Hotter than Hell is the way pizza wars are shaping

Steve Willis, manager of Hell Pizza in Symonds St, one of what will soon be 30 stores. Picture / Martin Sykes

A battle in the market for gourmet pizzas looks set to heat up as Pizza Hut goes upscale with fancy pizzas to meet competition from independent operators such as Hell Pizza.

Gourmet pizza chain Hell had four stores at the start of last year. Next week it opens its 30th store, on Dominion Rd, and has plans to open a further 15 stores next year.

The franchise stores will have a turnover of $26 million this year and Hell is becoming a serious ecommerce operator, taking 10 per cent of its orders over the internet.

Pizza Hut, owned by the listed retail group Restaurant Brands, had sales of $81.3 million in the year to February and has 100 stores.

It holds the lion's share of the pizza market, but stiff competition from the likes of Hell has Pizza Hut testing its own gourmet pizzas.

Restaurant Brands chief executive Vicki Salmon said the gourmet pizza trials under way in Auckland and Hamilton built on occasional specials Pizza Hut ran for gourmet pizza types such as chicken and camembert.

But the "taste profile" of gourmet pizzas would not appeal to everyone, she said, and Pizza Hut would remain a family restaurant.

 

"Hell pizzas have a high price point. It isn't necessarily going to appeal to average New Zealanders."

Herald staff yesterday sampled some of Pizza Hut's new gourmet offerings, which build on standard pizza types such as Hawaiian and Meat Lovers, with salmon, capers, mango and sliced tomatoes among the more exotic toppings.

Callum Davies, who founded Hell in 1996, said the company had grown under the radar of Pizza Hut until recently.

"They haven't taken too much notice until the last six months," he said. "Now they're doing things to combat us."

Pizza Hut had responded with aggressive discounting offers.

A source said Pizza Hut wanted gourmet pizzas to initially make up 12 per cent of turnover in stores in which they were sold.

An advertising campaign around the gourmet pizzas is likely to kick off early next year.

Hell claims to make healthier pizzas than larger chains, saying it uses only 150 millilitres of oil per 16 kilograms of dough when making the bases. Food makes up 40 per cent of Hell's costs, relatively high by industry standards.

Davies said he welcomed increased competition from Pizza Hut, but did not expect their foray into the gourmet end of the market to go smoothly.

"I think they'll struggle to do it because of the way they're set up," he said.

Hell pizzas took longer to prepare than Pizza Hut pizzas which could take as little as 30 seconds.

"An ex-Pizza Hut manager described making Pizza Hut pizzas like painting a house, and making Hell pizzas like painting a picture," said Davies.

A race is also under way to exploit the link between pizza eating and movie watching.

Pizza Hut has given away movies with pizza meal bundles for some time. Hell has a tie-up with DVD mailout rental company Fatso, which allows free DVD hires based on the value of pizzas bought.

Davies, who started in the pizza business in the early 90s when he took over a rundown store in Wainuiomata, said the franchise model was working well.

"There's a heap of work in building up to sell your first franchise. It's a lot easier after that."

The plan was to keep the parent company privately owned, with the franchise model leaving little requirement for additional capital raising.