Pizza chains to add thousands of new units in the next three years

I don’t think there’s any pizza I won’t eat. Sure, I have preferences, but in a pinch, I’ll enjoy that cheap frozen microwave pie, thank you very much. 

And I am not alone in pizza passion. According to one recent survey, pizza is the food that Americans love the most.

Pizza was especially well-positioned to ride the pandemic off-premise dining boom. Unlike many takeout cuisines, pizza remains appealing on its journey to your home. (Compare that with french fries, which become soggy five minutes after being cooked.)     

But today, diners may be less likely to order pizza takeout because they feel freer to visit a favorite fast casual or casual chain.  Plus, pizza chains, like all restaurants, are facing rising costs and a scarcity of labor. Restaurants have been passing on some of those higher costs to customers, but it’s still tough going. 85% of restaurant operators say their restaurants are less profitable now than they were in 2019, according to a recent survey conducted by the National Restaurant Association.

So, has the pizza boom been followed by a pizza bust?    

Life in the Hut Lane

Back in 2019, Pizza Hut announced that it would close hundreds of dine-in locations, as part of a shift to carry-out and delivery. While the company had no way of knowing this at the time, soon every restaurant in the nation would also be focused on off-premise dining.

Pizza Hut locations

Pizza Hut was the first national pizza chain to offer contactless curbside pickup. It rolled out 1,500 “Hut Lanes” in March 2021. That shift to pick-up helped earn Pizza Hut an over 11% growth in same store sales in 2021.

In Q2 2022, however, U.S. same-store sales were down 4%. To combat the decline, the chain is now partnering with third-party marketplaces like Grubhub and Uber Eats. As of Q2, 55% of U.S. locations have implemented third-party delivery.

1,800 New Papa Johns by 2025

Papa Johns was earliest to the third-party game. It began partnering with delivery aggregators three years ago. And today, Papa Johns is the only major pizza chain with positive same store sales growth, at 1.9%.  

Papa Johns will have added about 320 new units in 2022 and has stated a goal of adding up to 1,800 net new stores by the end of 2025.

Domino’s grows units, eschews third-party apps

Domino’s Pizza also saw the 2021 sales spike and 2022 decline, with Q2 2022 U.S. same store sales falling by 2.9%. But unlike some others, the chain has not yet partnered with third-party delivery apps.  Perhaps that’s an acknowledgement of the fact that while such a partnership would likely drive revenue, it would hurt profits thanks to the large percentage fees charged on each sale by aggregators.

Domino’s Pizza U.S. Stores

Short term headwinds, long term growth

There’s more room for growth, according to many pizza chains. Countless locals and regionals have continued to expand. And other nationals have growth plans too.

• Little Caesars says it still has room to add 1,000 locations in the next ten years
• Marcos said in July that it had over 200 new stores currently in development
• Papa Murphy’s is currently expanding in growth states including TX, GA, AZ and CA

While it would be difficult for pizza chains to repeat the sales growth they saw in the pandemic, it doesn’t mean that we Americans have abandoned our favorite savory pie. As short-term labor and inflation issues resolve, many chains are planning for ambitious long-term growth.

And as for me, I’m thinking about grabbing a leftover slice from the fridge for an afternoon snack