Consumers’ attitudes towards food have changed dramatically over recent years in the UK. Consumers eat out more than ever before and they buy more convenience food, as their stressful lives leave them disinclined or too tired to cook after a long day. This trend has led to significant growth in home delivery.
Consumption of pizza and pasta, in particular, has grown significantly as a result of this trend. In the eating-out sector, pasta consumption continues to grow at a steady pace in line with the overall market. It is an established sector, worth &£1.1bn, and the category is by no means dormant: recent data from consumer research company Mintel shows that in terms of current prices, the sector has grown some 34.4 per cent since 1998. This rate of growth is marginally faster than that of the eating-out market in general.
The growth and value of the market is underpinned by the performance of the major household names that dominate the sector. The eat-in pizza market is dominated, in outlet terms, by Pizza Express and Pizza Hut, which is owned by leisure brand Whitbread. Pizza Hut is a key brand in the take-away/home market alongside Domino’s Pizza, but there is also a significant presence from Perfect Pizza/Papa John’s.
In the pasta sector, there have been a number of changes during the past couple of years, with Bella Pasta undergoing a transformation to the broader-based Bella Italia. meanwhile, Café Pasta, owned by Pizza Express, has been largely abandoned and replaced by the Marzano brand.
Alongside these major players, there is a much more fragmented structure with both smaller, regional chains and a large number of independent operators. The competitive threat extends beyond operators selling the same products and includes all types of restaurant. As the trend towards eating out has flourished, the variety of cuisines available has also increased. This will become a major pressure on the pizza/pasta sector.
Consequently, the eat-in sector has not grown as fast as the take-away market, which benefits from its ability to offer consumers food delivered to their homes at low prices. The popularity of pizza has also been retained thanks to on-going product innovation and the introduction of new concepts. This has been seen through the expansion of the authentic/premium sector including chains such as Zizzi, Prezzo and Strada. These outlets have blurred the lines between pizza and pasta, offering a balanced menu of both types of food.
These outlets are noted for their wood-smoked pizzas and rustic décor, which ostensibly offers a more intimate and sophisticated dining experience in contrast to the casual approach adopted by US brands such as Pizza Hut. They have also created crucial competition for the long-established Pizza Express chain.
The mainstream operators, led by Pizza Hut, have been expanding their restaurant portfolios. Convenience is a key factor in the decision to “go for a pizza”, so operators are concentrating on opening outlets in locations most relevant to families. Pasta remains an important menu choice for consumers, despite the waning popularity of the dedicated pasta chain.
The market has been characterised by a number of high-profile changes in ownership over the past year. One of the most prolific of these moves has been the take-over of Pizza Express by Gondola Express, a consortium backed by several private equity companies, including TDR Capital and Capricorn Ventures. Gondola has just snapped up rival pizza chain ASK Central for &£213m, following a battle with The Restaurant Group, owner of the Garfunkels chain.
The high level of activity within the industry over the past five years, including ambitious organic expansion plans by major existing players and the inception of new brands, has intensified competition. Consumers are the primary benefactors of such activity, owing to the increasing range of options and new products to choose from. Pizza Hut in particular has continued to seek new ways of presenting its products.
The casual nature of pizza and pasta dining means that it should continue to benefit from the growth in consumer expenditure on eating out. Pizza operators should gain from the lifestyle changes that have led to consumers being more willing and more financially able to buy take-away food when they don’t want to cook. The introduction of heated delivery bags has also helped companies to ensure that the quality and freshness of products are retained.
The delivery market will also benefit from developments in technology, affecting both how the product is ordered and the quality of the delivered product to the home. Online ordering is now a reality, although Domino’s Pizza is still the only company to offer customers the option of ordering through interactive television.
The delivery sector is expected to experience faster growth than the eat-in sector, although this is primarily because it is a relatively less competitive environment. But both sectors should benefit from consumer trends towards healthier eating, which is putting people off other foods such as burgers.
While pizza and pasta chains are well placed at the moment, operators will need to maintain their focus on developing new, high-quality products at the right price if they want to increase their slice of the market.
Pizza and Pasta Market 1998 to 2003
&£m &£m at 1998 prices Total eating out market &£m Pizza/pasta as percentage of total eating out 1998 845 845 20,029 4.2 1999 916 881 21,116 4.3 2000 971 902 22,105 4.4 2001 1,021 912 23,044 4.4 2002 1,082 931 24,173 4.5 2003 (est) 1,136 944 25,379 4.5
Eat-in Vs Take-away/Delivery Pizza
Take-away/delivery &£m Percent of market Eat-in &£m Percent of market 1998 406 48 439 52 1999 449 49 467 51 2000 476 49 495 51 2001 511 50 510 50 2002 542 50 540 50 2003 (est) 575 51 561 49
Operators with 50-plus outlets, 2000 to 2003/04
Chain Owner 2000 2001 2003/04 Change in outlet numbers Pizza Hut Whitbread/Tricon 424 471 575 +151 Domino’s Pizza Domino’s Pizza Ltd 215 237 318 +103 Pizza Express Gondola Express 222 272 311 +89 Perfect Pizza Papa John’s 205 218 225 +20 ASK Pizza & Pasta ASK Central Ltd 76 87 115 +39 Bella Pasta/Italia Tragus Holdings Ltd 73 65 64 -9 Caffe Uno The Restaurant Group 66 68 63 -3 Zizzi ASK Central Ltd 2 25 56 +54 Deep Pan Pizza* DPP Restaurants 62 54 54 -8 Est Est Est The Restaurant Group 24 22 19 -5
*converted/to be converted to Marzano