Last year, it was reported that the operating profits of latecomer pizza franchises, which compete based on cost-effectiveness, surpassed those of Korea Pizza Hut, Korea Papa John's, and Domino's Pizza, which are considered first-generation pizza franchises.
According to the Financial Supervisory Service's electronic disclosure system on the 6th, Cheong ODPK, which operates Domino's Pizza, generated sales of 201.2 billion won last year. Although sales were similar to the previous year, operating profit recorded a 42% increase to 7 billion won. During the same period, Korea Papa John's had sales of 71.9 billion won and operating profit of 3.4 billion won. Sales increased by 5.6% compared to the previous year, but operating profit decreased by 17.1%. This was the result of aggressive marketing, including hiring the idol group IVE as a model.
Korea Pizza Hut's performance from last year has not yet been released, but the company is currently in a precarious situation due to the aftermath of a lawsuit over the differential franchise fees. The company has entered corporate rehabilitation proceedings, and the master franchise agreement with its global headquarters, Yum Brands, has also reached its expiration.
There are also emerging analyses suggesting that the pizza franchise market is not what it used to be. According to the market research firm Euromonitor, the size of the domestic franchise pizza market has not exceeded 1 trillion won since 2019.
However, amidst this, there are places that have surpassed the operating profits of the three major pizza franchise companies. These are mainly low-cost pizza companies that are rumored to offer good cost-effectiveness. The sales of Pinachigong (Pizza Nara Chicken Gongju) last year were 95.9 billion won, and operating profit was 21.1 billion won. Pinachigong is characterized by providing the unique experience of enjoying pizza and chicken at reasonable prices, notably with the popularity of its single-serve set menu.
No More Pizza also recorded sales of 20.6 billion won and operating profit of 8.6 billion won last year. Its operating profit surpassed that of Domino's Pizza and is more than double that of Papa John's. No More Pizza is a rapidly growing business that expanded through franchises centered around Seoul Forest. Founded by former securities professionals, it gained attention for introducing small-sized pizzas targeting single-person households.
Last year, the operating profit of Pizza School, which is considered the original cost-effective pizza, was 5.6 billion won, marking a 43.6% increase from the previous year (3.9 billion won). During the same period, sales increased by 23.6% to 11 billion won.
According to the food industry, the reason for the increase in consumers wanting to enjoy pizza deliciously and cheaply is that it has been over 40 years since pizza entered the Korean market. It is expected that strategies focused on cost-effectiveness will resonate more with consumers than the premiumization of pizza in the future.
A representative from the food and beverage market noted, "When pizza was first introduced to Korea, leveraging the halo effect of being Italian cuisine, a relatively high-priced strategy was advantageous. However, now pizza has established itself as a fast food option for a quick meal," and added, "Pizza franchise headquarters need to consider more efficiency measures to lower prices while maintaining taste."