By Annie Gasparro
Little Caesars Pizza, the privately-held chain that rivals Pizza
Hut and Domino's for expansion in the U.S., is adding a fancier pie
to its menu, expecting the "Detroit-style deep dish" to attract a
new type of customer.
Little Caesars has long been known for its "$5 hot-and-ready"
take-out pizzas, which have appealed to value-oriented consumers,
but Chief Executive David Scrivano says customers now want
something a little more upscale.
"We wanted to go outside our traditional market with this, but
stay within the pizza category, and it really resonated with
consumers," Mr. Scrivano told Dow Jones Newswires.
The menu addition comes as Little Caesars and its peers face
increased competition from higher-end fast food, like Panera Bread
Co. (PNRA) and Chipotle Mexican Grill Inc. (CMG), which have
conditioned consumers to expect better quality from their
takeout.
Not only does Little Caesars need to keep its image fresh, but
the company needs to maintain strong margins to appease
franchisees. The "Deep! Deep! Dish" pizza will sell for $8,
slightly more expensive than its typical products.
"But it still offers a good value," Mr. Scrivano said. "We not
only had to make a premium product, but we had to do it for
less."
He said the franchisees are pleased with the results, to the
point that they are supplementing the national media campaign with
their own local ones.
Based in Detroit, Little Caesars has expanded to some 4,000
locations in the U.S. since opening in 1959. While it lags behind
Domino's Pizza Inc. (DPZ) and Yum Brands Inc.'s (YUM) Pizza Hut,
which have roughly 5,000 and 7,600 domestic stores, respectively,
Little Caesars has been expanding faster than the rest of the
industry in recent years.
Little Caesars isn't alone in its decision to offer a premium
option. Domino's last year came out with "artisan-style" pizzas
that have a fancier feel and seem to attract new customers.
Sbarro Inc., which sells most of its pizza by the slice in
high-traffic areas like malls and airports, also revamped its core
recipe recently. The chain said its strategy is to take the brand
up a notch, in light of tougher competition.
Then-Chief Executive Jim Greco, who on Thursday announced his
resignation, told Dow Jones in January that the new pizza had
boosted sales and customer traffic by "several" percentage points
since coming out last October.
While Detroit-style pizza, which is made in a deep, square pan
that originated from an industrial-parts tray, isn't as well known
as other types, regional styles in general are trendy, Mr. Scrivano
said.
He said that as Little Caesars continues innovating, "We will
remain focused on pizza--not sandwiches or pasta or anything
else."
"Better ingredients might become a secondary campaign," he
added, "but value and convenience are still our main message."
Write to Annie Gasparro at annie.gasparro@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires