opportunity to present new flavours and upsell products.

Hell Pizza takes 12 per cent of total orders online, with the figure exceeding 20 per cent at some individual stores.

Domino's general manager for New Zealand, Peter Jones, said his company did not offer internet ordering but would in the near future.

The Australian-listed company arrived in New Zealand in 2003 and now has 51 outlets, with two more being built.

It had stood apart early on with its more quirky pizza names such as Meatosaurus, Vegorama and Shrimp on the Barbie.

But Teague said that with a 30-year history in New Zealand, and a legacy as a dine-in restaurant, it was Pizza Hut that had defined Kiwis' taste for pizza.

"People know what a Pizza Hut pizza tastes like and it's the tanginess of our sauce - people can actually describe it to you, so it's the taste benchmark for pizza in New Zealand."

But Hell Pizza claims its pizzas are healthier, saying it uses only 150 millilitres of oil per 16kg of dough when making the bases. At 40 per cent, their food costs are relatively high by industry standards.

Callum Davies, who founded Hell in 1996, believed the launch of Pizza Hut's gourmet range last year was a aimed directly at Hell, but said it had not fazed the company, which plans to add six new stores to its 55 existing outlets this year.

Davies said that by expanding its range to gourmet pizza, Pizza Hut was trying to be "all things to all people" and in doing so was getting squeezed in the middle.

But rather than going head-to-head with Hell, Teague said the gourmet range was more about identifying a gap in the market between the high-end specialty pizzas and the tried-and-true family favourites.

Its success would see two new flavours added this year.

Teague believes pizza is the most social of all fast foods as "you associate pizza with sharing". And what the gourmet range had done was extend Pizza Hut into new pizza-eating occasions beyond big events such as rugby watching - traditionally big revenue nights for the chain.

As a result, Teague sees more growth in the gourmet sector. Davies also believed there was room for more players in the market. "Compared with Australia and the United States we are still way behind on the amount of pizza we eat."

It seemed people's appetites grew as the market grew "and with more people eating pizza, the more they appreciate good pizza".

Teague hoped the local pizza market would not follow in Australia's footsteps with ruthless price slashing. "We don't want that to happen here and it doesn't have to happen here."

Heading into a tighter economic climate, and as soaring petrol prices meant, potentially, less money in people's pockets, Teague did not think pizza eating would suffer. "This is just my personal view, but when the market softens, people often treat themselves more in smaller ways, they start to make trade-offs such as, we might not go to Fiji but let's buy more pizza."

Domino's chief executive, Don Meij, said industry trends showed pizza was an affordable, regularly consumed family meal and that demand for pizza was less likely to be impacted by economic factors such as rising fuel costs and interest rates.


PIZZA HUT

* 57 stores.
* $93 million in annual sales.
* Plans to expand its range of gourmet pizzas launched last year.
* Large Hawaiian pizza, pan base: Pick up $11.95, delivered from $17.95.
* Listed on the New Zealand Exchange.


DOMINO'S

* 51 New Zealand stores.
* Listed on the Australian Stock Exchange last year and is targeting a network of at least 620 stores across Australia and New Zealand. So far it has 418.
* Large Hawaiian pizza, classic crust: Pick up: $9.95, delivered $16.95


HELL PIZZA

* 55 stores.
* Specialises in gourmet pizzas.
* Says its pizzas are healthier.
* Large "Greed" pizza (double ham, double pineapple, double cheese): Pick up $13, delivered $18