Pizza companies battle for dough

Consumers shopping around to get the best value for their food dollar are putting the heat on pizza companies battling for a slice of the takeaway pie.

Gourmet pizzas are shaping up to be a casualty of the recession as consumers move toward cheaper-value toppings and other takeaway options such as fried chicken.

The tough market has forced franchised pizza company Hell Pizza to  now  compete on price  shortly after lifting its prices in November.

At the time Hell Pizza general manager Colin Mellar justified the price rise in a leaked memo to franchise holders saying the company was able to operate at a higher price point than its competitors because of its superior pizza offering.

Now Mellar says latest research conducted by the company shows price is a driver when it comes to generating sales.

''There's no doubt about it, you do need to be able to light a bit of a fire under people's backsides to get them out of the chair these days.''

The company is offering a $13 pickup deal for its Double Gourmet and Premium pizzas to celebrate its 13th birthday, a price point that Mellar describes as ''a lot cheaper than we've gone in the past.'' Traditionally those pizzas would retal for about $17.

Hell Pizza outlets are also seeing an increase in pick-up orders instead of delivery as customers try to make their dollars stretch further. And the research shows while loyal Hell Pizza lovers aren't  necessarily trading down to cheaper options, they are ordering less often.

Mellar says the company will look at other ways to increase re-orders through existing customers before it considers sustained price reductions.

Hell Pizza is owned by Burger King franchisor Trans Pacific Foods,  which has been trying to raise equity for expansion of both its fast-food brands since July last year.

Mellar dismisses claims made that the company is actually looking at offloading its Hell and Burger King operations. ''Selling is overstating, we're looking at the total business.''

He says there has been significant interest from investors, but would not disclose any further details. ''We have some people who are running through diligence processes at the moment.''

The recession has taken its toll on expansion plans to increase the number of franchised Hell Pizza stores from 63 to 90 in the near future.

Mellar says franchising inquiries have slowed  ''a little bit'' as credit lines have dried up.

Hell competitor Pizza Hut, owned by Restaurant Brands, has reported a 1.2 per cent drop in same-store sales for the fourth quarter to March   which is actually an improvement on previous quarters but still not a good situation

to be in.

Same-store sales for the previous three quarters were -4.3 per cent, -11.1 per cent and -7.1 per cent respectively. Four Pizza Hut stores have  closed in the past year.

Restaurant Brands' fried chicken brand KFC, on the other hand, is performing strongly, reporting a 5.5 per cent increase in same-store sales on the equivalent quarter last year.

Meanwhile, budget pizza brand Domino's Pizza reported same-store sales growth of 2.2 per cent for its Australia and New Zealand stores for the half year to February, on the same period the year before.

Domino's told the Dominion Post last November it had plans to be the country's biggest-earning pizza retailer within two years.

The Australian-listed company has 74 franchised stores in New Zealand, making it the second-biggest pizza chain after Pizza Hut, which has 93 stores.

- © Fairfax NZ News