Low-priced Little Caesars Pizza Chain Returns To R.i.

(Sunday, October 18, 2009) - Price-conscious consumers in 2008 began preparing more food at home and buying more takeout meals rather than sitting down to dinner in restaurants, boosting the prospects of operations that offer cheap eats.

That's led to the return to the state of Little Caesars, a low-priced pizza chain that is taking advantage of the economic downturn.

That downturn has been brutal on restaurants as the industry is expected to see its second consecutive year of sales declines in 2010 –– the first time that's happened since Technomic Inc., a leading market research company, has tracked the food industry. If Technomic's projections for 2010 hold true, the 2008-2010 period will mark the weakest period in food-service history.

That's because consumers are opting more and more for fast-food takeout meals — pizzas, burgers and fries, buckets of fried chicken and the like — and for frozen dinners purchased at supermarkets to eat at home.

In a survey in July 2009, Ohio-based marketing company WorkPlace Media asked 760 people how the recession had affected their dinner consumption –– 48 percent said they had cut the number of times they went out for dinner, while 5 percent said they discontinued purchasing dinner out altogether. For the year ending March 2009, the pizza category was down 2 percent in customer visits from the year ending in March 2008, according to market research firm NPD Group Inc.

All sorts of restaurants have offered discounts and freebies, or simply cut prices to lure back customers. They relentlessly focus advertising pitches on value, when just a few years ago luxury and indulgence were the key themes.

Papa John's, known for its gourmet pizza, is pitching low prices in its TV ads.

Other large pizza chains also broadened their menus with Pizza Hut moving into catering and Domino's adding sandwich and pasta delivery.

"Everybody in a bad economy is talking value," said Gabi Bazzi, the franchisee who brought Little Caesars back to Rhode Island this summer.

Little Caesars promotes itself as the cheap deal for consumers caught in the recession.

The Detroit chain sticks to its traditional value niche — marketing deals with slogans such as "Pizza! Pizza!," "Big!Big!" and its mainstay "Hot-N-Ready" pizza for $5.

Little Caesars has a 3.6-percent slice of the nearly $29-billion limited-service pizza market, a market share that has been growing over the past few years.

The chain's sales grew steadily over the past three years, from $830 million in 2006 to $930 million in 2007, a 12.1-percent increase, and $1.055 billion in 2008, a 13.4-percent increase, according to Technomic's research.

Little Caesars' simple menu and carryout model has made it the world's largest carryout pizza chain.

The no-frills chain returned to Rhode Island in 2009 after a 15-year absence when Bazzi, a Detroit native, opened a franchise outlet on Smith Street.

On the hunt for franchise locations, Bazzi first scouted Fall River.

"I tripped over Rhode Island because I was staying in Warwick, near the airport," Bazzi said.

With time to spare before his return to Detroit, Bazzi drove around the state. He decided Providence was a better place to open an outlet because of the number of college students living in the city and its high-density housing.

More apartments mean more potential customers and college kids make good customers, Bazzi said.

He's unfazed by the state's 13-percent unemployment rate as it means more people are looking for low-priced food and more prospective employees, Bazzi said. He hired 45 people to run the Smith Street shop.

"I have [earned] the same sales for two months now," Bazzi said in September.

He plans six more outlets in the state, with the first expected to open in North Providence before the end of 2009.

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