Pizza restaurants coping with a growing pepperoni shortage

Photo (c) Arx0nt - Getty Images

The popularity of pizza during the pandemic is creating supply issues

Pizza parlors, especially those that deliver, have enjoyed a booming business during the coronavirus (COVID-19) pandemic. But that surge in popularity is apparently having negative consequences on supplies.

Bloomberg reports that pizza restaurants across the nation are now facing a growing shortage of pepperoni, and the cost of that popular topping has nearly doubled. The report attributes the shortage to two factors -- production problems at some meat plants that have reduced output and growing demand from consumers over the last five months.

Smaller “mom and pop” shops have been hit hardest. According to Bloomberg, Charlie’s Pizza House in Yankton, South Dakota was paying $2.87 a pound for its supplies of pepperoni in January. Now, the price is $4.12 a pound. One independent New York eatery has seen its pepperoni cost go from $4 a pound to $6.

Big chains not yet affected

So far, tighter supplies haven’t been a problem for the large pizza chains like Dominos and Papa John’s. These companies usually purchase all of their ingredients on long-term contracts, so it’s mostly the suppliers who are taking the hit.

In mid-July, Dominos reported that its U.S. comparable sales jumped 16 percent in its fiscal second quarter, the first full reporting period after the coronavirus lockdown. In 2019’s second quarter, Dominos barely posted a 3 percent gain.

“The second quarter marked a rather unprecedented acceleration for food delivery in the U.S., and we were certainly no exception,” Domino’s CEO Ritch Allison told analysts.

‘Golden age of pizza’

Industry publication QSR had already declared this to be “the golden age of pizza,” noting that Americans’ appetite for it was enjoying a resurgence. When the lockdown hit, the industry was uniquely equipped to respond.

“The why isn’t complicated: Pizza brands came into the crisis, on a broad scale, already equipped to deliver and fulfill carryout service,” the magazine reported. “No pivot needed.”

While food delivery services like Grubhub and UberEats gave nearly all restaurants a delivery option, consumers were already comfortable with the pizza delivery option since they had been using it for years. And for many, pizza is comfort food, making it an easy choice during a pandemic.

So far, most pizza restaurants have said they are not passing on the higher pepperoni cost to their customers, though that could change if the shortage persists. 

A YouGov survey conducted for a recent National Pizza Day confirmed that pepperoni is America’s favorite pizza topping, followed by sausage, mushroom, and bacon -- toppings consumers might need to get familiar with should the pepperoni shortage persist.

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