Pizza Patron Case

Highly Competitive and intense. Barriers to entry and exit are very low.

Pizza is a high-margin product that is easy to manage so it attracts new entrants every year.

There are 69,386 pizzerias representing over 7% of the total restaurants in the United States.

In 2005, retail sales in the industry exceeded $31.2bn, representing more than 6.5% of overall sales in the restaurant industry.

The top 25 national chains own 35.2% of US pizzerias and control more than 50.53% of sales.

Trends in the industry:

Health conscious eating habits such as gluten-free dough increased sales by over 10%.

Hispanic flavors such as adding corn, plantains, chili peppers and tropical fruits, are becoming attractive.

Organic ingredients, fat content, cholesterol, and sodium determine customers' purchasing decisions.

Pizza Patron's products and services are its key differentiators in the competitive market services include; low prices($4.99 for a large pizza), calling cards to Mexico, Mexican soft drinks, fiesta wings, use of Mexican pesos, hired mostly Hispanic staff to communication purposes. Serves a large Hispanic clientele (about 52%).

Competition in Mexico is equally intense.

Domino's Pizza, an international competitor is well established and holds the largest market share with over 660 stores; followed by Pizza Hut(178 stores).

Benedettis leads local competitors with 105 stores.

Dia, one of the distribution suppliers, is owned by Domino's Pizza.

There are few high-quality suppliers and distributors for toppings, boxes, flour, tomato sauce, vegetables, cleaning supplies, equipment, and services-like distribution.

Since NAFTA agreement, Foreign companies can wholly own business in Mexico.

Laws are relatively easy to contend with if a company is willing to participate, no other laws impact foreign direct investment..

Better understanding "efficient grease" hypothesis is necessary.

Addresses supply chain and government issues

Company culture can be addressed through business model

Can build on Pizza Patron through acquisitions expertise

Can change over stores over time

Requires a great deal of research to find the right fit

Still have a great amount