In 1994, Little Caesars was the #2 pizza chain in America (just behind Pizza Hut) with $2 billion in annual sales.
In 2010, it was number four, with half as much revenue.
Here is the breakdown of pizza market leaders in 1994:
- Pizza Hut: $5.4 billion
- Little Caesars: $2.1 billion
- Domino's: $1.9 billion
- Papa John's: $450 million
It's success was built on advertising as consistent as Geico, with a genius tagline: "pizza! pizza!" that you just couldn't ignore. It was coined by ad man Cliff Freeman who also coined the famous "Where's the Beef?" which were the very words that catapulted Wendy's into pubic success as well.
The question is: How did such a seemingly successful marketing strategy plummet so suddenly?
Well folks, this is a story of what happens when executives get bored and unsatisfied with the same old promotions and product. As a result, all too often they resort to adopting product strategies, much like the competition, that are a complete deviation from what made the company successful in the first place.
So, let's review what happened.
I loved Little Caesars' pizza when I was a child. I loved the way it tasted, and you could always be sure there was enough for everyone because, as everyone knows, when you purchase on Little Caesars pizza, you got a second one free.
Also, because they didn't deliver, it made the anticipation of your friend's dad going out and getting everyone pizza even more special. "Is he back yet!" Hey, they might have been a good ad!
And that was the keystone of Little Caesars' success: Free pizza, and no delivery. After all, Pizza Hut dominated delivery, so why not save some money and give away free pizza?
Well, that winning formula was abruptly changed when executives decided that they wanted to offer" more", ergo:
- Start offering delivery: "Delivery. Delivery"
- Start selling larger pizzas than Pizza Hut and Domino's: "Big ! Big ! Pizzas"
- Stop offering 2 pizzas for the price of 1: No more "pizza! pizza!"
- Change the sizes of their pizza
Let's review #4 first...
The sizes of Little Caesars' pizzas alone became very confusing as now a small Little Caesars' pizza was now the size of a large Pizza Hut pizza, and a large was about 65% bigger than a large Dominoes and Pizza Hut large pizza.
Yes, this is confusing -- it's not just you.
Needless to say all this complication over new sizes, the addition of delivery (while they may have been wise) combined with the abandonment of the famous "pizza! pizza!" commercials in exchange for the "Delivery. Delivery" and "Big ! Big ! Pizzas" led Little Caesars into a downward spiral which resulted in the following drop from 2nd place to 4th place in in 2009 (same source as above):
- Pizza Hut: $5.0 billion
- Domino's: $3.1 billion
- Papa John's: $2.1 billion
- Little Caesars: $1.2 billion
Now, there are marketing failures of omission and commission.
A marketing failure of omission is when you sit on market share and not pursue new innovations that will increase value, customers and decrease costs.
A marketing failure of commission is almost more admirable as these started as honest attempts to drive company growth.
This is what happened with Little Caesars as they attempted to provide the same benefits as Pizza Hut, while giving people more pizza and purchasing options.
Sounds harmless, right?
The problem was people already had a formula they were comfortable with regarding Little Caesars, and after 15 years of experimental product-pricing strategies, Little Caesars sacrifices a whooping 42% loss in sales.
Today, well they really haven't recovered much position in the quest for pizza dominance since their unforced fall.
The latest research in 2015, from PMQ Pizza Magazine, reports that Little Caesars is currently in 3rd place in terms of pizza sales by a major company, with Pizza Hut in 1st, and Domino's in 2nd.
I frankly haven't had Little Caesars' pizza since I was a kid.
I can still remember the cartoon commercials that grabbed my attention. Today, we order from local pizzerias who, incidentally, make up over 50% of the total sales of pizza.
Will Little Caesars return to #2 or even rise to #1?
Sure, the second they call me.Don't compete — DOMINATE.
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