A ½ Pepperoni, ½ Mushroom Pizza: Why Do Some Pizzerias Charge You For 2 Toppings and Others For Only 1?
I know you may think this is trivial, but this is a question I’ve struggled with longer than I care to admit. Why would a pizzeria charge you for two “full” portions when they only use two half portions for your “half and half” pizza?
In search of answers, I posed this fascinating pricing conundrum to a couple of my friends and together, we came up with a working hypothesis. Our initial research revealed that legendary and gourmet pizzerias tend to charge for two toppings while Mom & Pops and chains seem to only charge for one topping. We hypothesized there are two key reasons why legendary and gourmet pizzerias charge for two toppings. First, customers that patronize these establishments tend to be less price sensitive. This notion is supported by the fact that I rarely, if ever, see coupons for these pizzerias while discounts (coupons, volume specials) are readily available at chains and Mom & Pops. Second, customers dining at legendary and gourmet pizzerias highly value unique toppings. This concept is supported by the fact that these restaurants are often known for specialty toppings such as clams, homemade sausage, thyme roasted mushrooms, etc.
Next, I did a little dialing around the country to see if these ideas made sense in the real world. Sure enough, in my small sample, these hypotheses seemed to bear out. All of the major chains only charged for one topping, even the high-end brick oven pizzeria chain Bertuccis. Legendary pizzerias like Regina’s (Boston), Santarpio’s (Boston), and Lou Malnati’s (Chicago) all charged for two toppings. Similarly, gourmet pizzerias like Upper Crust (Boston), Two Amy’s (Washington, DC), and Alberto’s (Washington, DC) charged for two toppings.
Some restaurants charged a price between one and two toppings. Emma’s, my favorite gourmet pizzeria in Cambridge, MA., charged a 25 cent premium for a large half and half topping. The truly legendary Pepe’s Pizzeria in New Haven, CT charges $8.10 for a large chicken topping and $5.40 for a half-topping (67% of a full topping).
There were some outliers. No highly rated pizzeria in my hometown of Cincinnati charged for two toppings, even though one uses gourmet ingredients (Dewey’s) and another uses a wood fired oven (Pomodori’s). A gourmet pizzeria at Cornell University (Aroma) only charged for one topping. And regardless of the city, highly-rated (that are not “legendary”…an admittedly arbitrary label) non-gourmet pizzerias primarily charged for one topping.
What I find interesting is that value pricing confidently explains a pricing strategy that at first blush, seems arbitrary. And given my experience that few companies actually employ value pricing, it’s surprising that the pizza industry exhibits a clear pattern of setting prices based on value. The next time you are at your favorite pizzeria, I bet you’ll check if it is a one or two topping establishment!
Thanks to my friends “Price is No Object” Steve, Rob, Mark, and Robert (who runs a blog that discusses buffets) for their insights and patience.
