Street Pizza Essay Example

Street Pizza Essay Example Street Pizza Paper Street Pizza Paper Essay Topic: Main Street While driving to his office in Cabanas-e-Insist, Phase 6, Tanager Hussy was thinking about the good old days when he started 14th Street with his two best friends Invigilated and Maximum. Despite the amazing response that they initially got, the ship now seems to be quite in a bit of a lurch. Started by three best friends, 14th Street was supposed to be the next big thing. Being the pioneers of the 20 pizza they intended to knockout the pizza giants like Pizza Hut and Dominos and they were successful initially. But then woo of the partners, Navigated and Maximum jumped ship and went to Dublin to look after their other business and became the sleeping partners at 14th Street. Tanager now looks after all the operations alone and he is smart enough to know that things are not going as smoothly as he would like them to be. He is unable to control his costs and therefore he is forced to sell his pizza at a higher price than his other counterparts but he does not have much choice. Knee deep in payable he is unable to come up with a solution as to how to reduce his cost or justify the high price. He expanded his business to there major areas of Karachi thinking that that will help him in increasing his revenues but even that didnt work out as well as he expected due to growing number of pizza joints that offer similar product as 14th Street such as California, Broadway, and New York Pizza. The competition is really tough and the switching cost for the consumer is practically zero. So why should they buy, high priced, 14th street Pizza when they can easily go for a cheaper and similar brand? Adamant to not compromise on the quality of Pizza, Tanager is now looking for options that he can choose from to get back on firm grounds. He has assigned this task to his 6, highly qualified and motivated employees to come up with solutions to help this sinking ship get out of the thunderstorm and back on calm seas. They will be presenting their recommendations today and he is quite hopeful that their recommendations will be worth his time. Background Evolving from a traditional family recipe, 14th Street Pizza Co. Has come a long way. It was launched in Karachi, on 14th February 201 1 by three friends Tanager Hussy, Invigilated, and Maximum as partners sharing 40%, 30%, and 30% respectively. Two years before launching 14th Street Pizza, the friends had bought a franchise Of subway located at Shabby commercial DAD Karachi. The franchise is still up and running and has earned the reputation of the best franchise of subway all over Pakistan. 14th street pizza was the first brand in Pakistan to introduce 20 inch thick pizza, which was enough to serve maximum 8 people. They were also the Satirists joint to introduce customization of each slice of pizza. Before the launch of 14th Street Pizza, for 20 years, people only had few other options such as Pizza Hut and Dominos. People loved 14th Street Pizza and they got amazing response, more than they could handle. Initially 14th Street only got delivered in DAD and Clifton but after the amazing reviews and positive response they started their delivery operations in major areas of Karachi. Recently they have also started franchising. It was very hard to keep up with the thriving demand soon after its launch. Thats when the real test began, but they faced the challenge with gusto and were soon back on the table with a better team and a bigger kitchen. Today, more than three years later, 14th Street Pizza still tanks tall. The pioneers of the 20-inch pizza in Pakistan, 14th Street Pizza Co. Has grown from being a corner pizza delivery place in Karachi to one of the most recognized pizza delivery places, operating branches at 5 prime locations of Karachi: Cabanas-e-Shabby, Cabanas-e-Insist, KID, SMS, North Amazonian. 14th Street Pizza also operates in the Blue Area Of Islamabad and also recently launched in Manual. The first thing you notice about their pizza is the size. But thats just not it. Their motto is to use crust to give you fuller taste and an unforgettable flavor. Their aim is to use premium laity ingredients to give you a pizza that not only looks and tastes great but is also up to the highest standards of freshness and quality. They believe in providing their customers with an exceptional customer service and believe that their customers are their driving force and would like to make sure that they are 100% satisfied with their products. A passion for pizza and an unending devotion to keep delivering the biggest, yummiest pizza in town, fuelled by the love, encouragement and feedback of their fans, gives 14th Street Pizza co. He power to expand beyond belief. Pakistani Pizza Market Pakistani food industry has witnessed an exceptional growth over the years. Food industry in Pakistan shares 17% of the total GAP. A major chunk of this growth is coming from the local pizza market which includes big multinational names such as Pizza Hut, Dominos, and Broadway, as well as local pizza brands such as 14th street pizza, California pizza, Pizza next, Pizza point etc. Trends in the Industry The pizza trend has entered into mainstream. It all started when Pizza Hut introduced its business in Pakistan in 1993. Pizza hut is considered as the pioneer in the pizza market and has remained a dominant player since. To penetrate into the market further they have tailored their menu to local taste by introducing flavors such as chicken tike, shakable etc. After Pizza Hut, Dominos Pizza and Papa Johns entered the pizza business and things psychoanalytically. Five to eight years later if we talk about the growth of pizza business in Pakistan there were only two established names in the business that were both multinational chains, Pizza Hut and Dominos. However, the market developed significantly in the last few years and to cater to the appetite of pizza lovers many new local players have launched their operations. Market statistics According to a recent statistics fast food industry is the second largest in Pakistan, with approximately 16. 9 million consumers. The consumption level of food mainly depends upon the number of consumers and their income level. Pakistanis total population is growing with a yearly population growth rate of 1. 67%. Out of the total population of Pakistan 37% are the urban and 63% rural with different income classes. Exhibit Shows the size of different classes In the urban population. About 17 million people are in the upper or upper middle class who can actually afford fast food. The average person spends 47. 7 percent Of his or her household budget on food consumed at home. Only less than 2% of Pakistanis total population spends on fast foods regularly. Current Market Situation We have recently seen the success ventures of food portals like EAT EYE and FOOD PANDA. The food portals have made the life of consumers very easy by providing them with both the discounts as well as quick delivery. Pizza companies got a huge benefit through this as consumers get more attracted towards their product. Country like Pakistan is still following the incept of cooking the food at home, if we observe countries like US and KICK their fast food market is far bigger than us because of the fact that their busy households now prefer to eat outside rather than cooking food at home. Slowly and gradually Pakistanis urban population is also adopting the same trend and this is the reason why these fast food chains earn massive profits with an even higher future revenue forecasts. STOW Analysis Strengths Weaknesses The high quality of the ingredients that are used in making 14th street pizza. Pioneers of the 20 Pizza category in Pakistan and have managed to build a potable brand name. High focus on customer service and on time delivery of Pizza. Highly customized slices to cater to the different tastes of the consumers. They dont have any service restaurants like Pizza Hut, Dominos and California Pizza. Lack of awareness about 14th street as it is still not a very known brand in some parts of Karachi. Opportunities The reads Opening kiosks in shopping malls and food courts. Open up service restaurants to attract consumers who want to dine out. Add more variety to their menu such as pasta and lasagna. Continuous innovation in tastes and sizes to keep the customers interested y offering them something new. Introduce customer loyalty program for brand loyal 14th Street lovers. An increase in the trend of online ordering because of food portals like Food Panda and Tattoo. Poor economic conditions forcing people to dine out less. Increased prices Of ingredients, which subset intently increases the cost Of product thus reducing the profit margins. Low switching cost for consumers between brands. Availability of Cheaper substitutes. Rise in number of competitors offering the same product. Competitors Analysis Competition for pizza takes into account direct competitors as well as indirect motorists (substitute products like burger, steaks,pastas etc. ). Pizza market has developed considerably in a last few years and several local and international players have come into play. 4th street pizza in the first few years of its business has received a great deal of fame and earned a name for itself mainly due to the ingenuity and uniqueness of their content. Let purely deals in home delivery and takeaway. Amongst local competitors its is the brand with highest market share but overall it ranks number 3 with 10% market share According to the CEO of 14th street pizza The daily intentions, the engaging interactions and t he high stakes giveaways are all proofs of the ways in which we seek to delight our customers and ensure that we stay the top of the mind brand when one thinks of ordering pizza. Pizza Hut Pizza hut first started its operations in 1958 and entered Pakistan in 1993. They are the pioneers of pizza in Pakistani market and are also the biggest player when it comes to dine in because of its delighting pizza and spacious restaurants with good ambiance and comfortable atmosphere. Being a pioneer it has got the largest share in market but its sales are plummeting cause of the prevailing trend of large pizzas. Their social media presence, stands at around 900,000 followers as compared to 14th Street Pizza reaching a million fans on their Faceable page in the same month. Since its inception Pizza hut is known to be the market leader even today it holds 35% of the total pizza market followed by another international brand, Dominos which stands at number 2 with 20% market share. Broadway Pizza It started its operations initially in Lahore after getting a positive response from there it recently launched in Karachi. With amazing sidelines, stirring labors and huge size Broadway is getting popular among scratchiest and the market share of Broadway pizza has reached 9% a little lower than that of 14th Street Pizza. It has got an active website and worth using Faceable page. It also offers the most lavish toppings. There is fierce competition been Broadway and Pizza Point, which also has a 9% of the total market share. The New York Pizza The New York Pizza is popular for its large thin crust foldable pizzas. They offer delicious toppings and sauces besides delivering Gingko pizza. New York is widespread and much known with much lower market share than Aziza hut and slightly lower than 14th street pizza. It has around 22,000 Faceable fans with 5% market share. California Pizza To know if California pizza is a good option one needs to go its main location that is next to Dominos in Abdullah. This outlet is always flooded withheld. It offers as big as 20 pizza and has good service restaurants besides having feasible rates. California pizzas user-friendly website and promotional activities on Faceable page with 1 90,462 likes helps surge its sales. In Exhibit ahoy can see the comparative prices of a standard large pizza of the competing brands. Comparison Between Competitors We took a sample size of 67th of which 29 were students, 30 jobholders, and 3 businessmen. After analyzing the results of our research, we found out that despite being a high priced product most of the respondents believe the price of 14th street pizza to be justified. We conclude that there are several reasons for this perception such as the quality, size, and taste of 14th street pizza. As an individual brand people have the following perception about dustsheet: 54% of the respondents think that the price of 1 4th street pizza is good, that is justified. % of the respondents think that the Quality of 14th street is excellent and 42% think it is good, which makes the majority of the respondent. 45% of the respondents think that the taste of 14th street is excellent and 37% think that it is good, which is again the majority of the respondents. 52% of the respondents think that their service is good, while 27% think that this it is excellent. We compared 14th street with the following pizza joints: Pizza Hut Dominos Broadway New York We compared these on the following attributes: Quality Price Taste Service Size And came to the following conclusion: QUALITY If we compare the result of 14th street with the rest of the Pizza joint we can clearly see that it surpasses all other brands in terms of quality according to the respondents. With Pizza Hut being the second best choice. PRICE At this the results were pretty much the same for all other brands but respondents believe that 14th street pizza is slightly high priced as compared to other brands as 31 % of the respondents ranked it at 4 and 22% of the respondents ranked it at 5 (5 being the highest). TASTE 14th Street got the highest ranking in terms of taste as 45% of the exponents ranked it 5 and 30% ranked the taste of 14th street at 4. While Dominos, California Pizza, New York Pizza, and Broadway Pizza got the highest ranking around 3, which signifies average taste. SERVICE 43% of the respondents ranked 14th street 4 for service and 30% ranked it 5 (5 being the highest). Again we can see that that Dominos, California, New York and Broadway got the highest ranking around 3, which signifies average service in comparison to 14th Street. SIZE From the result it is clear that when it comes to size, the first name that comes to people mind is 14th street. Although Broadway, New York and California pizza Offer the same product but 14th street got the highest ranking in comparison to all. Whats Wrong With 14th Street? 14th street pizzas biggest problem is their higher pricing compare to their competitors, and reason is not that it is a premium brand, but its because their food costs and their expenses are so high that they have to reflect some it in their prices. In Exhibit ewe kept their most selling product, which is Full 20 inch pizza as a benchmark, to estimate the rough impact of their costs on the prices. Currently the price of 20 full pizza is RSI. 899. By seeing Exhibit 3 one can infer that providing best quality of ingredients is the prime focus of 14th Street Pizza. Mozzarella cheese, which is the most expensive ingredient of all, gets 24% of the price. Mozzarella cheese is imported from France of the brand Aerial; it is one of the top used mozzarella brands all over the World. Even the chicken topping used in their Pizza is supplied by the top chicken quality providers KNs. The management of 14th Street is not at all in the favor of reducing the quality of the Ingredients they use in order to cut down their overall costs. Losing their current customer base as a result of using lower quality ingredients is something that they cannot afford. A brief detail of the rest of the monthly expenses can be seen in Exhibit 4. Number of Employees 14th street pizza currently has around 400 riders, 250 kitchen and commissary labors, and 30 professional employees. 5. Million rupees in monthly payroll is still a very high expense for a small local brand like 14th Street. Marketing Expenditure They are also keen on advertising their brand and products through appropriate channels they could use to reach to their target market, usually hey are spending on streamers, billboards, and most of all social media where their actual target market is present. Utilities Their utiliti es are supposed to be higher because big machineries like Pizza ovens and room size chillers, those all are running on electricity. Payable The other pressing problem for the management is their increasing payable. They owe their food suppliers around 25 million rupees and rest to equipment and oven providers. These payable also reflect on their pricing strategy. Outsourcers In order to make up for the lost revenues, 14th Street also started to outsource their marketing and IT services to other business. This might seem like a good move but can have long term implications. Recommendations In light of all the above-mentioned problems of 14th Street Pizza, the team of six came up with the following recommendations: 14th street needs to stop providing their services to other businesses as outsourcers. This will not only help them focus more on their own operations but it will also allow the top management to right size their business and only keep the employees who add value to the companys operations. This action will subsequently lead to a significant decrease in their monthly salaries, which is a massive burden on a company as small as 14th street. The management should clearly write down the objectives that they want to achieve through their pricing strategies. Since they are already selling their product at a loss, bringing down their prices is not an option that they can avail. The next best thing that they can do is to position their product as a premium Pizza brand. They can achieve this through proper communication and marketing strategies. According to Exhibit 2, the prices of the competitors such as New York and Broadway Pizza re exactly the same bringing the price any higher than this might result in loss of existing customer base since the cost of switching for a consumer is practically zero. Focus on market penetration so as to increase the entry barriers of new entrants. Make the most of the food delivery portals such as Food Panda and Tattoo to attract more and more customers towards their brand by offering different deals. Increase communication and communicate to the consumers why they should go for 14th street instead of Broadway, New York or California Pizza. Low-end Pizza joints such as Pizza Hut, Pizza Point, Pizza Max, etc. Are a serious threat. They are not only lower end but they also cater to a large population that cannot afford expensive pizza brands.