The pizza segment is as dynamic as ever.
As costs increase and customers demand convenience, operators have sprinted toward tech-based solutions and innovative growth strategies. Companies are reinventing themselves, but also not ignoring what made them special in the first place.
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For the first time, QSR is partnering with its sister publication, PMQ, to provide a holistic deep dive into what pizza restaurateurs are focusing on and where they’re heading next. The report explores the potential applications of artificial intelligence and gives insights into how major chains are adapting to market trends, among other major topics.
High On AI
You might assume Domino’s is leading the way in bringing AI to the pizza industry. After all, the chain’s executives have proclaimed that it is, first and foremost, a technology company. But, while Domino’s isn’t exactly lagging—it has been using DOM, an AI-powered ordering assistant bot, for years—other smaller brands have also been running point in this AI revolution.
Foremost among them: Jet’s Pizza, the Detroit-style chain headquartered in Sterling Heights, Michigan, with about 440 locations in 23 states. Jet’s says it has fulfilled more than 5 million orders with the OrderAI Text and OrderAI Talk systems from HungerRush. The text-to-order option began in 2019, and, as of July 2023, 4 million orders had gone through. Moreover, in December 2021, the brand started piloting Order AI Talk, an AI-powered chatbot. It’s now available at 240 stores in 20 states and has already surpassed 1 million orders. In July, the company said it was earning $6 million per month using AI tech.
Aaron Nilsson, Jet’s chief information officer, noted at the time that AI has made employees’ jobs easier, too. “One of the biggest concerns we were hearing from franchisees was getting enough applications in the door, so we addressed this with technology,” he said. “OrderAI can take infinite phone calls, which is instrumental in getting employees off the phones and back into the fun part of the job—making delicious pizzas.”
Nilsson added that Jet’s has “seen less turnover as work stress has been reduced. Technology has created a better work environment and, let’s be honest, it’s really fun for our customers to use.”
But Domino’s is very much in the AI game, too. In October, the brand announced a new five-year partnership with Microsoft “to create the next generation of pizza ordering and store operations with generative AI technology and cloud computing power.” Domino’s revealed that it had been experimenting with data and AI capabilities to “make store operations smarter, simpler and more robust.” The Microsoft partnership’s goal: develop a generative AI assistant that will streamline day-to-day managerial tasks, like inventory management, ingredient ordering, and staff scheduling. It will also help with pizza preparation and quality control and could free up store managers to spend more time with customers and team members.
“The rapid advancement of artificial intelligence … will revolutionize not just the tech industry but the restaurant industry as well, and pizzerias are no exception,” says Bobby Lawson, publisher and technology editor at Earthweb, an online business, technology and lifestyle publication, and resource discovery platform.
So what are AI’s potential applications for pizzeria operators?
“For marketing, AI can be used for personalized customer engagement,” Lawson says. “They can use artificial intelligence to collect data about customer feedback, order history, and preferences. They can then use this to create a more personalized marketing campaign and send emails with recommendations based on the customer’s order history and preferences.”
Additionally, Lawson adds, “AI can make operations a smoother process if it’s used to optimize inventory management. With all the data that AI can collect, it will be able to track inventory levels. The AI system can then be trained to generate reorder points, assisting pizzerias in reducing food waste and ensuring they have the right stock on hand to create their customers’ favorite pizzas.”
Kat Campbell, a data scientist and author of a Substack newsletter called Data Science and Machine Learning 101, notes that AI can drill down to uncover and employ data in surprising ways, such as “analyzing past consumption patterns and factoring in variables like local events, weather forecasts, and seasonal trends” to optimize inventory and control food costs. She also recommends using AI-driven analytics “to understand customer preferences better, tailoring the menu based on popular choices and even predicting future culinary trends.”
Coppell, Texas-based Cicis Pizza found a more novel use for the technology this past summer: leveraging AI as a social media “intern.” Over the summer, Cicis’ marketing team used ChatGPT and Midjourney to create social media posts, including graphics and captions, across all platforms. The first post created by the “AI intern” went live on Instagram on July 17. It depicted an AI-generated robot bearing pizzas and a simple caption: “Meet our AI intern slicing up pizza posts this month at Cicis!”
As a copywriter, AI leans a bit too hard into clichés, but it generates some splendidly weird graphics; after all, it lacks the artistic and design sensibilities that humans possess and often doesn’t understand or prioritize esthetic principles. That’s just part of the fun. Case in point: Cicis’ July 19 post, depicting a football player leaping above a crowd of fans, mouth open wide to bite into a floating pizza—even though he’s still wearing his helmet.
All in all, the Cicis initiative was successful, but it won’t replace real, live social media managers anytime soon, says Maria Trujillo, the brand’s senior vice president of marketing.
“When it comes to our in-feed content for Facebook and Instagram, posts featuring our AI intern’s creations yielded average engagement rates that were at least 15 times higher than the industry average,” she explains. “For us, these results are in line with our typical social engagement, so, while not a huge boost from a metrics standpoint, it successfully opened up new creative possibilities, allowing us to try new things without any additional investment—like reimagining our brand mascot as an anime character.”
Moving forward, Trujillo adds, “[AI is] a tool we’re employing to help drive efficiency and assist with brainstorming. But unless we’re creating something wildly imaginative, like a mac and cheese robot, it will be used day to day as needed. Our food means everything to us, so even if AI could replicate our pizza’s appearance perfectly [in a social media graphic], we wouldn’t want to do that. Authenticity matters, and we often went back in and incorporated our actual product shots into the AI images so that it better reflected the food our customers could find on the buffet.”
Regardless, Nilsson believes AI tools should no longer be thought of as optional for restaurant chains. “We see them as key competitive differentiators that position us as a market leader,” he says. “With this type of technology, we’ve been able to significantly elevate our brand.”
Cicis’ marketing team will continue to incorporate AI into social media “when it makes sense,” Trujillo says. “However, like in all industries, I’m sure AI will find its way into every little corner of our operations at some point. But there are no grand plans just yet.”
Big Players Make Noise
Of course, the quick-service pizza chains won’t likely give a lot of ground in the tech race. As previously mentioned, Domino’s and Jet’s have already taken the AI plunge, along with Yum! Brands, Pizza Hut’s parent company. But 2023 was a mixed year for the industry’s leading brands. For one thing, while Domino’s hasn’t surrendered its spot as the world’s largest pizza chain—not by a long shot—its executive leadership had to make some tough decisions to stay on top this year.
Most notably, Domino’s finally yielded to the seemingly inevitable: third-party delivery. For years, the company had shunned aggregators even as its rivals embraced them. That changed this summer when Domino’s entered into a global agreement with Uber Eats that included stores in four pilot markets in the U.S. “Now that aggregators are at scale, the next logical marketplace for us to enter is order aggregation,” Domino’s CEO Russell Weiner said in a July 12 announcement.
Since then, Weiner told investors in an October earnings call, “Our integration into the Uber Eats platform is proceeding as planned. We’ll achieve our goal of Uber Eats providing delivery orders to all our U.S. stores by the end of the year. We expect this initiative will drive incremental delivery volume from new customers, increase our share of the pizza delivery market, and create stronger economics for our company and franchisees.”
The fact is, Domino’s has been struggling to hire drivers since the pandemic. In 2021, then-CEO Ritch Allison said the company had been “experiencing one of the most difficult staffing environments in a long time,” adding, “The real pinch point is the drivers.” But the company might have found at least a partial solution to that problem this year: Since many potential drivers don’t have their own cars, the chain plans to put more than 1,100 Chevy Bolt electric vehicles on the road for select franchise and corporate stores by the end of 2023.
The combination of more in-house drivers and third-party delivery could ease Domino’s same-store sales woes—Weiner thinks so, anyway. Although the brand logged an impressive 3.6 percent growth in U.S. same-store sales in the first quarter of 2023 compared to Q1 2022, the second quarter saw growth of just 0.1 percent, followed by a decline of 0.6 percent in the third quarter. To boost sales again, the chain unveiled a “new and improved” Domino’s rewards program that makes it easier for customers to earn free food. Then, in a headline-generating move in October, Domino’s promised free “emergency pizza” to customers who joined the loyalty program and placed a digital carryout order of at least $7.99. They followed up that same month with a promise of free “emergency pizza” for anyone with student loans to pay off.
Papa Johns prefers menu updates to pizza giveaways; the company hailed its Cool Ranch Doritos Papadia, launched in May with a star-studded marketing campaign, as its “biggest innovation ever.” And in March, the brand announced it was expanding its use of OptiPrice, a pricing gap analytics platform, “to ensure that our products remain price-competitive and that our customers are receiving great value from each of our restaurants.”
Marco’s Pizza has made no secret of its goal to claim the No. 4 pizza spot in the U.S. Already this year, Marco’s has opened more than 50 stores and announced the signing of 50-plus franchise agreements. Over the last six years, the brand has doubled its store footprint and shows no signs of slowing down.
In late October, Gerardo Flores, Marco’s chief development officer, said the company has identified more than 4,200 locations where it could open new stores over the next five to 10 years.
On the fast-casual side, Blaze Pizza scored a huge coup with a Pi Day promotion on March 14, adding 500,000 new members to its Blaze Rewards program and raising total membership to an astonishing 3.5 million. Not bad for a chain with about 330 stores in 38 states and six countries.
How did they do it? On March 1, Blaze announced the return of its $3.14 deal for Pi Day. Customers who downloaded the Blaze Pizza app were automatically enrolled as Blaze Rewards members, which qualified them to purchase any 11” pizza with unlimited toppings for $3.14 on March 14 only. That pizza usually sells for $11.25. Customers were required to visit a Blaze location to take advantage of the offer. Thanks to that move, the Blaze Pizza app was the fourth-most downloaded app on March 14, even edging out TikTok.
Like Domino’s, Seattle-based MOD Pizza also jazzed up its loyalty program, MOD Rewards, to allow members to earn rewards faster. With more than 540 stores in 29 states and Canada, MOD says it’s now the largest fast-casual pizza concept. It’s certainly one of the most socially conscious. In April 2023, the brand announced it was partnering with nonprofits across the country to create the MOD Opportunity Network (MOD O.N.), dedicated to hiring and supporting people with barriers to employment, specifically justice-involved individuals and those with intellectual and developmental disabilities.
Back in 2021, Scott Svenson told PMQ that he and his wife, Ally, founded MOD Pizza as “a crazy social experiment,” aiming to “combine the best of a for-profit business with the heart of a nonprofit, whereby the more successful we were, the better and bigger social impact we would make.” So far, so good.
