This is probably something that you would be asked while interviewing with a management consultancy firm. But this question popped up in my mind while enjoying yet another bite of this strangely irresistible (and unhealthy) food. So I set out to find the answer to this question. There were two approaches. The first was to approach it in the way that one would in an interview i.e. by making initial assumptions and using a few heuristics, one would be expected to figure out the solution to this problem. As the interviewer would say, yada yada, we don’t want an accurate answer from you, yada yada, we just want to know your thinking process. But with the convenience of the Internet and the lack of pressure of being in an actual interview, I wanted to find out a relatively more accurate answer to this.
The first step was to find base data. Was there any pizza chain that had shared their consumption/sales figures? I was in luck. What is the first brand that comes to mind when you want to have pizza (at least in India). For most people, it would be Domino’s. In India, Domino’s is owned by Jubilant Foodworks Ltd, a publicly listed company. This would mean that it would have shared some details of their revenue/sales in one of their annual reports. This was the first
piece slice of data that I found in their 2012-13 annual report.
Looking at the various emerging trends, the organised sector in FSI, which currently accounts for 30% of the business, is expected to account for nearly 45% of the total food service sector by 2015.
This would mean that Domino’s falls under the 30% of the organised sector. Further,
As India’s largest and fastest growing food service company, Domino’s Pizza India enjoys a dominant 62% share in the organised pizza market and more than 70% share in the pizza home delivery segment countrywide (as per Euro monitor report 2012).
Thus, out of the organised sector, Domino’s has a 62% market share. And lastly,
…it sells nearly 66 Lakh pizzas a month across its network of 576 stores across 123 cities in India.
So by a simple calculation using ratios and proportions,
- Pizzas sold monthly in the organised market = 66 lakhs / 0.62 = 106.5 lakhs
- Pizzas sold monthly in the total industry = 106.5 lakhs / 0.3 = 355 lakhs
- Pizzas sold yearly = 355 lakhs * 12 = 4260 lakhs = 42.60 crores
There you have it. For a country of 120 crore people, 42.60 crores pizzas were consumed in 2012-13. This is, of course, nothing compared to the pizzas consumed in the US. The average figure is 3 billion which is equal to 300 crores.
There are still many assumptions in the above calculation. For example, I’m assuming that the market share mentioned in their annual report is by numbers and not by value. This itself is not likely to be true. The above market share would most definitely be on the basis of value. And because the price of a Domino’s pizza and the price of a pizza sold by a local eatery would be different, Domino’s would have a less market share in terms of numbers than the values mentioned in their annual report. But as I said, the goal is to find a relatively more accurate answer and for that purpose, this assumption seems alright.