Frozen pizza sales are red hot and expected to outlast the pandemic
The pandemic has been hard on restaurants, as physical distancing requirements have led many to shut their doors and do their best to stay alive however they can.
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Yet COVID-19 lockdowns have also presented an opportunity for some. Pizza consumption has surged during the pandemic. And rather than bringing the family down to the local pizza place, Canadians have moved in droves toward making the frozen variety the pie of choice.
According to market research firm Nielsen, frozen pizza sales rose 20 per cent in the year up to the middle of March to reach $650 million across the country. Sales of pre-made crusts and do-it-yourself dough are up even more.
Nearly three-quarters of all Canadian households bought some sort of do-it-yourself pizza this year, and online sales are way up, according to Nielsen.
Family business evolves
Archie’s Pizza in Starbuck, about 50 kilometres southwest of Winnipeg, sold a big slice of the pies in Manitoba.
Originally started by Archie Mollot in the 1930s, the family business is now partly owned by his grandson, Phil. Over the years, it’s evolved from a meat business into more of a pizza-selling empire.
That transition started about 20 years ago as a small side business, but now, selling pies is about two-thirds of the business’s revenue.
“We were selling … about three times more than usual for a month-and-a-half to three months at least,” the younger Mollot said of his experience in the spring of 2020, when COVID-19 lockdowns swept across Canada.
Even after settling down from those crazy, early pandemic days, the business is still selling about 15 per cent more than it was before this all started. Archie-made pizzas are now sold in 25 stores — everywhere from Winnipeg to Brandon to Portage la Prairie, about 215 kilometres and 85 kilometres west of the capital respectively, and a number of points in between.
While he’s glad to be busy, that growth has come with challenges as it was hard to keep up with demand.
“We’ve learned a lot, and we could handle a third wave, but I don’t see it being anything like the first one,” Mollot said. “I think that was just people not understanding that we’re not going to run out of food.”
Archie’s pizza isn’t the only one seeing a surge in demand from hungry customers.
Feeding the growing trend
Toronto restaurateur Ali Khan Lalani said he was scared last March when he had to close his pizza place, General Assembly Pizza, because of the pandemic, not really knowing when he could open up again. It had only been in operation since December 2017.
But on a trip to the grocery store getting food for his family, he noticed the store was limiting frozen pizza sales to four per customer. That gave him an idea: he could use his restaurant’s ample space to make pizzas that his customers could have delivered to cook and eat at home.
“We took off our restaurant hats and we put on our grocery hats,” he said in an interview.
“We’ve got the dough, we’ve got the cheese, we’ve got the sauce. Let’s try to roll out a pizza kit. We actually launched the pizza kit on the third day after everyone closed, and we were overwhelmed by the response.”
From there, the idea evolved to a ready-to-cook frozen pizza, and then to a direct-to-consumer frozen pizza subscription service, delivering customizable packs of up to 10 pizzas a month.
The idea has been such a success that he plans to open a larger master facility outside Toronto very soon and potentially additional restaurants next year.
The company recently tried to raise $3.5 million to fund expansion plans, and investor appetite was so great they ended up taking in $13 million. Now, they’re planning to go public on the Toronto Stock Exchange as soon as this year. That could provide the capital to make General Assembly pizzas available across Canada — if not the world.
“I was blown away, and I feel extremely fortunate and humbled to have that much interest in our business and what we were doing,” he said.
Pizzerias were among 1st to go online
That interest comes as no surprise to Jonathan Waze, the editor of Restaurant Business, an industry trade publication based in Minneapolis.
In an interview, he said he’s not surprised to see the pizza business is booming in this pandemic-induced era where everyone is even more online than usual, since it has a long history of being far more technologically savvy than most other types of restaurants.
“Go back to the ’90s, and pizza chains were actually the first restaurants to really embrace the web as a source of sales and ordering,” Waze said.
Nearly 30 years ago, Pizza Hut earned the distinction of becoming the first company to ever sell anything over the World Wide Web when they opened their web portal, then called PizzaNet, in 1994.
Though bare bones, customers could type in an order, phone number and address and get a pizza delivered. Few did at the time, but it’s hard to imagine a successful restaurant business that hasn’t fully embraced the internet now.
Waze says many parts of the food industry have been seeking to move more into direct-to-consumer selling and away from physical locations, and the pandemic might have presented the pizza industry with the perfect opportunity to push harder in that direction.
“It’s fascinating,” Waze said of the type of subscription service that Lalani is pioneering. “I don’t see any reason why something like this can’t work.”
While he’s as surprised as anyone to go from making pizzas to becoming what he calls a “data driven e-commerce business”, ultimately Lalani says he’s still a restaurateur at heart. He can’t wait for the day when he’ll get to reopen his flagship location in downtown Toronto to diners wishing to eat in again.
But with all he’s learned, he knows the direct-to-consumer model is the future. He’s all for it.
“The frozen pizza business is a $17 billion … a year business in North America,” he said. “And we just want our slice.”
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