Pie Five Pizza was once dubbed a pioneer of the fast-casual pizza business, though
it's now a shadow of its former self. Times are tough for restaurants everywhere, but even some
pizza joints are facing serious struggles. Here's why Pie Five is struggling to stay in business.
It's not surprising that pizza is a highly competitive market. When Tom Monaghan founded
Domino's Pizza in the 1960s, he likely didn't know what he was setting in motion.
Customers expect fresh, quality ingredients customized to their liking and served at record
speed. On top of that, they expect friendly customer services, complete with a smile,
and fair prices to boot. It's easy to forget the little guys when Domino's and Pizza Hut stand firm
as the top two global pizza chains. With that said, independent pizza places account for over
40 percent of the nearly 50 billion dollars in pizza sales annually in the United States.
Why would anyone even attempt to get their piece of the pie in such a fiercely competitive
landscape? While giants like Domino's and Little Caesars have perfected their business models,
the fast-casual pizza chain concept is still in its infancy. There's no telling if these
companies will have the same fruitful longevity as their big-time competitors.
Nostalgia also plays a big role, says The Irish Times, as customers tend to reach
for familiar and comforting options rather than the newest and trendiest offerings.
One of the first fast-casual restaurants, Chipotle opened in 1993 and hasn't lost momentum since.
It successfully created an entirely new sector of the business and now operates over 2,600
locations globally. Quickly-made food in a casual setting didn't become a pizza thing, however,
until 2008 when Drew French opened the first fast-casual pizza restaurant, Your Pie.
Many saw vast opportunities and quickly followed suit on grander scales. Claiming
to get pizza served to a customer in under five minutes after placing an order, Pie Five opened
its first location in Fort Worth, Texas in 2011. Growth was slow the first few years,
and expansion focused mainly on other markets in Texas. Things were exploding for Pie Five by 2015,
when the chain opened over 50 more locations as far as Florida and Maryland. By 2017, they were
operating over 100 restaurants, converting to a regional franchise model. Perhaps due to the
sudden growth and loss of internal control, many of these shops closed just as fast as they opened.
Today, there are only 34 Pie Five locations still in operation, according to Scrape Hero.
"Here at Pie Five, I can get anything I want on my pizza."
In theory, the fast-casual concept should inherently work with pizza.
There's little needed from employees to top and cook the pies, resulting in relatively
low-cost labor. As Drew French of Your Pie told QSR that the real hurdles were in getting the
customer used to such speedy service and the amount of customization available.
While trendy, the fast-casual pizza concept may have been D.O.A., according to The Motley Fool,
thanks to one major and perhaps overlooked component. Established pizza businesses,
like Pizza Hut, Domino's, and even your local Mom and Pop shops, are already serving up pizzas hot,
fresh, and in a timely fashion. Meanwhile, fast-casual concepts have relied on the
fact that their ingredients are reportedly handcrafted and of high quality. Yet, these
buzzwords may have been too little, too late to draw new consumers away from old pizza standbys.
On top of all that, it's not exactly convenient for a family to order four specific and unique
pizzas, each complete with a laundry list of ingredients. Pie Five attempted to address that
hurdle with the addition of 14-inch shareable pizza. Regardless, it seems like an emotional
attachment to pizza is deep-rooted in the desire to come together and share,
which goes against fast-casual pizza's focus on individual pies.
While Pie Five is relatively new in the pizza world, its parent company,
Rave Restaurant Group, is no amateur when it comes to the business of crust. In 1958,
the first Pizza Inn, also operated by Rave, opened in Dallas. The company, known for its pan pizzas
served buffet style, at one time operated over 500 storefronts throughout the United States
and even internationally. Franchising stalled out, however, and the brand's image grew stale. That,
along with the sheer amount of real estate needed for new locations, means there are currently just
over 150 Pizza Inn locations left. Pizza Inn's then-CEO Charlie Morrison told QSR Magazine:
"We lost our way as a company. Opening a
few stores and closing a lot is not a recipe for success."
This isn't terribly shocking, considering the pizza industry as a whole has had a
rough go of things recently, according to QSR. Once the go-to option for the average,
hard-working family, the takeout industry is littered with options.
Be it diet trends or the growth of other food industries, the crust has gotten a bit stale.
Pizza Inn is also faced with the unique challenge of operating a buffet business in a time where
eyes are so thoroughly focused on health, cleanliness, and quality, as opposed to quantity,
not to mention the pandemic worries of 2020 and beyond. Other all-you-care-to-eat concepts,
like Golden Corral and Shoney's, have faced steady declines in sales for decades.
"For pizza out, it's Pizza Inn."
The restaurant industry is notoriously ruthless. Fans certainly aren't willing
to hold back if they feel they've been cheated out of their hard-earned money.
With economic hardships and crippling debt running rampant, consumers are warier than
ever when it comes to which restaurants get their money. These days, it's common for the would-be
consumer to scroll through endless posts, reviews, and comments before landing on a final decision
on where they're going to get their grub. While everything should be taken with a grain of salt,
most restaurants still operate under the assumption that the customer is always right.
Pie Five has experienced its fair share of negative reviews that may have impacted business.
One Pie Five location in Lexington, Kentucky has a middling 3.5 out of 5 stars on Yelp.
Many complain that the restaurant isn't living up to its promise of fast pizza,
with customers regularly waiting over 10 minutes for a meal. Pie Five's Independence,
Missouri location isn't immune to bad reviews either. Customers have frequently called the
shop out for its stingy toppings, dry crust, and lack of cohesive management.
For consumers to become and remain regulars, consistency is key. These mishaps may prevent
a future visit from the once loyal customer. According to Restaurant Engine, a whopping
70 percent of customers don't return because of failings like those at Pie Five locations.
You can lead a horse to water, but you can't make it drink. Or eat pizza,
it seems. This is where marketing comes into play. You can dedicate your life to mastering
your craft and creating glorious pizza, but if people don't know about your product,
it may all be for nothing. Therefore, companies spend millions each year carefully designing
marketing strategies to capture the public interest. According to FSR, successful companies
spend on average 11 percent of their revenue on marketing alone, further proving the theory that
sometimes you really do need to spend money to make money. It's not always easy, though.
Pie Five franchisees are individually responsible for their own marketing. With no set standards,
this opens up a whole can of worms for any owner who is inexperienced in the complex
field of marketing. Budding businesses may be wary of spending their limited funds,
even with the potential for positive long-term results. According to marketing expert JC Copy,
the Rave Restaurant group has long struggled with its overarching marketing strategies,
especially when it comes to email campaigns. Unfortunately,
their email blasts are perceived simply as mass, self-serving advertisements that do
little to draw in the customer through genuinely established connections.
"Nobody's ever ordered that!"
Diet trends may be to blame for the overall dip in pizza sales, especially those with a low-carb
focus. From Atkins to Keto, this has become a serious money-making sector in the food industry.
Many restaurants have been quick to adapt to health-conscious customers and their waistlines.
Pie Five jumped aboard the low carb train with the debut of a cauliflower pizza crust that is lower
in carbohydrates, sodium, and sugar. What started as a limited-time run quickly became a permanent
menu item thanks to its popularity. According to Forbes, Pie Five saw a resurgence with its
new menu item, but it's likely not strong enough to pull the company out of economic hardship.
In an effort to draw in new diners and increase sales,
one franchise owner took matters into their own hands. Located in the suburbs of Kansas City,
Pie Five's Westport location sunk a lot of dough into both expanding its craft beer selection
and offering patio dining. According to the Kansas City Business Journal, the attempt to
appeal to the sports bar demographic failed to bring additional foot traffic as locals opted
to visit full-service bars instead. Within a year of the reinvestment, that location sadly closed.
The Rave Restaurant group was already struggling before it came head-to-head with the 2020
coronavirus pandemic. Few businesses were spared as the virus decimated the restaurant industry,
forcing many out of work. Some businesses were hit so hard that they had to close.
The National Restaurant Association estimates that the restaurant industry lost a whopping
$120 billion from March to June 2020 alone, leaving millions of employees out of work.
With the state-mandated at-home orders, restaurants pivoted to unconventional ways
of generating revenue streams with little success. Given the astonishing overhead
needed to properly run a restaurant, it's difficult to survive on take-out orders alone.
Neither Pie Five nor its sister restaurant, Pizza Inn, were spared from economic hardship.
The fallout was palpable as the first quarter of 2020 saw the company's 18th consecutive quarter of
declining sales, according to Restaurant Business. Additionally, 10 stores under the Pie Five brand
closed during that part of the year. Similarly, Pizza Inn faced the unprecedented challenge of
operating a buffet-style restaurant in a time of increasingly stringent safety and health
protocols. With the pandemic lingering and mandates still in place in many locations,
it's not clear how much longer the Rave Restaurant Group can hold on.
The impact of the 2020 COVID-19 pandemic has proven
to be just one of many devastating blows for the Rave Restaurant group.
Plagued with an endless decline in sales and near-constant closures across the country,
the struggling restaurant company now faces the financial indignity of its removal from
the Nasdaq stock market listings. This is the second time in just 6 months that the
company has received a delisting warning, making its struggles plain for all to see.
According to Restaurant Business, the Securities and Exchange Commission dictates that a company
must maintain a minimum of $1 per share. While it wavered just above this minimum in 2020,
in January 2021, it was traded at just 90 cents a share. According to The Nest,
when a company is delisted, that usually means major trouble is ahead
and that the struggling business has little chance of rebounding. Rave Restaurant Group
appealed the delisting notice, leaving the future of its stock up in the air.
Maintaining customer loyalty is crucial for any restaurant.
Between inconsistent food quality and poor customer service at some Pie Five locations,
keeping the customer satisfied is at the forefront of many franchise owners' minds.
At least it should be if they want to stay in business. Ultimately, that customer-restaurant
relationship all comes down to trust. When trust between a customer and a restaurant is broken,
it can be close to impossible for a business to gain it back. Pie Five experienced a major
breach of trust when, in 2018, customer credit card security was compromised.
According to a 2019 press release that followed an extensive investigation,
Pie Five came to the conclusion that a cybercriminal was able to gain access
to its software and install a capturing system that went undetected. This high-level system was
able to capture sensitive payment information from customers who used their debit and credit
cards for purchases at store locations. Pie Five sought out law enforcement and
went on to improve its operating software systems, but the damage was already done.
In Topeka, Kansas, WIBW reported another Pie Five credit card incident. In this instance,
credit card purchases at the pizza chain saw processing delays that, in some cases,
lasted months. Breaches of credit card information are nothing new in this digital age,
but one such incident can quickly turn even the most loyal customer sour.
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