Korean Pizza Hut is entering the rehabilitation process, and the performance of pizza franchises is poor. Over the past few years, they have been continuously raising prices, resulting in being shunned by consumers, while the emergence of frozen pizzas and mid-range franchises has deteriorated their revenue.
In response, the industry is striving to recover revenue by introducing cost-effective menus targeting young people and single-person households, or by pioneering new businesses.
According to the related industry on the 26th, Domino's Pizza has introduced a 'Happy Daily Pizza' menu that can be ordered at a lower price than the existing menu. Earlier this year, they launched a large size of five types in the 10,000 won range. After receiving favorable reviews from consumers, they introduced the 'Half & Half' pizza and added a single pizza in an 8-inch size, which can be eaten alone. Recently, they launched a Quattro pizza as part of the Happy Daily menu for the year-end.
The Happy Daily Pizza is selling for 16,900 won to 19,900 won for the large size. There is a 1,000 won discount for takeout. The single pizza is priced at 6,900 to 11,900 won, similar to the prices of frozen pizzas sold in supermarkets. A representative from Domino's Pizza noted, "While regular pizzas primarily featured high-priced toppings like steak, Happy Daily Pizza is characterized by using trendy ingredients such as 'mala.'"
Pizza Alvolo introduced a total of 14 types including pepperoni pizza, its signature Mokdong pizza, sweet potato pizza, pumpkin pizza, combination pizza, and potato pizza as 'personal pizzas' starting this year. They lowered the price to 6,500 to 9,500 won for sizes that can be eaten alone and made them available for order at some locations.
The emergence of cost-effective menus from large pizza franchises is due to increasing competition following the growth of the frozen pizza market. New franchise companies emphasizing price competitiveness, such as Mom's Pizza (Mom's Touch) and Back Boy Pizza (The Born Korea), are also entering the market in succession, adding to the burden.
Among the top five companies in the domestic pizza industry—Korean Pizza Hut, Domino's Pizza (Cheongodipk), Korean Papa John's, Pizza Alvolo (Alvolo F&C), and Mr. Pizza—only Domino's Pizza and Papa John's reported operating profits last year.
The operating losses of Pizza Alvolo and Pizza Hut more than doubled compared to the previous year. Although Papa John's avoided a loss last year, its operating profit has been declining each year, with only Domino's Pizza improving its revenue.
Even Domino's Pizza and Papa John's, which avoided losses last year, are not in a good situation. Cheongodipk, which operates Domino's Pizza, recorded a revenue of 209.5 billion won and an operating profit of 5.1 billion won last year. In 2020, they achieved a revenue of 232.8 billion won and an operating profit of 16.5 billion won. Korean Papa John's has steadily increased its revenue from 28.8 billion won in 2014 to 68.1 billion won last year, but operating profit decreased from 6.3 billion won in 2021 to 4.8 billion won in 2022, and 4.2 billion won last year.
To improve revenue, pizza franchises are rushing to try changes. Papa John's has entered the chicken market. Although competition is fierce in the chicken market as well, it still believes there is an opportunity due to relatively higher demand compared to pizza.
Korean Papa John's launched the Mama Chicken brand last year and completed the registration of an information disclosure statement for franchising with the Fair Trade Commission last month. This document is mandatory for registering a franchise. Mama Chicken, which is touted as original American chicken, promoted fried chicken and chicken wings. They aim to expand to over 1,000 stores nationwide by 2035.
Banolim Pizza also unveiled its entry into the chicken market on the 5th by introducing 'Boneless Chicken French Fries Pack Original,' 'Boneless Chicken French Fries Pack Garlic Jalapeño,' and 'Chicken Topping Set on Pizza.'
Banolim Pizza acquired 100% of the shares in Ogu Rice Pizza's headquarters, Ogu Bonka Co., Ltd., last month. The strategy is to lower costs and logistics expenses through economies of scale to secure revenue. Ogu Rice Pizza is characterized by dough made from rice, barley, millet, wheat, and black sesame. It operated over 370 franchise stores. A representative from Banolim Pizza stated, "We believe that the acquisition of Ogu Rice Pizza will provide an opportunity to improve logistics services and actively defend against price volatility of various ingredients."