Pizza Today - November 2020 - 12

M I K E 'S M O N T H LY T I P

MIKE BAUSCH

the more expensive the item, the better it is,
and the more your customer will feel pride
in purchasing it. I am not suggesting having
a thousand-dollar pizza, but don't forget the
restaurant that did.
In 2011 Nino's Bellissima Pizza in New York
sold a $1,000 pizza with four types of caviar.
It got national attention for being a unique
Veblen Good that created a ton of marketing
buzz. That's an extreme example of what I am
describing. Your best bet is to price your pizza
correctly with enough cost to it that people
feel special for purchasing it. Just enough of a
charge that it's not perceived as "cheap."
The best handbag does not seek to be the
cheapest. The finest luxury automobile does
not seek to have the same lease payment as a
Hyundai Sonata. On the inverse, people do
not want to purchase $3 halibut because it
appears too cheap. If you give that feeling
of cheap to your customer, the hero you sell
becomes the price, not the product. You will
have taken your customer from product aware
considered egregious in most of the U.S.
to price-aware, and that is a no-win scenario.
How did this happen? It occurred when
Like a dozen eggs and a carton of milk have
the big chains of the industry, who were
their
price stuck in the consumer's brain, pizza
averaging $15 to $20 range per large pizza
is
now
in that category as well. Three dollars
in the early 2000s, switched to two pizzas
for
milk
seems like the right price even though
for $10. As a result, they started a price
it
hasn't
changed
in 20 years, and $1.40 for a
war. This price war has negatively affected
two-liter
of
soda
seems
appropriate. Regardeveryone, including them. This war has
less
that
GDP
has
grown
three percent on
resulted in countless independent closures.
average
every
year
for
the
last 30 years. IncredThe notion of an independent single-unit
ibly
you
can
charge
$2.95
for a refillable soda
operator taking on that price war is futile.
at
a
restaurant.
A
price
more
than double the
The only way the big chains are hanging on
price
of
a
2
liter,
and
it's
considered
acceptable.
is with robust side item upsells and great
Grocery
stores
take
a
loss
on
milk
and twobulk ingredient pricing from their vendors.
liter
bottles
of
soda
to
get
people
in
the
door.
With all that, they are still hurting. The
Many
people
choose
their
grocery
store
based
national chains' most significant competitor
solely
on
this
metric.
Meanwhile,
ridiculously
is no longer each other, but instead gas stacheap-to-make fruit snacks cost $3.40-$5,
tions who have figured out convenient and
fast pizza at an even lower price than them. and no one questions it because it has not
become commoditized. Your most expensive
In the price war, no one is a winner here
pizza might be turning people off unless you
except for the gas stations.
lean into it and make it proof of your value.
The only recourse for an independent
In a restaurant $3 fountain sodas, $9
now is to create the highest perceived
appetizers,
$15 cocktails are the workaround.
value item in the customer's eyes. This is
If
a
$30
pizza
seems too expensive for your
achievable with impeccable pizza, not at
market,
you
must
find profit elsewhere. Howa cheap price, but the correct price. Those
ever,
I
advise
you
to
find the inelastic demand
that do this will not only survive, but thrive.
of
your
pizza
as
a
Veblen
Good. This is preferInstead of judging your menu based on the
able
to
the
soul-crushing
race to the bottom
competition's price, seek to create a Veblen
of
commoditized
pricing.
■
Good. A Veblen Good conceptually means

How to Un-Commoditize
This Industry

W

hat should a large pizza cost?
Ask yourself, or better yet, ask
someone who's not in our
industry. Ask someone with no preconceived notions what a large pizza should
cost. Not based on inch size or the number
of slices. Simply put: what should a large
pizza cost? Now take whatever their answer
is and ask that same question if it was
2010, 2000 ... even go back to 1980? What
should a large pizza have cost then?
The run of the mill answer for a large
pizza, regardless of it being a 14-inch large
or a 20-inch large, is about $10. Some
might go as high as to say $13, but on
average, people mostly believe a large pizza
should be around $10. If you ask what it
should have cost in 1980, 40 years ago,
when the cheese price was incredibly lower,
and the minimum wage was 1/5th what it
is today, they would also say about $10.
Our industry's failure has been the
allowance of pizza to become commoditized. The pricing strategy of racing to the
bottom has made it impossible to fight
negative price perception for an appropriately priced pizza. Even if that pizza fed up
to 4 people, over $30 seems high. In a world
of $55 steaks and $15 burgers and $16
cocktails, a 20-inch pizza priced at $30 is

MIKE BAUSCH is the owner of Andolini's Pizzeria in Tulsa, Oklahoma. Instagram: @andopizza
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Pizza Today - November 2020

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