Ali Lovek
Mr. Reuter
Economics
5 March 2015
The Effect of Pizza on the Economy
In this ever changing economy the supply and demand for almost all products is constantly changing. Something that has stayed strong and helped the economy tremendously is the pizza industry. The pizza business is a 40 billion dollar industry when measured by sales per year. It makes up 17% of all restaurants in the US.
By being the number 5 comfort food in America, pizza companies have always been able to provide an enjoyable product to consumers. These companies know how to get customers, and one way they’re doing that is by offering deals. When Pizza Hut started offering a $10 pizza with up to three toppings, their business went up 8%. Domino’s did a similar thing and started offering 2 medium pizzas for $5.99 each and then their sales jumped 11.7%. Each company had to make a trade off by creating money saving deals. They could either have lower prices and more customers, or higher prices with less customers. When they decided to make these deals the opportunity cost was more profit from each single order, but with these new prices will come more customers meaning that the benefits will outweigh the cost. The reason sales went up after cheap deals were offered is because pizza is an elastic good, meaning that the lower the price is, the higher the demand will be and the more customers will want. According to FranchiseHelp, Americans eat approximately 100 acres of pizza a day. That’s 350 slices per second! Not only that, but the pizza demographic is huge; 93% of Americans eat at least 1 pizza per month. Even with all of those people already buying pizza, 41% of people say that they’re not getting takeout or delivery as much as they would like to. About ¼ of people will also say that technology will play a big role when choosing where they buy their food. For these reason many pizza chains now have online options were people can order their takeout from their computer. Domino’s Pizza CEO, Patrick Doyle, says that 45% of their business is online, and that digital ordering is also more profitable. When people order online they usually get more and have a higher satisfaction.
Another way the pizza industry has helped this economy is by creating many jobs. There are approximately 70,000 pizzerias in the US; the biggest pizza chain is Pizza Hut which produces 12.9 billion dollars in annual sales, and they have over 160,000 thousand employees. In addition to that, eating and drinking places are expected to add jobs at a 3.2% rate in 2015. By 2025 the entire restaurant industry will employ 15.7 million people. With more and more becoming digital though, a problem that people worry about is not have as many workers needed. However, the CEO of Domino’s pizza says that their restaurant is growing so much that he doesn’t see that becoming a problem, and that they are still hiring in their stores.
All of these statistics discussed in the above paragraphs prove that the pizza industry has stayed strong throughout the years, and will continue to thrive in any economy. It also does our economy great justices by creating enjoyable products for customer satisfaction, and by creating hundreds of thousands of jobs. For these reasons, the pizza industry is both needed and wanted.
Bibliography
Berman, John. "Pizzerias Thrive in Slumping Economy." ABC News. ABC News Network, 8 Dec. 2010. Web. 8 Feb. 2015. <http://abcnews.go.com/Business/pizza-survives-recession/story?id=12306684>.
Bomey, Nathan. "Q&A: Domino's Pizza CEO on 2015 Outlook." Detroit Free Press. 4 Jan. 2015. Web. 8 Feb. 2015. <http://www.freep.com/story/money/business/michigan/2015/01/04/dominos-pizza-patrick-doyle-michigan-economy-jobs/21212647/>.
"NRA Forecasts Continued Growth for Restaurant Industry in 2015." Www.pizzamarketplace.com. 27 Jan. 2015. Web. 8 Feb. 2015. <http://www.pizzamarketplace.com/news/nra-forecasts-continued-growth-for-restaurant-industry-in-2015/>.
"Pizza Industry Analysis 2015 - Cost & Trends." Pizza Industry Analysis 2015 - Cost & Trends. Web. 8 Feb. 2015. <https://www.franchisehelp.com/industry-reports/pizza-industry-report/>.
"Pizza Today - The Top Five Pizza Companies Are..." Pizza Today. 1 Nov. 2014. Web. 8 Feb. 2015. <http://www.pizzatoday.com/industry-news/pizza-headlines/the-top-five-pizza-companies-are/>.
"Pizza Statistics." Statistic Brain RSS. 18 June 2013. Web. 8 Feb. 2015. <http://www.statisticbrain.com/pizza-statistics/>.
Forget burgers and fries, pizza is definitely America's favorite food! I had no idea how much pizza people consumed, or that over 90% of Americans eat pizza at least once a month. The entire country eats pizza! Pizza companies can afford to offer deals on their pizzas a lot because they know that pizza is actually a pretty inelastic good, just because it's a staple part of American diet and there are so many different pizza places to choose from if the price skyrockets at one of them. While it may just be a food, pizza actually really assists the economy. What do you think would happen if there was some sort of massive pizza shortage? Do you think the economy would actually experience a notable drop just because of pizza? Pizza really is an amazing thing! Great post!
ReplyDeleteThe statistics in this are mindblowing; I knew that pizza was basically a staple food in America, but it never occurred to me how much of an economic impact it had! Hearing that it's pretty much needed to sustain jobs and economic growth gives me comfort that I won't have to worry about pizza dying out! Perhaps something you can do to really broaden the horizon on just how much pizza impacts the U.S. is compare the consumption rates of pizza between our country and select countries from around the globe? That way we can see on an even bigger scale where the pizza industry stands on the economic food chain! This was a nicely detailed article!
ReplyDeleteI totally agree that pizza makes a huge effect on the economy. Especially here in America, we love all fatty, delicious foods. Pizza is enormously popular and is a food that can be adjusted to many different tastes so it's hard to not like it. This is something that will always benefit our economy, as you said, because it will always be a well-liked food. From your pizza hut trade off's analysis, I think it's very important when pizza companies make these kinds of decisions; raising prices or decreasing prices. Of course all of us consumers want the prices to go down, and I think it brings in a lot more customers which benefits them because it brings them a greater profit. Overall, great job and great argument!
ReplyDeleteAmericans eat 100 acres of pizza a day! jeez, I knew we eat a lot of pizza but i didn't think we ate that much and it is no surprise that Pizza Hut and Dominoes are the leaders in the pizza game, but looking at the pie graph I was confused why independent business are making more the the chains, shouldn't Pizza Hut have the biggest slice considering there are Pizza Hut's everywhere.
ReplyDeleteWell first off, I love pizza, just like the rest of America. I did not know however, that 17% of restaurants in the US is made up of pizza parlors and shops, with 350 pizzas being eaten per second. I find it interesting, but not surprising, that Pizza Hut, Domino's, Topper's and other pizza places would be having their revenues increase throughout time, and especially through being able to order pizza online. The demand for pizza has increased gradually, but it doesn't help that nowadays, lots of people are trying to lose weight, which could mean that pizza businesses might have their income and revenues drop some percentages. However, it doesn't help that these companies keep changing their prices on their products, which will keep consumers coming in and ordering everything that they want - especially at a discount. Overall, I enjoyed this blog post, especially because I can relate with the love of pizza.
ReplyDeleteI thought this was an interesting topic to write your post on because I don't think that many of us really think about how much we are contributing to the economy when we buy pizza, but it turns out we are contributing an immense amount! The most surprising thing to me after reading this post was that "Americans eat approximately 100 acres of pizza a day". That was crazy to read and a cool fact to include because it was easy to picture how much pizza that really is, I mean that's a huge amount! I knew that pizza was a popular industry but I didn't know that it was this popular, or the most popular. I think some of that has to do with the fact that the majority of people in America just love pizza, and it is an easy food to make multiple different ways. It is probably so easy for pizza companies to come up with new deals and menu items that spark an interest in everyone because the item itself is so changeable, or has a lot of variety. Overall, this was a cool post and I learned something I didn't know before!
ReplyDeleteI love this post not only because you did a nice job but I love pizza. Pizza to is a necessity because it is so good. I am defiantly one of those people who has pizza at least once a week. It's hard not to, especially when it's frozen pizza, because it's so easy and quick to make. There is such a high demand for pizza that I don't see any problems arriving in the future about not having enough costumers. I loved the pie chart because I never realized how big Pizza Hut's industry is until now. I knew they were big but them being 14% of the Pizza industry as a whole is very impressive. Loved your post!
ReplyDeleteThe pizza industry is extremely profitable here in the United States. With special deals, chains like Pizza Hut and Dominoes interesting change the markets. They offer lower prices that increase the demand. All they are doing is moving towards equilibrium where they can make profit and people will still buy.
ReplyDeleteI was surprised at how much pizza people eat and how much it impacts the economy. It is probably easier for pizza companies to offer deals on their food because they know that a lot of people will buy it, and they already have a lot of money from their pizza. I think they are able to lower the price because they have plenty of profit already, so the discounts won't hurt them. Additionally, a lower price means that more people will want to buy it. It is interesting that independent companies make the most money when compared to other large companies such as Pizza Hut.
ReplyDeleteThis was a great topic to bring up because many of us probably eat pizza very regularly. I agree that this topic does relate to economics very well because it impacts the economy a whole lot. When a company has a promotion that they give out, it can draw more people to there pizza store. For the pizza industry it is easily seen that some companies suffer because they don't have promotions. But then the companies with promotions make more money and then the others will make less. Overall, I thought that this post was a very interesting topic to bring up because many people don't think about the economics perspective of pizza.
ReplyDeleteIt is crazy to think of how much Americans eat pizza. I would have never guessed how beneficial pizza can be for our economy. Also I found it crazy how many people the industry employed. I personally would be in the 7% that don't eat pizza once a month. Also I found it interesting the trade offs and opportunity costs that these companies have to think of. Usually you don't jump to the conclusion saying pizza companies have to think about economics. 100 acres a day sure does show how important pizza is to us Americans.
ReplyDeletePizza is a huge industry in the United States. There are so many chains and also independent pizza companies. Pizza always being in high demand, makes it so companies have to employee a lot of people to meet that demand. You said that the pizza industry is thriving and continue to grow, but with increased sales online wouldn’t that actually be bad for the industry? With more of the business done online, not as many employees are needed.
ReplyDeleteAlthough I don't particularly like pizza, I loved this post. I never realized how great pizza affected the economy. I seriously cannot believe how many pizza is eaten in the US in one day! That's crazy! Also, how is Pizza Hut is the biggest pizza chain? Their pizza is really disgusting. If I could pick one pizza company to never visit again, it would have to be Pizza Hut. I mean, do they stick their dough in a tub of grease for a week? Why are their bread sticks and pizza crust so greasy? It's just nasty.
ReplyDeleteAli, you are a champion, good job. No. Great job. :)
This is a good topic, since a lot of people can relate to it. I thought it was really surprising how much pizza people eat. Also, I liked how you provided lots of statistics as to how popular pizza is. I think that dropping the price of pizza to get more customers doesn’t really make that much of a difference to the businesses since it is such a popular good and they make a lot of money on it anyway. I never thought of how I contribute to the economy when I buy a pizza.
ReplyDeleteIt’s clear that pizza is by far America’s favorite snack. Mostly for schools, you sometimes see class ice cream parties and a pasta party here and there, but do you ever hear a burger and fries party? No, because pizza sweeps the field clean of any other stereotypical foods Americans tend to chow down on. Pizza parties are so common, I had one this week even. It’s ridiculous to think such a greasy dish of bread, cheese and sauce, can make every person’s answer yes when asked “have you ever tried a pizza?”. Pizza didn’t even originate in America, it originated in Italy, which makes it even more bizarre for Americans to be so crazy about it.
ReplyDeleteSpeaking of pizza: I just had Rocky Rococo's last night and it was delicious. Pizza is just a relatively cheap and tasty food that people everywhere enjoy. I'm kind of surprised Pizza Hut had only roughly 15% of pizza sales. For some reason I thought they dominated the pizza industry. Anyways, what blows my mind is that Pizza Hut has over 160,000 employees! At least the pizza industry will probably be around for a while yet if not forever.
ReplyDeletePizza is very popular in America and it's crazy to think about how much revenue it gains. It would be interesting to compare this to other countries and see the revenue from this simple food. Also, it would be interesting to compare it to other restaurants and see the impact of the pizza economy.
ReplyDeleteI didn’t know the statistics of pizza were and now I see how important this valuable product is for the economy in the U.S. By buying pizza, we are helping the economy and making jobs be available across the country. It is very interesting how a food product can have such prominence in the lives of Americans and be so good. It is also interesting to look at the effects that technology has had in pizza businesses where the product is made on the spot, it is so weird that almost half of their consumers use the internet instead of the traditional ordering by phone or going into the store. This just makes us realize more and more that technology is vital for e v e r y t h i n g nowadays.
ReplyDeleteI never knew anyone kept that much information on pizza! Pizza is such a simple purchase I never really thought about how much it does for our economy and how many people actually eat it. Now that you brought up the pizza subject, it makes me wonder what other foods we take for granted that may have an even larger impact on the economy. The fact that several pizzerias have used the online ordering system definitely doesn't surprise me that their ordering went up. That just shows that our economy is improving and so is the technology.
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