Little Caesars Adds More Pepperoni To Its Hot-N-Ready Pizza And Bumps The Price Up To $5.55
Little Caesars has had tremendous success with its Hot-N-Ready pizza, particularly during the past year when most people were stuck at home.
Now the chain is making some changes to that signature pizza for the first time since 1997. Starting today, the Hot-N-Ready will cost $5.55, up from its longstanding $5 price point. For that extra 55 cents, the pizza will include 33% more pepperoni.
During a recent interview, CEO Dave Scrivano said the price increase is a way to balance rising labor and commodities costs. The cost of pepperoni, for example, has risen more than 50% throughout the pandemic. Little Caesars is trying to blunt the increase by adding more of the popular topping.
“There are all kinds of pressures on businesses these days, but we still want to deliver the best product at the best value to our customers. They have told us they want more pepperoni. While other companies are decreasing their portions and increasing their prices, we decided to make our pizza even better. It still remains the lowest price in the business, but we’re adding more to it,” Scrivano said.
In some markets, like California and New York, the $5.55 tag isn’t an increase. In other markets, Scrivano said the price won’t deter customers and predicts the added toppings will actually drive new customers.
Little Caesars has gained quite a few new customers throughout the past two years, with 2021 going down as a record sales year for the chain. It helped that the company put some pieces into place before the pandemic that set it up for a contactless experience–no doubt fortuitous given the crisis environment. In 2019, for example, Little Caesars launched its Pizza Portal, where customers can pick up their pizzas through a portal by scanning a QR code. And, in January 2020, the company launched delivery.
“As delivery grows and contactless pickup grows, those are methods we never had in the past and they provide more options for today’s customers. We think that customers are going to be attracted by 33% more pepperoni and the ability to leverage those two channels. The purpose of this change is to attract more customers,” Scrivano said.
As a private company, Little Caesars doesn’t disclose sales mix numbers of its delivery channel, but Scrivano said it has become quite clear that customers are willing to pay more for such convenience. Delivery sales in 2021 were higher than 2020 and contributed to the chain’s record year.
Unit growth–both domestic and international–also contributed. Scrivano said the chain is targeting several markets in 2022, including the Northeast, parts of Texas, the Southwest CSWC -0.9%, Russia, the UK, Latin America and Canada.
Of course, it’s easier to grow units when sales are growing. The pandemic has been good to the pizza category in general and Scrivano recognizes that. He also thinks such favorability will continue regardless of the circumstances.
“Pizza provides a little break from all these troubles, whether it’s the pandemic or issues with work or managing the kids. It’s a little respite,” he said. “There’s also the value of pizza that will never go away. It’s a low-price way to have a great, full meal. We have high confidence we’ll continue to grow our revenues regardless of what happens.”
That confidence extends beyond navigating the pandemic and into navigating the other challenges hindering the industry–namely, labor shortages and supply chain pressures. Little Caesars owns Blue Line Foodservice Distribution, which largely insulates the chain from supply disruptions. Scrivano said being a family-owned company also helps with labor recruitment and retention.
“It is wonderful working for a family culture, where franchisees and their employees feel like they are a part of this family,” he said. “We’ve increased wages across the board and offer flexible schedules. So many people in our company who are now vice presidents and franchisees started as crew in the stores, so we’ve shown that an opportunity exists to get promoted. Those factors have helped us mitigate much of what is happening right now from a labor standpoint.”
All of these factors are creating a strong tailwind for the company and Scrivano expects that to continue for the foreseeable future as it rolls out a new cloud-based point-of-sale system and new menu offerings, and as it pushes the gas on its marketing strategy. The chain has been wildly popular on TikTok, for example, and is sponsoring the highly anticipated movie, “The Batman.”
Perhaps what Scrivano is most optimistic about, however, is the Hot-N-Ready change.
“Our franchisees were highly accepting of this proposition. They want to treat their customers like gold and make sure they get the best product possible and they love the idea of more pepperoni,” he said. “We think we’ve got something good here with delivery and our Pizza Portal and our Hot-N-Ready pizza. We’ve got a good structure to really drive overall growth.”