Investment analysts aren’t usually too concerned with the pizza business, but things are changing and Wall Street is beginning to take notice of a scenario where ingredient costs are down and consumer spending is rising, making it a good time to add some pizza to portfolios.
Recent news that California Pizza Kitchen was on the auction block focused new attention on competing pizza chains too and quickly showed the pizza business is benefiting from improved consumer attitudes, new products and lower ingredient prices. All factors indicating it might a good time for investors to get into the game. The prices of both cheese and grain are down from previous peaks in 2009. Declining grain prices usually indicate that cheese prices will continue to fall for at least another a quarter or two.
All indications point to pizza chains and their investors benefiting from lower ingredient costs for a while to come. Along with CPK, Domino’s has been a big player in the category with the company's recent revision of its pizza recipe that helped lift the segment further. Instead of removing market share from other pizza chains, Domino's rise has been at the expense of other quick-serve rivals like McDonald's and other non-pizza chains.