Subway Seeks To Slice Domino’s, Pizza Hut Pie
Pizza is coming to Subway. By June, the largest restaurant franchise in the country will add deep-dish style personal pizza to the menu at 13,000 U.S. stores. The introduction will place even more heat on Pizza Hut and Domino’s Pizza, both of which saw sales cool off in 2006.
As the No. 1 player in the sandwich chain category, Subway has been trying to incorporate pizza onto its menu for about 10 years. Logistical problems, such as an oven that “took up eight feet of counter space and a separate table for fresh dough,” slowed the introduction, said Cindy Kopazna, project leader for new product development at Subway, Milford, Conn.
Speed ovens, which were installed nationally in 2005, have allowed Subway to streamline the process. Some nontraditional locations at hospitals and airports now offer pizza, but only a few traditional stores have had it during a trial period.
An employee at a test store located in the East Village section of New York City said they only sold two pizzas the first day of the test in late March, but are now are up about 25 a day. The biggest problem: patrons don’t know about the product despite a prominent sign on the menu board, he said.
Introductory marketing should address that issue. TV ads, initially created by a combination of local agencies, will spread the word, per Kopazna. They will show romance shots of the pizza with the message: “Fresh from the oven in 90 seconds, personal pizza topped your way.”
When asked if Pizza Hut should be worried, Kopazna said, “Sure.” Pizza Hut refused comment.
“It’s got to hurt somebody because of [Subway's] sheer number of locations,” said Ron Paul, president at Technomic, Chicago. “Even if pizza makes up only 5% of Subway’s sales, that’s a lot of pizzas. It’s all a question of who wins and who loses.”
Lately, Pizza Hut and Domino’s are the ones losing. In a fast food category that has been roughly flat, Pizza Hut’s U.S. sales were down 3% to $5.2 billion in 2006, per Technomic. Domino’s sales were down 2.8% to $3.2 billion. Subway grew 7.7% to $7.7 billion.
Subway’s addition of pizza is not without precedence. McDonald’s has been testing pizzas off and on for years. Panera Bread Co. offers pies after 4 p.m. Dunkin’ Donuts is testing individual pizzas at four locations; Dunkin’ Deli locations also offer “Pizzettas.”
“Pizza is the most competitive category in fast food,” said Bob Sandelman, CEO at food service research firm Sandelman & Associates, San Clemente, Calif. “There are not only the chains, but also local competition from mom and pops and regional players.”
One potential branding issue is the fact that pizza flies in the face of Subway’s healthy-for-you proposition. “I can’t see them launching a national ‘Eat Fresh.’ campaign for pizza,” said Paul. “I don’t think they want to mess with their image. Sure, it’s available, but it’s not the chain’s focus and it’s not the reason most people go to Subway.”
According to Kopazna, “We’ve got all types of customers. We’re not trying to be all things to all people but we do have a menu that does have variety on it so those who want to enjoy a meatball sub or one of Jared’s favorites have the option.”
The thick-crusted personal pizzas are prebaked at central locations and shipped to nearby stores. Basic pies will go for $2.99. Additional toppings, such as pepperoni, sausage or meatballs, are an extra dollar. Vegetables and extra cheese are free.
“After you eat this you won’t go back to Pizza Hut,” the Subway employee in New York boasted.
By Kenneth Hein for BrandWeek.com
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