Greetings from Pizza Expo

We’ve just returned, energized from our annual trip to Pizza Expo in Las Vegas! As usual, we really enjoyed treating our pizzeria guests to a bit of Real Italian hospitality at our “Stanislaus Cucina.” If you’ve ever visited us at Pizza Expo in the past, you know that for our company, visiting our booth is like a family reunion and an old-fashioned Italian house party rolled into one.

As for the show itself, Pizza Expo this year was fairly well attended. However, I still had plenty of time to spend with individual pizzeria owners to find out what’s going on in the restaurant business around different parts of the country.

In talking about their businesses, nearly everyone I spoke with, from New York to California, Maine to Texas, expressed frustration with the rising cost of just about everything they buy, including flour, cheese, utilities, wages, gasoline, etc. On the other hand, the general feeling among most of our guests seemed to be that rising costs are part of a “new reality” in the restaurant industry.

As a result, most have concluded that it is necessary to regularly pass along their rising input costs through their menu prices. When I asked operators who had raised prices within the last year how their customers had reacted, most said their regulars either hadn’t seemed to notice or had been supportive. As one owner put it, “We’ve been raising prices to cover rising costs. But we’re not worried. You can still feed a family of four with a pizza for a reasonable amount of money. When we’ve told customers we have to choose between quality and price, they tell us, ‘Don’t cut corners, I’m willing to spend another dollar or two.’”

In terms of the economy around the country, most Independent pizzeria owners agree that between rising gas prices and falling home values, families simply have fewer dollars left at the end of the month to spend on anything, including meals out. Interestingly, most Independents also feel that this family budget “squeeze” is causing their regular customers to become more “value-conscious” than “price-conscious.”

That is, having fewer dollars to spend means that their quality-oriented patrons are becoming even more quality-focused than ever. As one Italian restaurateur put it, “My regular customers are still coming in like clockwork, but they expect excellence and won’t tolerate anything less!”

That’s why most of our guests feel strongly that their future success depends even more heavily on maintaining or enhancing their food quality edge over the chains and on working even harder to further personalize their service. As one Midwestern owner put it, “We just have to be certain that our food and our service are the best they can be, so our customers never want to go somewhere else.”

I think it is important to note that the type of operators who attend Pizza Expo do tend to be relatively successful in their businesses. So to hear that most of our guests are doubling down on service quality and maintaining or enhancing food quality wasn’t a surprise. What was surprising, however, was the number of quality-oriented Independents who saw the soft economy as an

opportunity. They said that as a result of the economy, their price-oriented competitors, particularly chains, were further reducing service quality, portion sizes, and most importantly, ingredient quality. As a result, they felt those competitors will eventually leave patrons unsatisfied with their offerings. This will lead these unsatisfied patrons to seek out and find quality-oriented Independents like themselves.

As one upscale pizzeria owner put it, “I hate it when the cost of cheese and flour go up, but you can bet the chains selling five dollar pizzas hate it even more. I assure you that a good tasting pizza cannot be made for five bucks! In a year or two, it will be the cheap guys who are closing their doors, and we’ll still be attracting loyal customers looking for a better pizza.”

Hopefully you’re already taking the necessary steps in your business to ensure that your menu prices keep up with inflation. But if not, what I heard from successful Independents at Pizza Expo is that taking that first leap of faith caused them to become even more confident in the power of superior quality food in attracting loyal repeat customers!

While times may be getting tougher, I’m very optimistic that Independents who remain focused on superior food quality and personalized service will keep winning, just as they did during the quality wars of the 1980s and 1990s. That’s my bottom line!