Little Caesars Takes on 'Artisan' Trend With New Type of Pizza

   By Annie Gasparro 
 

Little Caesars Pizza, the privately-held chain that rivals Pizza Hut and Domino's for expansion in the U.S., is adding a fancier pie to its menu, expecting the "Detroit-style deep dish" to attract a new type of customer.

Little Caesars has long been known for its "$5 hot-and-ready" take-out pizzas, which have appealed to value-oriented consumers, but Chief Executive David Scrivano says customers now want something a little more upscale.

"We wanted to go outside our traditional market with this, but stay within the pizza category, and it really resonated with consumers," Mr. Scrivano told Dow Jones Newswires.

The menu addition comes as Little Caesars and its peers face increased competition from higher-end fast food, like Panera Bread Co. (PNRA) and Chipotle Mexican Grill Inc. (CMG), which have conditioned consumers to expect better quality from their takeout.

Not only does Little Caesars need to keep its image fresh, but the company needs to maintain strong margins to appease franchisees. The "Deep! Deep! Dish" pizza will sell for $8, slightly more expensive than its typical products.

"But it still offers a good value," Mr. Scrivano said. "We not only had to make a premium product, but we had to do it for less."

He said the franchisees are pleased with the results, to the point that they are supplementing the national media campaign with their own local ones.

Based in Detroit, Little Caesars has expanded to some 4,000 locations in the U.S. since opening in 1959. While it lags behind Domino's Pizza Inc. (DPZ) and Yum Brands Inc.'s (YUM) Pizza Hut, which have roughly 5,000 and 7,600 domestic stores, respectively, Little Caesars has been expanding faster than the rest of the industry in recent years.

Little Caesars isn't alone in its decision to offer a premium option. Domino's last year came out with "artisan-style" pizzas that have a fancier feel and seem to attract new customers.

Sbarro Inc., which sells most of its pizza by the slice in high-traffic areas like malls and airports, also revamped its core recipe recently. The chain said its strategy is to take the brand up a notch, in light of tougher competition.

Then-Chief Executive Jim Greco, who on Thursday announced his resignation, told Dow Jones in January that the new pizza had boosted sales and customer traffic by "several" percentage points since coming out last October.

While Detroit-style pizza, which is made in a deep, square pan that originated from an industrial-parts tray, isn't as well known as other types, regional styles in general are trendy, Mr. Scrivano said.

He said that as Little Caesars continues innovating, "We will remain focused on pizza--not sandwiches or pasta or anything else."

"Better ingredients might become a secondary campaign," he added, "but value and convenience are still our main message."

Write to Annie Gasparro at [e-mail]

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