Illustration
צילום: ירון ברנר
6 out of 10 pizza parlors at risk of closure
Dun and Bradstreet report shows intense competition in Israel's pizza branch puts 57% of pizzerias at risk of shutting down. Currently, some 1,000 parlors open across county, with prices not affected by competition
When you get a craving for pizza, and you choose a certain pizza parlor to satisfy your hunger, know that you just might be sealing the fate of a competing pizzeria, as Dun and Bradstreet numbers show that some 57% of pizza parlors in Israel are at high risk of shutting down.
The Dun and Bradstreet report says it is actually the popularity of pizza in Israel that makes the branch so dangerous. The fact that opening a pizza parlor does not call for too high an investment makes the business extremely competitive. As a result of the competition, many businesses in the field are not able to survive long.
The costs of opening a pizza parlor range from some NIS 100,000 to NIS 300,000 (about $27,000 - $80,000), with 40% of the investment allocated to renovations, and the remainder to purchasing equipment.
Deliveries makes up about 55% of the entire branch. In some cases delivery makes up up to 85% of a pizza parlor or pizza chain's income, meaning a pizzeria that does not delivery is likely to make less profit.
Another factor that increases competition in the branch is the frozen pizza market, which is on the rise. According to estimates, the frozen pizza market makes up about one third of pizza sales in Israel.
There are currently some 1,000 pizza parlors operating in Israel, with an annual revenue of some NIS 400 million ($107 million), and some 6,000 – 8,000 workers.
Major pizza chains operate about 200 branches, and are responsible for roughly 55% of the branch's revenue. There are also smaller chains, operating between 2 – 6 branches, which make up some 15% of the branch's general revenue.
The rest of the market belongs to neighborhood pizzerias. About 57% of pizza parlors in Israel are located in the center, some 31% can be found in the north, and only 12% operate in southern Israel.
Despite the intense competition, prices have not been affected, and small pizza parlors offering their meals at low prices tend to shut down fast.
All chains offer special deals, but they usually come in the form of offering a free bottle of soft drink, or with the requirement to by two pizzas.
