Pizza and pasta restaurants are enduring tough times, due to growing health-consciousness among consumers. The economic downturn is also having an impact on the frequency with which many can afford to eat out, with the improved quality of supermarkets' chilled pizza offerings providing appealing and affordable alternatives. The eat-in category has slowed and looks likely to stall, although takeaway will continue to record a steady rise. Due to the difficulty of innovation in pizza, brands have focused on developing web, SMS and interactive TV ordering platforms.
Pizza has become a staple of British cuisine. Whether it is a takeaway that arrives, courtesy of a moped-riding delivery boy, a shop-bought treat quickly cooked in the oven, or freshly prepared and savoured in a restaurant with the family, the dish is a universal favourite.
However, it is the array of alternative ways in which pizzas can be bought that is putting pizza and pasta restaurants under pressure. Even within the sector, there is competition between the take-home and eat-in markets.
While for some people pizza is just another form of fast food, others consider visiting a pizza restaurant more of a treat or a leisurely, casual dining experience. Whatever the mindset, its appeal spans generations, and many of the major operators go to great lengths to appeal to the family market.
However, as the nation pays more attention to the nutritional value of the food it consumes, the content of pizzas has come under scrutiny, and the food has lost favour among many trying to improve their diets.
More specifically, pizzas have come under fire from some quarters for their high salt content. Restaurants are tackling this by adding a greater choice of healthier options such as fish and salads to their menus, as well as adapting recipes by using thinner bases and reduced-fat mozzarella. In May, Pizza Hut US launched The Natural, a pizza that uses only organic produce, though it has yet to bring this option to the UK.
Other consumers view eating out as a time to indulge and forget about fat content and calories, but other conflicting issues affect this sector. 'Foodie' trends have made affluent consumers, in particular, more discerning about the quality of their food, leading them to avoid US-style chain-restaurants and seek out more authentic fare.
TV chef Jamie Oliver is looking to tap into this market with the roll-out of his chain Jamie's Italian, which aims to offer affordable, quality food. The first of the restaurants opened in Oxford in June, and further openings are planned in Bath and Kingston later this year.
Despite the pressures on the sector, especially in the eat-in market, pizza and pasta restaurants have continued to grow. In 2007, the sector was worth £1.4bn, with home-delivery accounting for £720m, and eat-in £674m.
According to TGI, most people tend to eat a takeaway at least once a month; however, pizza is the least-popular takeaway offering when compared with Chinese, Indian, burgers and fish and chips.
Part of the pressure has come from the rise in quality of the chilled pizza and pasta stocked by supermarkets.
PizzaExpress has responded by licensing out its pizzas and dough balls to make them available in-store.
However, Pizza Hut and Domino's are the leading players in the sector, and both have been expanding rapidly.
Yum! Brands owns Pizza Hut, which has about 700 outlets and caters for the family market. Despite the relatively limited room for innovation within pizzas, the brand has introduced a Stuffed Crust variant and, in 2006, Cheesy Bites.
Domino's has about 480 outlets, and is expanding by up to 50 stores a year. It is also developing ordering platforms; its SMS service, launched in 2007, garnered 2000 registered users in its first month.
It also removed hydrogenated fat from its range last year, and has introduced a smaller, seven-inch Personal pizza aimed at one-person households and lunchtime trade.
There has also been growing interest in the premium sector, home to brands such as Strada and Prezzo, and the Gondola Group's ASK, Zizzi and PizzaExpress. The expansion of these restaurants fits with the UK's growing number of older, more affluent consumers seeking better-quality food and service.
The range of ordering methods in this sector have also grown with technology; Interactive TV sits alongside the web and SMS.
Mintel predicts that by 2012 the market will reach a value of £1.6bn, a rise of 13% at current prices. However, when the effects of inflation are taken into
account, this represents stasis in the market. The takeaway sector is forecast to grow to reach a value of £857m over the next five years, but eat-in will decline in real terms. L
Sandy Livingstone, director, Enlightenment
As casual diners are looking for keen prices and reliable quality or exciting, fashionable and innovative formats, middle-of-the-road pizza and pasta restaurant brands risk being caught in the squeeze.
Options from innovative retailers such as Waitrose, mean that consumers have access to Italian food at an ever-higher level of quality at home. Domino's takeaway pizzas have doubled their penetration since 2003, and with branded pizzas and pastas now available on shelf and eat-in menu innovation slowing ,the focus is on dining experience and lifestyle fit.
First, the premium market is being successfully segmented by modern brands offering a sense of conviviality, backed by an authentic Italian experience and ingredient provenance.
Our research shows that people are paying more attention to origins of their food (over the past five years, the focus on artificial additives and free range is up 10%), indicating that these formats fit with the values of today's consumers, and can look forward to a bright future.
The family sector is more focused on speed and convenience. This is difficult territory for restaurants, as they generally have an unfavourable cost base in comparison with home-delivery and retail; rising input costs add to the pressure.
Furthermore, some well-known formats are beginning to look long in the tooth. Growth is on the cards, but brands need to adapt if they are to be profitable.
During the downturn, the sector is among those that will suffer the most from consumers' renewed focus on value. Whether Bella Italia or Bertorelli, customers will smoke out those parts of a brand's offer that don't deliver.