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Pizza Franchise War In Australia May Hit U.S. Shores

pizza hut and dominos

Pepperoni. Mushrooms.

And, for those who like it hot-how about some Banana peppers?

(This post may contain affiliate links. Please read my disclosure policy).

What do you like on your pizza?

More importantly, how cheap do you want it?

 

Pizza Franchise War In Australia May Hit U.S. Shores

That’s right: A price war between pizza franchises in Australia has been brewing baking for a while in Australia for a while. And, soon, U.S. pizza lovers could benefit from it.

Keep reading.

 

The Federal Supreme Court

The Federal Supreme Court (in Australia) has just ruled in favour of cheaper pizza.

(Notice how the word “favor” is spelled. That’s how they roll down under.)

Anyway…

Pizza Hut and Dominos are currently battling to sell the cheapest pizza in Australia.

While it’s great PR for both franchisors, it’s not being looked at too fondly from local franchisees across that country. You’ve read about stuff like this before on this franchise blog. Like when McDonald’s franchisees rallied-and really got McMad about having to offer low-profit items on the Dollar menu.

The war in Australia-for Total Pizza Domination, may go on for years. But, the war between franchisors and franchisees-that one seems to be over.

From Crave:

In a bid to keep up with its mortal enemy and fierce competitor, Yum! recently launched a revamped ‘sales strategy’ that puts a cap on the price its local outlets can charge for a pizza and scaled back the number of items on the Pizza Hut menu.”

YUM! owns Pizza Hut-as well as several other franchise concepts, and has taken a stand. They want volume. They want to be the winner in the Australian pizza wars. Do the franchisees?

Not really.

Franchisees…not just pizza business franchisees, are in it to make money. They have risked a lot to become small business owners. They need to have fair profit margins. They have lots of expenses-things like rent, inventory, insurance, taxes, and payroll. They also have to pay a percentage of their gross sales to their franchisor in the form of royalties. These expenses add up quickly. The higher the expenses are, the lower their profit margins are.

So, what’s more important?

Total domination of the pizza space, or franchisee profits?

And, is this pizza war headed over to the U.S.?

 

Franchisors vs. Franchisees

It shouldn’t have to be this way in Australia-or anywhere, for that matter.



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Can’t everybody just work together, instead of against each other/

Can there be a middle ground? Or, some creative solutions?

I have one an idea. 

 

solutions

 

My idea:

Franchisors that insist on making sure their brand is the dominant one-by way of price, should award bonuses…maybe in the form of royalty payment percentage deductions, to franchisees that are improving their sales numbers.

That way, both parties win.

Another idea:

Stop selling stuff based on price alone.

What do you think about my idea?

What do you think about being the cheapest?

I’d love to hear from you in the comment section.

 

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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Straightforward Advice
Joel, thank you for taking the time to speak with me yesterday. It was refreshing to finally speak with someone in franchising who dishes out straightforward, candid advice. You provided me with some insightful ideas that I'm giving a good deal of thought and consideration to. I look forward to speaking with you on our next consultation call."
- John Timmins, Columbia, South Carolina
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