Upstart Pizza Chains Close Locations as Domino’s Keeps Growing

(Bloomberg) — A push by upstart restaurant chains to challenge the dominance of Domino’s Pizza Inc. and Pizza Hut isn’t going well.

Pie Five, a business that’s attempting to bring a fast-casual approach to pizza, is shuttering locations in Illinois, Colorado and Minnesota. The Wisconsin-based Toppers Pizza chain, meanwhile, is closing four locations in the Chicago area.

“It’s just tough,” said Michael Halen, an analyst at Bloomberg Intelligence. “They could be opening in bad locations, or bumping up against mom-and-pop places that have a strong customer base.”

Pizza entrepreneurs have long been trying to duplicate the success of fast-casual chains such as Panera Bread Co. and Shake Shack Inc. But it’s been an uphill battle to create a successful national business.

Domino’s has used technology such as mobile ordering to solidify its market share. And a broader restaurant slump has made it hard for upstarts to find their footing.

Pie Five, which is based in Texas, is closing 14 locations. Its same-store sales — a key indicator — tumbled 17 percent in the most recent quarter. The company blamed the broader industry slowdown, as well as more competition.

Pie Five, owned by Rave Restaurant Group Inc., said in February that rivals are taking a bite out of sales. “Increased competition within the fast-casual segment and general industry softness contributed to weakened trends,” the company said at the time.

But the slowdown hasn’t brought much of a speed bump to Domino’s. It’s been able to draw customers with mobile-ordering technology and discounts, including a deal offering two items for $5.99 each. Domestic comparable-store sales jumped 12 percent in the fourth quarter, a sign that it’s taking market share from rivals.

Toppers, meanwhile, plans to focus on areas such as Minneapolis and Indiana, where it sees more opportunity for growth.

“We’re just going to concentrate our growth on areas where we’re already expanding,” said spokeswoman Bridget Vetter.

The chain may take another stab at the Chicago market if it can return in force, she said.

“We’re going to come back when we have a better opportunity to really saturate the market,” Vetter said.


©2017 Bloomberg L.P.


This article was written by Leslie Patton from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].

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