In 1970, Pogo, a famous and beloved cartoon character, uttered the phrase, “We have met the enemy, and he is us.” While the reference was made with regards to man’s negative impact on the environment, those words certainly apply to today’s pizza industry as well.
In my conversations with pizzeria operators around the country, I am always asked the same question: “How much do you charge for a pie?” Invariably, my answer is this: “As much as I need to.” That typically invokes a follow-up question regarding the competition. To that, I quote a statement from the menu of renowned pizzaiolo Anthony Mangieri: “ I have no quarrel with the man who charges less for his pizza … he knows what his is worth.” I believe that one of the greatest challenges for independent pizzeria operators is hidden in that statement. We all must know what our product is worth.
All too often, our primary marketing tools involve some sort of giant discount. Even the most experienced operators forget the most basic rule: Low price alone is not an indication of value. In truth, value is a ratio of price to quality. You can have the lowest prices in town and still be a lousy deal. More importantly for independent operators, you can have higher prices and still be the best value — if you offer the very best food and service.
One thing is certain, however: you cannot be the best and the cheapest if you intend to stay in business. Over the last several years, the major chains have done our industry a huge disservice. They have turned an artisan product into a commodity. The $5 large pizza creates the illusion that all pizzas are created equal. Furthermore, it sets the bar so low that it becomes impossible for any of us to earn a fair profit for our work.
The large chains have staked out the low end for themselves. Fine. I say, “Let them have it.”
It is time for pizza makers to understand that what we do has real value. As independent operators, we must resist turning towards the discount game as an easy fix for sales challenges. Every time a piece of advertising goes out that stresses low-priced pizzas, we diminish the value of what we do.
Engaging in a price war is a fatal exercise. Your rivals buy ingredients by the trainload. They function with a core of low-paid employees. They make the best real estate deals for prime locations and they have collective advertising power that can’t be matched.
So, how do we compete? Ironically, Sam Walton, the biggest of all big boys, provided an answer when asked what he would do if he were a small retailer and Wal-Mart came to town. His answer: Specialize and concentrate on giving a level of quality and service that the big chains can’t match.
As independent operators, it is essential that we dictate the rules of engagement. The best part of this is that once you have made the commitment to compete on quality and service instead of price, your life will become much easier. Every decision that you make will be based on only one question: Will this improve the experience at my pizzeria?
Calculate what it costs you to provide a world-class pizza experience, and then add in a fair profit margin. There’s your price point. From there, let those other guys worry about how they are going to compete against the best pizza experience in town.