Dive Brief:

• The U.S. pizza industry is worth nearly $46 billion in revenue as of September with the top pizza chains dominating the industry with nearly a 60% slice of the market, or $26 billion. Independent and small chains are worth nearly $19 million in revenue. The North America pizza market is expected to grow 10.2% in the next five years,  PMQ Pizza Magazine reports.
• Domino’s dominates the segment with sales just shy of $6 billion in 2017 growing 11% compared to 2016. Pizza Hut, which used to dominate the segment, dropped 4.2% in sales to $5.5 billion in 2017.
• The fast casual pizza segment, which was booming a few years ago, appears to have reached saturation and started to decline in same store sales and unit growth slowing in 2016 to 2017. Pieology, which had 25% sales growth and 68% unit growth in 2015 to 2016, slowed to a pace of 16% sales growth and 3% unit growth in 2016 to 2017.

Dive Insight:

Pizza remains a stalwart in the quick service restaurant industry despite some declining sales among top competitors Pizza Hut and Papa John’s. A recent survey by PMQ revealed that over 60% of companies surveyed increased sales compared to the last year, according to PMQ Pizza Magazine. Although hamburger-focused restaurants garner the largest share of QSR sales at 30%, pizza companies are second in the QSR industry with 15% market share, according to Franchise Help. A majority of consumers also eat pizza at least once per month, PMQ Pizza Magazine reports.

Domino’s has been leveraging technology to provide consumers with a plethora of ways to quickly order their favorite pizzas and it seems to be paying off. Earlier this year it unveiled Hotspots, where consumers can go to a set destination, such as a park, and have pizza delivered to them. Executives told investors that Hotspots helped generate additional attention for the brand. Same-store sales rose 6.3% domestically during the third quarter ending in September. In the U.S., year-to-date, Domino’s opened 140 stores while closing seven.

Comparatively, Pizza Hut grew same-store sales by 1% and declined units by 1% during the third quarter, according to a call with investors. Both Pizza Hut and Papa John’s have been rolling out new technologies or enhancing their rewards programs, but it could be some time before they can catch up to the same pace at Domino’s.

With a Papa John’s sale still up in the air, it may not be until after the brand sells or things settle down internally before the company has a chance to catch up. Last quarter, Papa John’s comparable sales in North America declined by 9.8%.

Fast casual pizza chains appear to be holding their own despite a recent slowdown in growth. The slower pace could simply be a sign of market saturation, according to PMQ Pizza Magazine, rather than a declining interest from consumers. These fast casual chains offer more individual pizza that can make them more ideal for lunch than the pizza offered big chains. They also offer a wider variety of toppings and healthier options than some of the larger chains. Now that these chains have reached saturation after a few years of explosive growth, the next five years will help determine whether these companies are a passing fad or are here to stay.