Pizza Pizza CEO discusses growth strategy as Trump tariffs bite

Paul Goddard, President & CEO of Pizza Pizza, joins BNN Bloomberg to discuss the company's latest earnings.

Pizza Pizza Ltd.’s CEO says the company is deploying several strategies to lower the cost for franchisees to operate their businesses amid the ongoing tariff war with the U.S.

The company primarily uses Canadian food products to reduce the cost of import-related expenses, converts existing stores and refurbishes well-maintained ovens. It, however, typically purchases tomato sauce and ovens from the United States, which are subject to retaliatory tariffs.

“You’re really looking at ovens from Italy or the United States, and so those are definitely something that you see a palpable cost increase,” Paul Goddard told BNN Bloomberg in a Friday interview. “We have to think about, how do we best manage that and just get the best efficiencies we can, but it is a headwind.”

Ottawa has imposed retaliatory duties on ovens and aluminum and steel parts on equipment while also slapping tariffs on American produce, according to the Department of Finance.

Pizza Pizza Royalty Corp., the chain’s publicly traded sister company, reported on Thursday that total sales for the second quarter increased 3.9 per cent to $161.4 million from $155.4 million the same time last year.

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Goddard highlighted the company’s value perceived as a low-cost pizza chain winning customers over.

“I think even predating this sort of current extra focus on value, it’s something that’s core to our brand and something that people associate very much with our brand. Affordability, value for money,” said Goddard. “I think it’s more just an increased emphasis for us, even compared to prior days. So that’s very much the case.”

The company attempted to capitalize on trade war discussions by developing marketing campaigns aroundthe severity of tariffs on Canadian businesses and residents. Pizza Pizza has created a reverse tariff program where customers can receive 25 per cent off an order online or through the Pizza Pizza smartphone app and a fixed rate pizza offering an extra large pizza at a locked-in price inline with fixed rate mortgages.

“I think we just want to be top of mind, be very topical, very relevant, and not take ourselves too seriously. You have to be judicious, because some of these topics are very serious,” said Goddard. “I mean, tariffs, obviously, are very serious but our 25 per cent reverse tariff cheeky campaign got a lot of attention. Same as the fixed rate mortgage type of approach, the fixed rate pizza that we offered and things like that. I think we’re trying to point out that to people to show that, look, we hear you, we know that times are tough for you with probably less discretionary spending, but look over here.”

• Trade War coverage on BNNBloomberg.ca

Goddard highlighted the company’s digital transformation stating that over 70 per cent of orders are made online through the website or app. He however said the phone number, 967-1111, is still an important part of Pizza Pizza’a marketing strategy, which also leverages data.

“On the back end, a lot of cloud-based services leverage consumer data, and we’re able to target campaigns and things behind the scenes as well, in terms of how we do media buy, and just analyze what works and what doesn’t,” said Goddard. “There’s continued investment there, and we’re always promoting our organic delivery, which even was up this quarter in many ways thanks to our apps. Rather than using third party apps, which is a channel for us, we want to really drive people to use organic apps, because it’s cheaper for them, and you have a pizza time guarantee, for instance, as well if you go through our organic app or website. That’s something that we’ve seen grow this quarter, organic delivery, and that’s because of our technology.”