Pizza no longer a cheap option or super profitable business

The pizza industry isn’t quite the canary of the restaurant industry, but fractures in it are pointing to a shaky economy.

According to data from the USDA, pizza is the most popular food in the United States, with individuals consuming more than 23 pounds of it every year.

Even so, national chains, North Bay groups and independent pizzerias are feeling the impact of declining sales because of consumers curtailing their spending habits and choosing healthier options, as well as the added expense of ingredients and employee costs.

According to market research company IBIS World, revenue at pizza restaurants has been falling at a compound annual growth rate of 2.9 percent for the past five years. In 2025, revenues were expected to be $49.5 billion.

“Pizza restaurants have suffered revenue declines due to growing competition and some economic volatility over the past five years,” IBIS World reports. “Pizza is a mainstay in many U.S. households, but other restaurants have begun selling it, and various at-home options exist (like) frozen pizza. Further, rising health consciousness among Americans has lowered demand for pizzas.”

Not that long ago pizza was about the only restaurant food one could get delivered. DoorDash and Uber Eats have changed the delivery landscape, which in turn cuts into pizza sales.

Skipolini’s has been making pizzas since 1974. (Image: Kathryn Reed)

Tracking spending habits 

While people are obviously still eating pizza, they might be ordering a medium instead of a large, or not getting a side or beverage.

The Chandi Hospitality Group operates 17 Mountain Mike’s—eight in Sonoma County, three in Humboldt County, and two each in Napa, Marin and Mendocino counties.

“People are watching their spending. I have seen that customers in the North Bay for our locations are looking for value—good deals, lunch specials, and combo offers,” Bhupinder “Sonu” Singh Chandi said. Chandi is founder-president-CEO of the restaurant group. “Delivery platforms are doing OK compared to other channels because of promotions, but margins are tighter. With rising costs, people want more value when they eat out.”

Mary’s Pizza Shack, with its 10 locations in Sonoma, Napa and Solano counties, is also cognizant of people not parting with their money as freely as they once did.

“We are noticing an easing of sales in general at our Sonoma County restaurants. Not specifically pizza, but overall sales of pastas, sandwiches, salads,” Cullen “Cully” Williamson, owner of Mary’s Pizza Shack, said. “When people don’t know what the future will hold, you automatically start cutting back where you can. So maybe they eat out less often or when they do go out to a restaurant, they don’t buy a glass of wine, or they share a salad.”

Pat Townsley, who opened Creekside Pizza & Taproom in San Anselmo in 2017, is witnessing a slowdown in the number of people coming through his doors, while those who do come are spending less.

“Average spend per guest is down and gratuities are also down. Summer was slow by 23 percent versus 2024, and we have an amazing summer-long downtown weekend concert and street festival,” Townsley said.

Using the week before Christmas as an example, sales were off 30 percent compared to 2024 at the Marin County restaurant.

“We have also seen a drop in our daytime business. We had a significant 60-plus crowd from noon to 3 p.m. and that has dropped by at least 50 percent,” Townsley said. “They may be the most frugal, perhaps on fixed incomes, and don’t want to ‘treat’ themselves to extra spending.”

Happy hour at Creekside, which is every day of the year, was down 40 percent the last half of 2025 compared to the previous year.

Creekside has the other burden of being a tap room as part of its business model. Alcohol sales are trending downward, as is the case throughout the adult beverage industry. People at the Marin pie shop are ordering healthier drinks or fewer glasses of wine or beer.

“Once trendy and hip and cool, craft beer is now on the far end of the product lifecycle. It has peaked and leveled off as noted by consolidation in the industry and many, many brewery closures. The market became saturated around 2022,” Townsley told the Journal.

Belal Eid, owner of Seniore’s Pizza in Fairfield, notices regulars coming in less frequently. When they do arrive they want a deal or the most value for their buck.

Seniore’s has 11 locations, with all but one in the Bay Area.

La Prima Pizza, which has had locations in Calistoga and St. Helena for about 25 years, has felt the biggest drop in business with the lack of tourists in the Napa Valley. Locals are keeping them afloat.

Beer and pizza–always a good combination. (Image: Kathryn Reed)

Economic realities

         Net profits are taking a hit as expenses rise and shop owners are reluctant to pass along all of the increases to customers.

In 2025, Chandi Hospitality Group experiences packaging costs rising 6 to 8 percent, pepperoni up 10 to 15 percent, and sauce prices more by 4 to 6 percent. Cheese, wheat and all meats cost more today than even a year ago.

“These rising input costs continue to put pressure on overall margins,” Chandi said.  “Some of our stores are doing well in keeping revenue as in the past year, overall we have seen that our traffic is down (in 2025) when we compare to (2024).”

This Mountain Mike’s group did not have any major price increases on 2025, but adjustments were made to account for the $20 minimum wage franchises were mandated to pay in California starting in 2024.

Mary’s Pizza Shack points to more than ingredient prices soaring. It’s all business expenses—from energy bills to liability insurance.

“The increase in labor expenses is not just wages, but also the payroll taxes and workers compensation insurance. Health insurance increases are approximately 10 percent or more a year,” Williamson said. “2025 has been a challenge for us because when expenses go up and sales go down, it makes it hard to earn a profit.”

Still, he is confident with the pizza company establishing a loyal customer basis during the last 66 years that “we’ll get through this tough time.”

Eid at the Seniore’s Pizza in Fairfield said his profit margin continues to shrink because he’s caught between rising prices and customers not willing to absorb all of his added costs. Aldo Nunez, who manages the La Prima Pizza restaurants for his parents, echoed that sentiment.

Even though Eid is not obligated to pay workers $20 an hour, the labor market is such that workers will go where the higher paycheck is so he says he is “stuck paying the higher minimum wage costs big corporations are paying.”

Townsley at Creekside acknowledges being in Marin County is a bonus because economic downturns are less severe in a more affluent community. Even so, it’s not all rosy.

“Too many beer options, expensive ingredients, shipping/logistics, a decrease in demand equals decline-failure in industry,” he said.

Myriad issues are beyond most owners’ control, as Townsley highlights topics not always top of mind for the consumer.

“There are always going to be production challenges that impact pricing from freezing crops raising the cost of limes temporarily, to a levee break in the Central Valley that halts ag trucks from shipping within the state,” Townsley said. “Everything is connected. Regardless if we are sourcing locally, there is a global supply chain thread that ripples through all industries. No business or industry is an island.”

He is also contending with higher alcohol charges, with some distributors adding a 10 percent increase for all inventory. Keg prices are up about $10 per barrel, while some breweries are charging delivery fees or increasing minimum order quantities.

“At Creekside, we haven’t changed prices in years. We have a consistent following and can generally weather the ups and downs by throttling labor and supply purchases; those two are our biggest costs,” Townsley said.

While he is not subject to the $20 minimum wage for fast food franchise, the California minimum wage went up Jan. 1 to $16.90 from $16.50. That 40 cents increase alone is expected to cost Creekside $25,000 in 2026.

Note: A version of this story first appeared in the North Bay Business Journal.