The pizza market in India appears to be mirroring a trend visible in the fast-moving consumer goods (FMCG) industry, as food inflation and the need for more options drives consumers towards cheaper and new alternatives.
Small and regional pizza players are eating into the share of bigger rivals, data sourced from the industry indicate. This comes at a time when players such as Jubilant FoodWorks, the master franchisee of Domino’s in India, are responding with a brand refresh, more combo offers and new pizza toppings.
The rise of food aggregators such as Swiggy and Zomato, say experts, has also contributed to the growth of smaller pizza brands over the last few years.
Conversations with analysts and industry executives indicate that local pizzerias and regional chains now constitute nearly 30% of the Rs 8,300-crore pizza market in India. Five years ago, this number was under 15%. Morevoer, local chains may continue gaining share as the market remains competitive, experts said.
“Post Covid-19, local competition within pizza had virtually been eliminated because of the constraints that the overall business was under, but now these small players are coming back,” Manish Dawar, chief financial officer and whole-time director, Devyani International, a franchisee for Pizza Hut in India, said during the firm’s Q3FY24 earnings call in February.
Sanjay Purohit, group CEO and whole-time director, Sapphire Foods, the other franchisee for Pizza Hut in India, said competitor intensity within pizzas remained high, hurting Pizza Hut sales.
Local names such as Tossin, Smokin’ Joe’s, La Pino’z, Leo’s Pizzeria, online-only brands such as Ovenstory and MojoPizza, and newer entrants such as South Korea’s GoPizza are competing on price and toppings with national chains, Karan Taurani, senior vice-president, research at brokerage Elara Capital, said.
“At a broader level, the pizza market is also facing the heat from other segments such as burgers and fried chicken,” Taurani said. Local competition in pizzas is also fierce versus burgers and fried chicken, he said.
“The pizza market is highly cluttered with the cumulative number of outlets far outpacing other quick-service restaurant (QSR) segments,” analysts at brokerage IIFL Securities said in a recent note.
According to industry estimates, there are around 4,000 pizza outlets across the top 15 chains in India, which is double the number of burger outlets at 2,000 and four times that of fried chicken outlets (close to 1,000 stores) in the country.
Executives at Jubilant FoodWorks were not immediately available for comment. But during the company’s Q3FY24 earnings call in January, company officials said that Domino’s was gaining share in a competitive market. They said Domino’s had a 46.8% share of the 4,000-odd pizza stores in India, with revenue share at 69.7%.
“The latest brand refresh for Domino’s — It happens only with Pizza — will help us reimagine the brand as a companion for every joyful moment. We also intend to increase the pizza occasion share within the $51-billion food services market in India, where pizza is just $1 billion,” Shyam Bhartia, chairman, Jubilant FoodWorks, said, when addressing investors.
Devyani International, Dawar said, remained cautious about the segment given the competitive market. The company was going slow in terms of store additions (30 outlets added in Q3FY24 versus 40-50 added in the past), had enhanced brand visibility and in-store experience, and increased premium pizza offerings.
Purohit of Sapphire Foods said the company would put more focus on marketing and brand-building efforts apart from innovating in terms of flavours and toppings to improve Pizza Hut sales.