A guide to the value determinants of the pizza experience. Is it time to innovate?
Saturated market, products that meet the same physiological needs, inability to enjoy consistent economies of scale; these and many other factors seem to lead the restaurant industry, including pizzerias, back to what most practical chess players would call "stalemate."
Fortunately, several entrepreneurial histories teach, it is exactly in these situations that the entry of an innovation revives the game, reshuffling the now rusty balance of the competitive ecosystem.
In this sense, the study presented here proposes to first investigate the determinants of value within the pizzeria experience, observing how they are perceived by different consumer clusters, and second, to analyze the economic potential of personalized pizza; a product that involves the reproduction of motifs and portraits on the dish, through the processing of mozzarella cheese on the surface.
Such a proposition, although still niche to date, could spread by virtue of its ability to provide the dining experience with all the trappings to best satisfy those psycho-social benefits increasingly sought within it.
Because not all individuals experience the pizzeria experience equally, a Non Hierarchical Cluster Analysis (K-Means algorithm) was conducted on the importances associated by the 506 questionnaire respondents with the main attributes that make up the pizzeria experience.
From the analysis, it was possible to identify three different clusters of consumers:
- CLUSTER 1 - The so-called Disinterested; individuals with little interest in the pizzeria experience, whose food is but mere satisfaction of a functional need: survive.
- CLUSTER 2 - The Enthusiasts; individuals who consider each component of the offering to be fundamental, and who see the experience as a way to satisfy their psycho-social needs as well. In this sense, they represent the cluster that most frequently integrates food photo sharing practices into their consumption habits.
- CLUSTER 3 - The Quality-Addicted; individuals who are weakly interested in all attributes of the experience except the quality of ingredients, to which they attach higher importance than even the "Enthusiasts" cluster. In order to consume a quality dish, they are willing to bear higher costs.
Then, through a Choice-Based Conjoint Analysis having attributes and levels presented in the figure as the object of analysis, it was possible to compute their respective relative utilities and importance, as well as reconvert these measurements into monetary terms. Specifically, given the high waiting time for the making of a personalized pizza (about 2 hours), it was necessary to hold in consideration how much incidence "waiting time" determines value (or rather "disvalue") within the dining experience.
The results, at first, showed that all clusters present the same hierarchy in terms of importance and utility. Specifically, the type of pizza appears to be the attribute of primary importance, followed by waiting time, price and location.
On the other hand, the attribute levels that can maximize utility are pizza treated in appearance (followed by personalized pizza), casual location, and both price and waiting time with the lowest values, 4€ and 15 minutes from entering the pizzeria, respectively.
In addition, considering waiting time as linearly correlated with utility, it was possible to convert the disvalue resulting from one minute of incremental waiting in pizzeria into monetary terms, showing how for every 60 seconds of waiting a consumer perceives a disvalue monetarily equated to €0.45.
A further consideration that may emerge from the analysis relates to price; indeed, it would seem that although the lowest price is generally the option that induces the most value, it does not represent the first choice option of a substantial number of individuals.
In these terms, it is possible to assume (and investigate further with further studies) that price is also a manifestation of guarantee on the quality of consumption. "Quality-addicted" individuals might therefore discard lower-priced options in favor of more expensive alternatives that would communicate greater quality.
Although personalized pizza does not appear to be an innovation capable of catching on in Italy, it is also true that it could be a business proposition to be considered for the future. In fact, despite presenting a high investment risk, it might guarantee equally high returns in terms of ROI should it succeed in establishing itself and integrating with the growing trends of photo sharing of the dining experience.
In any case, it is clear that any possibility of implementation remains subtended by the entrepreneur's ability to optimize preparation time, making it at least equal to that of market benchmarks.
Although machines capable of automating such preparation are already commercially available, the ability to change consumers’ "belief system" in order to reduce the Perception Gap related to the artificiality of the product remains the subject of further investigation, which is necessary before a possible implementation.
In conclusion, while Personalized Pizza in Italy does not turn out to be a value proposition associated with a low-risk investment, it is equally possible to state that any entrepreneur in the sector can optimize the value of his or her offering by implementing a series of shrewdnesses, namely:
- Avoid competition based on price, as value is inelastic to price and a price that is too low projects an image of "poor quality" of the restaurant offering.
- Characterize one's location with curated and casual elements, without necessarily seeking distinctiveness and elegance.
- Focus entrepreneurial efforts as much on the quality of the core product (pizza, of course), as on service, paying particular attention to one's performance in terms of "waiting time," the second most important component of the offering.