Little Caesars

Jun 16, 2021 | Report Announcements

Little Caesars enjoys simple, effective brand positioning around HOT-N-READY speed & convenience, the lowest price points in the pizza segment and quality (as the only chain to make dough in-house). It’s HOT-N-READY access model means no waiting for an in-store pick-up of $5+ large cheese or pepperoni pizzas kept in inventory. Online orders for other products (Reserve-N-Ready) are available for pick-up from the store’s unique Pizza Portal. Access further benefits from a new DoorDash delivery service started at the beginning of 2020. Notably, the brand’s predominant carry-out service model provides a significant labor cost advantage relative to its national delivery competitors and helps facilitate low price points in a price sensitive market. While LC enjoys a relatively healthy post-lockdown positioning (because of its strong price value & great carryout access), its comps have been underperforming the pizza segment for some time because of its orientation towards a lower income demo and because of slower digital order progress. This chain’s inability to raise prices for its core $5+ HOT-N-READY Classic large (which drives the majority of sales) represents a challenge not only to COGs, but to its ability to offset post-lockdown traffic declines with mix improvements. To this end, a system worst EBITDAR margin reflects AUV & COGs underperformance. In conclusion, while Little Caesars maybe the best at carryout, it is challenged with the need to translate it’s fun menu and marketing into higher price points sufficient to increase unit level profits.

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