UnderstandingStrategicManagement UB: 1 UnderstandingStrategicManagement ExecutiveSummary

Understanding Strategic Management UB:

1

Understanding Strategic Management

A Strategic Analysis of Pizza Express.

Industries: Restaurant/Retail

FAO: The Board of Directors.

Word Count: 2495 (not including Tables or Executive

Summary)

Report prepared by UB:

Module Leader:


2

Executive Summary

Pizza Express is a key player in the Restaurant Industry. It is one of the biggest chains in the casual

dining sector. Alongside this, Pizza Express boasts an in‐restaurant takeaway service and offers their

signature pizzas in supermarkets as a fresh prepared pizza ready to cook at home. All three of the

markets which Pizza Express operates in have seen significant growth and growth is expected to

continue over the next 3 years. It is clear that there is plenty to play for and there is scope for Pizza

Express to become market leaders in the casual dining and chilled prepared pizza sector.

After a full strategic analysis of both the external and internal factors affecting the business, it is

clear that there are key drivers in the markets. These drivers are consumer attitude towards diet and

health and the fact consumers are becoming more price savvy and eager to find the best deals on

the market. These drivers are most likely to have an impact on the business and therefore need to

remain high profile within the business. The critical success factors which add value to the business

are customer satisfaction, innovation and value for money. These are the areas that the business

needs to focus on and develop in the future.

Based on the findings of this report, it is clear that Pizza Express have a dominant position in the

market however this could be improved and profits could be potentially increased if the business

implemented a number of recommendations. The most critical recommendations are to expand and

develop into international markets and to continually improve and develop healthier and tastier

pizzas and menus. The execution of these recommendations would result in reaching a larger

consumer market and an increase in sales.


3

Contents

Executive Summary 2

1 Company Summary 4

1.1 Company Background 4

1.2 Current Market Position 4

1.3 Current Financials 4

2 External Strategic Analysis 5

2.1 PESTLE Analysis 5

2.1.1 PESTLE Analysis – Conclusion 6

2.2 Industry Growth/Life Cycle 7

2.3 Porters Five Forces Analysis 7‐8

2.3.1 Porters Five Forces Analysis – Conclusion 9

2.4 Key Competitors 10

2.4.1 Competitor Pricing 10

3 Internal Analysis 11

3.1 Value Chain Analysis 11‐12

3.1.1 Value Chain Analysis – Conclusion 11

3.2 SWOT Analysis 13

4 Strategy Formulation 14

4.1 Porters Generic Strategies 14

4.2 The Ansoff/Market Options Matrix 15

5 Conclusions 16

6 Recommendations 17

7 References 18‐19

8 Appendices 20‐25

List of Tables and Figures

Fig. 1 Current Financials 4

Fig. 2 Pestel Analysis 5

Fig. 3 The Industry Life Cycle Model 7

Fig. 4 Porter’s 5 Forces Model 8

Fig. 5 Value Chain Analysis 12

Fig. 6 SWOT Analysis 13

Fig. 7 Porter’s Generic Strategies 14

Fig. 8 The Ansoff Matrix 15

Fig. 9 Growth by Value (£m) in the UK Restaurant Market between 2007 – 2016. 20

Fig. 10 Growth by Value (£m) of the Fast Food, Takeaway and Home Delivery Market

between 2007‐2016.

21

Fig. 11 Predicted Growth by Value (£m) in the Fast Food, Takeaway and Home Delivery

Market by Sector from 2012‐2016.

21

Fig. 12 Growth by Value (£m) in the Chilled Prepared Foods Market between 2007‐2016 22

Fig. 13 Chilled Pizza Growth in Value (m) from 2007 ‐2011. 22

Fig. 14 Key Competitors 23‐24

Fig. 15 Pricing Analysis 25


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1. Company Summary

Company Name: Pizza Express (Restaurants) Limited

Industry: Restaurant – Casual Dining Sector

Parent Company: The Gondola Group

Type of Business: Private Equity Business

Owner: Cinven

Number of Restaurants: 413

Number of Employees: 9,300

Average Spend per Head: £14.00

1.1 Background

Pizza Express (PE), a market leader in the casual dining sector is owned and operated by The

Gondola Group, who currently own several brands of restaurant chains including ASK, Zivvi, BYRON

and Kettner’s. Gondola Group formulates strategies across the board for all their brands with Chief

Executive Harvey Smyth responsible for operational activities. PE is the largest of the brands being

an Italian themed restaurant chain focusing mainly on pizzas and pasta. Their services have also

expanded, with a range of retail pizzas available to buy in supermarkets to cook at home, or the

ability to use the restaurant as a takeaway facility where customers can collect their favourite pizzas

to eat in their own surroundings.

1.2 Current Market Position

Restaurant Market Value: £26.18 billion. (Keynote, 2012) increased 5.7%.

Number of Meals served: 3.854 billion (Keynote, 2012).

Average spend per Head: £11.95 (Keynote, 2012).

1.3 Current Financials Figure 1: Current Financials of PE.

(FAME, 2012)


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Technology

- Internet - Mobile applications - Innovation in cooking

equipment. - Manufacturing

efficiencies with retail pizzas and dough.

- New Product Development

- Speed of adoption of new technologies.

Political

- Food Safety Act 1990 - General Food

Regulations 2004 - General Food Laws

(EC) Reg (178/2002). - Employment Law - Tax policies - Food Standards

Agency - Budgets – Alcohol tax

and Minimum Pricing Strategy

- Public Health Responsibility Deal/Government Health Initiatives

- Foreign Trade regulations.

Environment

- Global warming - Changes in weather

affecting demand for casual dining and consumers wanting to eat out.

- Changes in weather affecting supply of food products to restaurants.

- Pollution - Energy Saving - Food chain

awareness. - Waste awareness.

Economic

- Current recession - Amount of disposable

income - Cost of

capital/interest rates. - Inflation - Tax rates - Competition - Wage rates - Cost of living - Exchange rates when

dealing with foreign suppliers.

- Rising food and energy costs.

- Total GDP - Unemployment

Legal

- Health and Safety Law

- Consumer laws - Licensing Regulations - Food Safety Laws

Social

- Demographics - Attitudes towards

health and diet/ work and leisure.

- Income statistics - Social responsibility

around environment. - Cultural differences - Population growth - Ethics around

sourcing of food. - Growing demand for

convenience. - Occasions and

national events. - Consumers becoming

penny pinchers.

2. External Strategic Analysis

In order to understand the strategic position of a business, we must identify the external

environmental factors that could impact company performance. The PESTEL model helps us to

identify these broad issues and understand how they may affect PE’s success.

2.1. PESTEL Analysis

Figure 2: Pestel Analysis of PE.


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2.1.1 PESTEL Analysis ‐ Conclusion

Analysing the external factors that could impact PE has identified key drivers for change. These ‘are

the environmental factors likely to have a high impact on the success of failure of strategy’ (Johnson

et al, 2011).

The key drivers for change are:

The attitudes towards diet and health.

In today’s society, both media and the Government are reiterating the importance of a

healthy lifestyle. With the obesity crisis becoming a strain on the NHS and Foresight

predicting that by 2015 36% of males and 28% of females (Foresight, 2007) will be obese,

this clearly has a significant impact on the food industry. The Government’s newly

introduced optional Public Health Responsibility Deal could become mandatory in future. PE

has signed up to this already and whilst developing 500 calorie ‘Leggera’ pizzas they should

continue to improve their menu.

Consumers becoming more price savvy and searching for the best deals.

As the country comes out of recession, customers have taken advantage of discounts

offered by restaurants to help them survive. PE are one of the most publicised restaurants

that offer deals such as 2 for 1, and this is heavily promoted in partnership with Orange. The

retail aspect of PE also shows some healthy discounts. Supermarkets have been offering

promotions such as half price or buy one‐get one free on PE pizzas and sales uplift is

significant. For example, Morrison’s sales of their Margherita 8” on a non‐promotional week

were 2551 units. When the Pizza was priced at £2 per unit, sales increased to 63,875 units; a

significant 2400% increase in sales. (Morrisons, 2013). Clearly, promotional activity is key to

the on‐going success of PE and needs to be managed very carefully going forward.

Overall the PESTEL analysis doesn’t highlight any major concerns for the chain. The issues mentioned

will affect every business and the majority of the points will not result in changes for the business

and are just ‘business as usual’ issues that affect the company every day.


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2.2 Industry Growth/Life Cycle

Looking at current market trends in the sectors/industries that PE operates in shows us any patterns

that are emerging and helps to understand the cycle of the industry.

Please see Appendix 1 for the Growth by Value charts for the sectors that PE operates in.

If you were to compare the results seen in Appendix 1 with The Industry Life Cycle model (Figure 1)

the casual dining sector would appear to be in the Shakeout phase whereas the takeaway and chilled

food industries are in the growth stages. This is very positive for PE and shows there is plenty of

room for further growth in all areas.

Figure 3: The Industry Life Cycle model

(Hill and Jones, 2010)

2.3 Porter’s Five Forces Analysis

Porters Five Forces Model helps us to ‘identify the attractiveness of an industry in terms of five

competitive forces: the threat of entry, the threat of substitutes, the power of buyers, the power of

suppliers and the extent of rivalry between competitors’ (Johnson et al, 2011, p.54). As PE spread

across more than one sector, the key elements from all areas are combined in the below analysis.


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Competitive Rivalry

Very many competitors in casual dining sector.

Very many competitors in the retail pizza section (frozen and fresh) seen as a staple meal.

Low switching costs for the consumer.

Low customer loyalty – customers likely to switch brands based on promotional activity.

Most restaurants using vouchers to make dining more appealing to customers.

Restaurant developing unique products for their consumers. i.e. 500 cal pizza.

Buyer Power

Lots of substitutes available.

Price Sensitive customers.

Not classed as a necessity/commodity product.

Large supermarkets, ability to squeeze price for retail pizzas.

Vary large orders, covering supermarket stores.

Must adjust price if supermarket wishes to price cut/put on promotion.

Lots of substitute products (however not restaurant branded).

Threat of New Entry

High costs to enter the market in casual dining sector. Large set up costs to create a chain/brand of similar scale and economies of scale needed.

Ahead when it comes to marketing techniques (already collected a vast amount of consumer data which can be used for targeted communications).

Ahead with technological advances, using internet, email and mobile applications as main ways to communicate with customers. Can even split your bill and pay by mobile app.

Brand Loyalty high for business. Consumers may not be easy to change.

Supplier Power

High choice of supplier for fresh product.

Low choice for dough making supplier.

Similar products available.

Able to substitute.

Small choice of pizza manufacturers.

Threat of Substitution

Buyer likely to substitute product/service if more appealing offer. i.e. better discounts.

Retail pizzas in a highly competitive market, competitors keen to match/beat prices.

Brand loyalty high, customers who have dined in restaurant more likely to buy branded pizza in supermarket.

Figure 4: Porter’s Five Forces Analysis of PE.


9

2.3.1 Porters Five Forces Analysis ‐ Conclusion

On looking at the five forces for PE, the following conclusions can be made:

1) Threat of Substitution – The threat of substitution becomes high when pizzas are not on offer in

either the restaurants or in supermarkets. Customers are more likely to buy the product when on

promotion as they like the brand. The takeaway sector shows the biggest threat, as PE do not

currently compete with the likes of Domino’s pizza that continuously run heavily discounted

promotions.

2) Threat of New Entry ‐ this threat is low as the barrier costs of entering the market at such a scale

as PE would be extremely high.

3) The Power of Buyers – this threat is high due to the fact that consumers are very price sensitive

and very likely to switch brands if cheaper. There is no switching cost for the consumer to swap

brands if the price point is too high.

4) The Power of Suppliers – this threat is low as there are a mass amount of suppliers in the market

that can provide the business with the ingredients that they need.

5) Competitor Rivalry – this threat is high due to the vast array of competitors within all three

industries that PE operates within.

The analysis has identified that the structure for the industries Pizza Express operate in is

Oligopolistic as there are a few big players to compete with.

The most important point this analysis has highlighted is:

In order to reduce the threat of substitution and keep buyer power low, PE must consider

continuous discounting and promotions or lower their standard prices to match the competitors

especially in the takeaway and chilled prepared food sectors.


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2.4 Key Competitors

Please see Appendix 2 (Figure 14) for an analysis of the key competitors in the market.

Clearly there is high penetration within the Pizza market. Several casual dining restaurants are

offering Pizza on their menus either exclusively or part of their range. There are a growing number of

pizza takeaway chains emerging in the market with the key competitor being Domino’s pizza. In the

supermarket sector, there is a huge range of chilled and frozen prepared pizzas to suit every budget

and every flavour. It is a big market with plenty of competition.

2.4.1 Competitor Pricing

Please see Appendix 3 (Figure 15) for details of example pricing analysis.

Analysis of costs shows there is a vast difference between pricing. The most compelling information

shows that the PE retail chilled pizzas are 72% more expensive than Sainsbury’s own brand. This

shows that the pricing strategy of these pizzas needs investigation. The restaurant and takeaway

pizza is reasonably priced compared to other competitors however this depends on promotions

offered at the time.


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3. Internal Analysis

3.1 Value Chain Analysis

Porter’s Value Chain Analysis describes ‘the categories of activities within an organisation which,

together, create a product or service’. (Johnson et al, 2011, p97). The key purpose is to identify

which activities do and do not create value for the business. Please see Figure 5 on page 12 for the

analysis.

3.1.1 Value Chain Analysis – Conclusion

Looking at the Value Chain, it is clear that PE have all the right resources in the right places. The

support functions seen at the top of the diagram have a large impact on the operational success of a

restaurant. As a chain restaurant, the support functions in place ensure standards are consistent

across restaurants. It is then the responsibility of the operational staff to ensure that the customers

face to face experience with the restaurant live up to their expectations. It is clear to see that the

critical success factors to ensure the perfect experience for the customer mainly lie in the primary

activity sector of the model. These critical success factors are:

‐ Customer Satisfaction – brought about through quality of food and service and food safety

compliance.

‐ Innovation – The chain must ensure they are continually improving their menus, sourcing

new ingredients, developing new products and moving with trends and technology.

‐ Value for Money – in this climate, restaurants need to ensure that the customer is happy

with the food and service they get for the price they pay. If another restaurant can do this

better, customer retention is at risk.


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Lead

ership, Q

uality, PR, Training, Recruitmen

t, Planning, Ben

efits, Finance, IT Support,

Administration, Property/Estates, Legal.

Supervision of staff across all functions.

Red

uce packaging/emissions, developmen

t of new products, im

prove m

enu, speed

up cooking

processes, create innovative promotions, restaurant layout, till and order technology.

Source hau

lage and m

anage fleet / ingred

ients and delivery / buy advertising space / source

equipmen

t for restau

rants.

Delivery of

raw

materials to

the

restaurants.

Preparation

and cooking

of meals.

Develop

priority and

ordering

process.

Develop

advertising

material/

promotions.

Set pricing

strategies.

Serve food

to

customers

in

restaurants/

takeaw

ays.

Value Added Activities

Infrastructure

Human

Resources

Technology

Procuremen

t

Support Activities

Inbound

Logistics

Operations

Outbound

Logistics

Marketing

& Sales

Services

Primary Activities

Figure 5: Value Chain Analysis

based on Porter’s Value

Chain. (Johnson et al, 2011).


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3.2 SWOT Analysis

A SWOT analysis looks at the strengths, weaknesses, opportunities and threats to a business. It

focuses on both the external and internal issues that may or may not affect a business. The purpose

of a SWOT analysis is to summarise key findings from internal and external analysis and help to

cement the decisions we make for the business.

Figure 6: SWOT Analysis of PE.

Strengths Opportunities

Unique innovative products such as ‘Leggera’

pizza.

Large portfolio of restaurants in busy areas.

Large employee base.

Only Restaurant chain to put branded pizza into

supermarkets.

Strong brand presence in the market.

Innovative and quick to adopt new technology.

Expand Supermarket range.

Promote Takeaway side of business.

Expand menu to appeal to more consumers.

All industries currently involved in seeing

significant growth despite recession.

Develop Global brand and expand further into

other countries.

Weaknesses Threats

Heavy competition in all sectors competing in.

Not seen as a key competitor in the pizza

takeaway sector.

Supermarket brand pizzas up to £2.90 more

expensive per unit than other brands/own brands.

Government Health regulations.

Competitors heavily discounting, could force PE

to do the same and lose brand value.


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4. Strategy Formulation

4.1 Porter’s Generic Strategies

Michael Porter devised the concept of Porter’s generic strategies in 1985 and believed that the only

way to gain competitive advantage was to decide between being low‐cost or differentiated. That is

either providing the same product or service at the lowest price or having a product or service that is

unique that no competitors can replicate.

Figure 7: Porter’s Generic Strategies based on PE.

Low Cost Differentiated

Broad

Cost Leadership

Differentiation

Focused

Cost Based Focus

Differentiation Focus

(Adapted from Porter, 1985)

Above is a diagrammatic view of the Generic Strategies and points of PE that fall into the different

areas have been plotted on the model. Looking at the model it is clear that PE are currently in quite

a unique position in that they are ‘stuck in the middle’ of some of the strategies.

Competitive through use of promotions and discounts.

Focused in choice of music but keeps market wide by not being too imposing.

Discounting/voucher target different sectors and ranges.

Offer something different with diet conscious pizza.

Based on what can be seen above, it may be prudent to try and push the point of differences more

and move from the middle into a more robust position.

Price

Ambience/Style of

Restaurant

Innovative Diet Conscious

Products

Jazz Music

Vouchers/

Discounts


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4.2 The Ansoff Matrix/Market Options Matrix

The Ansoff Matrix shows a business what strategic directions they could take. There are four main

directions seen in Figure 8.

Figure 8: The Ansoff Matrix

(Adapted from Ansoff, 1988)

Based on the four directions, PE could do the following:

1. Market Penetration/Consolidation

a. Increase market share, taking into account Government Restrictions. Best area

would be supermarket products.

2. Product Development

a. Develop new innovative products using different ingredients.

b. Extend supermarket ranging.

3. Market Development

a. Expand into international markets.

b. Move into Coffee/Lunch sector. i.e. PE Cafes.

4. Diversification

a. Move into selling Jazz music CD’s.

b. Expand further into the Jazz Club scene.


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5 Conclusions

PE is one of the market leaders in the Pizza casual dining sector. It is performing well despite

economic pressure and it is expanding its portfolio annually.

The industries it operates within are all seeing impressive year on year growths which shows that

despite consumers feeling the pinch, they still want to dine out or treat themselves to takeaways or

prepared pizzas.

There is high market penetration in the Pizza industry, so much so it has become a staple meal in the

UK. As a non‐commodity food product, it is very price sensitive and prone to the threat of

substitution. Consumers ultimately hold the power in this market and can very quickly switch brand

or restaurants without any costs or inconvenience.

The key drivers for change in this sector relate to the changes in attitudes towards diet and health

and the penny pinching voucher culture that has developed over the past few years. Both of these

drivers are important to consider when devising future strategies.

The critical success factors that may affect the performance of PE are customer satisfaction,

innovation and value for money. Future delivery of innovative new products and adoption of new

technology, alongside excellent service and quality of food at a price that consumers are happy to

pay, will ensure performance for the business continues at the same rate as previous years.

The future of PE is bright, the brand is strong and recognised but the choice of strategy it takes could

make the difference from meeting expected profits to exceeding expected profits.


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6 Recommendations

In order to ensure future success of the PE chain, the following recommendations are proposed:

1) Increase market development into international markets.

a. The UK Market is currently saturated with casual dining restaurants. Future

expansion in the UK could increase the risk of cannibalization.

b. Continue with the expansion into foreign markets and ensure the business is aware

of different cultural market needs and that they satisfy these with innovative

products and restaurant technology.

2) Continually improve and develop healthier, tastier pizzas and menus.

a. With the obesity crisis in the UK getting worse, the Government is likely to increase

pressure on restaurants and food manufacturers to ensure their food is as healthy as

possible. Being on board with this and being one step ahead shows that PE care

about their customers and their wellbeing.

3) Develop more intelligent and intricate marketing systems.

a. Engage with customers on a more frequent basis and on a more tailored basis. I.e.

around birthdays etc.

b. Create innovative marketing techniques to capture new customer data and

communicate with them.

c. Increase personal connection with customers to make them feel valued and cared

for. This includes the service in restaurants.

4) Consider market development into the Coffee/Lunch Sectors.

a. Create coffee houses that serve up fresh coffee and PE developed cakes. Double

these coffee houses up as places customers can come and grab a quick slice of pizza

for their lunch on their way about their business.

b. Create an ambience of both professionalism but comfort and luxury with plush

leather sofas to appeal to more of the market using Jazz music as the focus for these

laid back day/night establishments.

5) Diversify into the Music Industry

a. Create CD’s of the most popular Jazz music played at restaurants that can be sold to

customers via the internet and directly through the restaurants.

b. Promote Jazz artists by giving them air play, celebrity endorsement is valuable and

has already proved successful with Jazz artists such as Jamie Cullum.


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7 References

Ansoff, I. (1988). The New Corporate Strategy. Wiley: New York.

FAME. (2013). Accounting Report – ASK. Available at

https://fame.bvdinfo.com.ezproxy.brad.ac.uk/version‐

2013326/Report.serv?_CID=838&context=2GWD8QN4RI1SP6H&SeqNr=0 [Accessed 09/04/2013].

FAME. (2013). Accounting Report ‐ Domino’s Pizza. Available at


2013326/Report.serv?_CID=130&context=1CVM8QN4RR63XMV&SeqNr=2 [Accessed 09/04/2013].

FAME. (2013). Accounting Report – Gondola Group Limited. Available at:


2013326/Report.serv?_CID=465&context=2GWD8QN4RI1SP6H&SeqNr=0 [Accessed 09/04/2013]

FAME. (2013). Accounting Report ‐ Papa Johns. Available at


2013326/Report.serv?_CID=610&context=1CVM8QN4RR63XMV&SeqNr=3 [Accessed 09/04/2013]

FAME. (2013). Accounting Report – Pizza Express. Available at



FAME. (2013). Accounting Report ‐ Pizza Hut. Available at


2013326/Report.serv?_CID=680&context=2GWD8QN4RI1SP6H&SeqNr=1. [Accessed 09/04/2013]

FAME. (2013). Accounting Report – Prezzo. Available at



FAME. (2013). Accounting Report ‐ The Restaurant Group (Frankie & Benny’s). Available at


2013326/Report.serv?_CID=2222&context=2GWD8QN4RI1SP6H&recordbvdliensid=GBCSC030343&

Display=PopupCustom&VolatileResolution=1004x768&format=_default [Accessed 09/04/2013]

Foresight. (2007). Tackling Obesities. Future Choice – Project Report, Second Edition. Available at:

http://www.bis.gov.uk/assets/foresight/docs/obesity/17.pdf

Goldola Group. (2012). Annual Report 2012. Available at

http://www.gondolaholdings.com/downloads/Gondola%20AR%202012_Interactive.pdf [Accessed

09/04/2013]


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Hill, C. & Jones, G.R. (2010). Strategic Management: An Integrated Approach Theory, Second Edition,

Mason: South‐Western Cengage Learning.

Johnson, G., Whittington, R., and Scholes, K. (2011). Exploring Strategy, Ninth Edition, Pearson:

Harlow.

Keynote. (2012). Chilled Foods. Available at: http://www.keynote.co.uk.ezproxy.brad.ac.uk/market‐

intelligence/view/product/10632/chilled‐foods?highlight=pizza&utm_source=kn.reports.search

[Accessed 09/04/2013].

Keynote. (2012). Fast Food and Home Delivery Outlets Report. Available at

http://www.keynote.co.uk.ezproxy.brad.ac.uk/market‐intelligence/view/product/10636/fast‐food‐

%26‐home‐delivery‐outlets?medium=download [Accessed 09/04/2013].

Keynote. (2012). Restaurants Market Report. Available at

http://www.keynote.co.uk.ezproxy.brad.ac.uk/market‐

intelligence/view/product/10589/restaurants?highlight=restaurants&utm_source=kn.reports.search

[Accessed 08/04/2013]

Morrisons. (2013). Sale/Budget Variance Report – Product Totals. Internal Systems.

MySupermarket. (2013). Grocery Shopping. Available at http://www.mysupermarket.co.uk

[Accessed 09/04/2013].

Porter, M. (1985). Competitive Advantage. The Free Press: New York.


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8 Appendices

8.1 Appendix 1 – Growth by Value in each of the Industries Pizza Express

currently operates in.

Figure 9: Growth by Value (£m) in the UK Restaurant Market between 2007 – 2016.

(Keynote, Restaurants, 2012)

The above graph shows that the value of the restaurant sector in the UK has grown substantially

over the last five years and marketing experts predict that this growth will continue to increase. This

shows us that despite the recession, people still want to eat out and enjoy themselves and shows

that Pizza Express still need a heavy presence in this sector.


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Figure 10: Growth by Value (£m) of the Fast Food, Takeaway and Home Delivery Market

between 2007 ‐2016

(Keynote, Fast Food and Home Delivery, 2012)

The graph above shows the growth in value of the fast food industry. This is very similar to the

restaurant sector and is showing massive growths by 2016. Pizza Express offer a takeaway service

however it is not heavily publicised and known about. This is a sector that Pizza Express could invest

in to see possibly good growths. The below table shows that Pizza is one of the fastest growing

areas within the fast food sector with a predicted year on year growth of over 29.8%.

Figure 11: Predicted Growth by Value (£m) in the Fast Food, Takeaway and Home Delivery

Market by Sector from 2012 ‐ 2016

(Keynote, 2012, Fast Food, Takeaway and Home Delivery Report)


22

Figure 12: Growth by Value (£m) in the Chilled Prepared Foods Market between 2007 – 2016

(Keynote, Chilled Foods, 2012)

The Chilled Prepared Food market is also a sector PE are involved in with the sale of their retail

pizzas in supermarkets. It is also showing a significant predicted growth in value and already has

solid figures showing that since 2007 up until 2011, there has been a year on year growth in value of

the pizza category of 19.6%. (Keynote, 2012).

Figure 13: Chilled Pizza Growth in Value (m) from 2007 ‐ 2011

(Keynote, Chilled Foods, 2012)


23

8.2 Appendix 2 – Key Competitors in Industries Pizza Express operates in.

Figure 14: Key Competitors

Industry Competitor Logo/Brands Comments

Casual

Dining

Sector

ASK

Owned by the same parent company.

Expanded range. Pre tax profit of

£9,023,000.

Prezzo

Similar to Pizza Express however offer

more choices of food, expands range

beyond pizza and pasta. 160 chains across

the UK. Pre Tax profits of £16,131,000

Zizzi Owned by the same parent company,

expanded range of food.

Frankie &

Benny's

200 Chains across the UK. Offers a range of

food including pizza and pasta. Pre tax

profits for the group of £48,608,000.

Pizza Hut Specialises in Pizza, Pasta and Salad. Nearly

700 chains in the UK. Pre‐tax loss last year

of £24,178,000.

Local

Independent

Various Smaller, independent businesses in areas

may impact on the choice a consumer

makes if offering competitive deals.

Fast Food,

Takeaway

and Home

Delivery

Sector

Pizza Hut Same as above. Offers a collection and

delivery service. Also have delivery only

chains similar to a standard takeaway with

no ‘eat‐in’ facility.

Dominoes

Pizza

Offers a collection and delivery service.

Over 700 chains employing 21,000 staff. All

stores are franchised. Pre Tax profits last

year of £42,015,000.

Papa Johns Currently emerging onto the market with

over 100 stores. All stores are franchised.

Pre Tax losses last year of £1,028,000.

Local

independent

Various Smaller, independent businesses that

make up the rest of the market sector may

influence a consumers choice.


24

Chilled

Prepared

Foods

(Retail)

Goodfella’s

Selling a range of 22 frozen pizzas in

various flavours and bases. Price point

between £1.40‐£2.80 each.

Dr Oetker Selling a range of 9 frozen pizzas with


between £2.30–£2.78 each.

Chicago

Town

Selling a range of 17 frozen pizzas/subs in


between £2.00 ‐ £3.99 each.

Supermarket

Own Brand

Huge choice of fresh and frozen pizzas

available from all large supermarkets.

Prices range from 60p ‐ £4.50 depending

on budget.

(FAME & MySupermarket.com, 2013)


25

8.3 Appendix 3‐ Pricing Analysis based on a standard sized Margherita pizza.

Figure 15: Pricing Analysis

Business Product

Description

Standard Price (non‐

promo)

Cost Difference

against Pizza Express

Pizza Express 8” Margherita £7.20 £0.00

Ask Margherita con

Bufala (Standard)

£10.25 + £3.05

Prezzo Margherita Classic £7.20 £0.00

Zizzi Margherita Classic £7.15 ‐ £0.05

Frankie & Benny’s Medium

Margherita

£7.95 + £0.75

Pizza Hut Regular

Margherita

£6.75 ‐ £0.45

Dominoes Medium Cheese

and Tomato

£10.49 + £3.29

Papa Johns Medium Cheese

and Tomato

£8.99 + £1.79

Pizza Express Retail 8” Margherita £4.50 £0.00

Goodfella’s Stonebaked Thin

Margherita Pizza

£2.80 ‐ £1.70

Dr Oetker Ristorante

Mozzerella Pizza

£2.80 ‐ £1.70

Chicago Town Deliciously Deep

Four Cheese

£2.00 ‐ £2.50

Supermarket Brand Sainsbury's Thin &

Crispy Margherita

Pizza

£1.60 ‐ £2.90

(MySupermarket.com, 2013)

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