Key drivers for pizza profitability: report

A new report by IBISWorld examines the strength and profitability of Australia’s pizza industry, arguing that independent operators are well positioned to capitalise on the growing interest in gourmet offerings.

The Pizza Restaurants and Takeaway in Australia report found that industry revenue sits at $3.7 billion, with profits of $269.7 million. There are 4,004 businesses in the sector, and over the five years to 2016-17, revenue is expected to grow by a compound annual 2.8 percent.

Rise of gourmet
Despite the higher price-point associated with gourmet offerings, over the past five years customers have been displaying growing interest in pizzas that boast premium toppings.

“Industry pizza restaurants have embraced these trends and provided a growing range of gourmet pizzas at premium prices,” the report reads. “As a result, industry profit margins have risen over the period to represent an estimated 7.3 percent of industry revenue in 2016-17.”

Pizza shops offering ‘traditional’ toppings like pepperoni and supreme used to account for more than 90 percent of the industry, however restaurants have worked to upgrade their image over the past five years, introducing gourmet, authentic Italian pizzas, in spite of challenging economic times.

“While traditional pizza remains the industry’s largest product segment, it has declined as a share of industry revenue over the past five years,” the report reads.