A Saucy Fight for a Slice of the Pie

By Janice Castro

John Smith's airliner sat at the gate for two hours at Pittsburgh International Airport, and he was famished. What to do? The Larkspur, Calif., lawyer walked into the terminal building, picked up a telephone and called a local Domino's Pizza outlet. Sure enough, 18 minutes later, a delivery boy, clad in red and blue, arrived at Gate 36 carrying a giant pizza with everything on it. Said Smith: "When I walked onto the plane with the pizza, everyone cheered."

It takes hustle like the delivery boy's to get ahead these days in the pizza business, where competition is as red hot as a pie straight from the oven. The pizza segment of the fast-food industry, overshadowed in the past by the marketing battles among the hamburger chains, has sprung to life with speedy- delivery contests, price wars and new-product campaigns. "It's an all-out conflagration," says Charles Henderson, vice president of marketing for Godfather's Pizza, the fifth largest U.S. chain (586 outlets). "This will make burger wars look like a neighborhood skirmish." Rather than fight it out, Pillsbury, the parent firm of Godfather's, has decided to sell the chain. Herman Cain, president of Godfather's, is leading a management takeover of the restaurants.

The stakes in the pie fight are high. Even as growth in fast-food sales (1987 U.S. total: $56 billion) is slowing, pizza purchases are booming. Americans will spend an estimated $15 billion on pizza this year, more than twice what they spent just five years ago. As pizza has become more popular, the chains have seemingly sprinkled their outlets on every street corner: Pizza Hut, the largest, has more than 5,400 outlets in the U.S. and 6,200 worldwide. Even McDonald's has test-marketed a pie, McPizza. With so much competition, "it's not enough anymore just to have the best pizza in town," says Paula Werne, editor of the trade publication Pizza Today.

Aside from taste, the most important weapon of the great pizza war is home delivery. While mom-and-pop parlors have long offered this service, the upstart Domino's Pizza of Ann Arbor, Mich., upped the ante. Promising a $3 discount on the price of any pie that takes longer than 30 minutes to arrive, Domino's, now the second largest chain, has grown to 4,375 outlets. At least one Domino's operator even delivers by boat. Art Hurteau, 29, owner of an outlet on Missouri's Lake of the Ozarks, maintains a fleet of ten speedboats to get pies to vacationers. Starting this week, Hurteau's employees will be cruising the lake, taking orders from boaters and transmitting them to headquarters by radio. Pizza Hut, which in the past offered only table service and pies to go, now includes home delivery at 1,000 of its outlets. Keeping the product hot counts too: Pizza Hut claims that it delivers its pies in containers made from space-suit material, which provides extra insulation.

Sometimes the battle goes to the cheapest instead of the swiftest. Little Caesars, a group based in Farmington Hills, Mich., has become the third largest chain (1,950 outlets) by offering two pizzas for what one would cost at a rival's restaurant. Wherever a Little Caesars pops up, competitors meet its prices. Industry experts contend that widespread discounting is tempting restaurants to skimp on toppings. "They are cutting ingredients. We have not done that, but I know this is going on," says Jack Harris, a director of Pizza Inn, the Dallas-based chain of 719 restaurants.

One aggressive new contender claims to offer the best of everything. Casino's, a 23-outlet Miami company, says its pizzas contain 50% more cheese than Domino's pies do. Casino's also beats its rival's $3 lateness discount by giving away any pizza that takes longer than 30 minutes to arrive. The battle in Miami between the two chains is escalating. Not only do both offer discount coupons, but they also accept their rival's chits and grant an additional $1 ! markdown. Whenever John Hattesen, manager of a wholesale fabric company, has a poker party, he orders a pizza from both chains and gives each deliveryman the other company's coupon. "So far, there haven't been any fights," he says.

Round Table Pizza, a San Francisco-based firm, has tried to stay above the discounting fray by hewing to quality. With 550 outlets, mostly in the West, Round Table offers superior ingredients -- and plenty of them. Its mozzarella, for instance, is made of whole milk instead of skim milk. Unlike some chains, which make their dough two or three times a week, Round Table rolls out its fresh crust twice a day. Says Ron Mehrens, who owns six Round Table outlets in Southern California: "You can't fool the customer with the level of quality. I know when I pick up my kids at birthday parties and see boxes from Little Caesars, the parents got it because it was cheap."

The pizza wars have squeezed some of the older firms and some of the mom- and-pop places as well. Shakey's Pizza (377 units), which started in 1954 as the first chain of its kind, is trying to diversify by offering a broader menu that includes tacos and pasta. Casa Luna, a family-owned pizzeria in Chicago, thrives by offering videocassette rentals on the premises. Even if the movie a customer wants is not available, says Co-Owner Bob Proskin, "they still order the pizza."

Ever searching for an advantage, the pizza chains have put their laboratories to work on new products. Pizza Hut is pushing the limits of prefabrication with Personal Pan Pizzas, which are assembled in advance to be popped into the oven for customers. Godfather's offers a stuffed pizza with the toppings placed between two crusts. Opinions differ as to the next big seller. Declares Michael Ilitch, founder of Little Caesars: "The main emphasis will be on the dough, a very light and very crunchy crust." Godfather's Henderson, though, thinks prompt delivery is still the main battlefront. Which ever chain wins the war, the tastiest prospects are the consumer's.

With reporting by D. Blake Hallanan/San Francisco and Maureen O''Donnell/Chicago