Hungry business: Grabbing a slice of the growing pizza market

Market segment sees huge growth; untapped potential remains, say industry officials.

KARACHI:

If there was a sector that has witnessed phenomenal growth over the years, it is the food industry. Arrival of foreign fast-food chains and opening of various local outlets across the country has been able to cater to the growing appetite of the huge population in Pakistan that loves to eat.

One of the key ingredients to this growth has been the local pizza market, attracting dozens of new pizza chains in the country.

The concept of pizza is not new to Pakistanis. The country’s first pizza restaurant, Pizza Hut, entered the market in 1993 and has remained a dominant player since. However, in the last three years the market segment has witnessed a phenomenal growth.

Despite the high competition, most new players are doing good business but even all of them combined have not had any impact on the sales of market leader Pizza Hut, say industry experts. This is a strong indication that the size of the pie is growing.

If one was to study the growth of pizza business in Pakistan, Pizza Hut and Dominos – both international chains – were the only established players that catered to the appetite of pizza lovers. However, the market developed significantly in the last few years and many new players, mostly local, also launched operations. These include 14th Street Pizza, Broadway Pizza, California Pizza, New York Pizza, Pizza Crust, Pizza Club, Pizza Channel, La Pizzaro and Pizza Plus, to name a few.

“I think the market was not ready back in the 1990s,” said Chief Executive Officer (CEO) at dealtoday.pk Shahrukh Chaudhary whose online portal frequently posts pizza deals . “Pizza Hut certainly developed this market and new players are now fully taking advantage of this and bringing in new varieties. Pan pizza was the only style followed in the past but the hand-tossed style is more popular these days.”

Unlike Chaudhary, 14th Street Pizza (a leading player) CEO Tanveer Yusuf says pizzas were in demand in the past as well but businesses failed to deliver as they followed a particular model. “Most players that entered the market in the past followed Pizza Hut’s style — some survived and others failed,” he said quoting Pizza Next as an example.

“Pizza is generally a takeaway and home delivery food all over the world, which is why the home-delivery market is growing so fast,” he says. “For large gatherings where friends watch the football World Cup for example, pizza is the most preferred meal.”

Perhaps, the ease with which pizzas can be eaten – without utensils and a laid-back attitude – is what appeals to the market as well.

Pizza Hut is the largest player when it comes to dine in — it offers pan style pizza and 12-inch is largest size it offers. By contrast, Yusuf’s 14th Street Pizza is hand-tossed, offers a 20-inch pizza and exclusively deals in home delivery and takeaway.

“Karachi is a very big market where two to three restaurants open up on a daily basis. Facebook has helped a great deal as well by continually informing the public of the newest restaurants opening in town, thereby attracting more people,” Yusuf said.

Commenting on the rapidly growing home delivery market, Broadway Pizza CEO Shahbaz Khan said home delivery is the fast-food culture. “If the fast food market grows, the market for home delivery will also grow,” said Khan.

He said Asia takes its cues from the western world when it comes to food or fashion trends. “The trends in Pakistan are inspired by them. They developed these habits decades ago. The market for pizza was bound to develop.”

Yusuf and Khan see home delivery as the future trend, while Chaudhary believes that dine in is still the most popular trend. But regardless, there is a clear indication that the market offers a lot of growth opportunity.

“This niche market will grow further as all the new players combined have not even been able to match the scales of Pizza Hut’s business,” Chaudhary said.

Published in The Express Tribune, July 14^th, 2014.

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