All hail the local pizza joint, the real reason for Eagle Boys’ demise

Jason Murphy,
21 July 2016
news.com.au
EAGLE Boys Pizza has gone into administration. Its death makes one thing clear — Australia is just not that into chain restaurants.
That might seem an odd thing to say given how Domino’s has stormed the pizza scene. But, despite the pressure of the big players knocking pizza prices down to $4.95, the local pizza shop is still king. It holds onto more than half the market.
The local pizza joint reigns supreme over the big chains.
There is room, it seems, for a certain number of chain pizza restaurants. But not too many. Instead of killing off the independents, the rise of Domino’s killed off Eagle Boys. Pizza Hut is also much diminished from its former glory.
Australia is quite different to America in terms of chain restaurants. We rejected Starbucks and Krispy Kreme. We watched Pie Face fail. We grew very tired of Sizzler.
Meanwhile, independent restaurants and cafes have become more and more celebrated.
Now, if you focus only on McDonald’s, KFC and Subway, we would seem to have a lot of chain restaurants. But America actually has more McDonald’s per person, and those three brands are not the whole picture.
America has dozens of other chain restaurants for which we have no real equivalent.
Olive Garden has one thousand outlets in the USA. Longhorn Steakhouse has 1500. Dairy Queen has 4800. Wendy’s has 6500. Chilli’s has 1500. Chipotle has 1500. Panera Bread has 2000. Jack in the Box, 2200. Arby’s, 3,300.
Plus there’s Applebees, Chick fil-A, Sonic, Red Lobster and Denny’s, and many more. It’s all just about as healthy as you imagine.
Dairy Queen’s meal deal. Does this look appetising to anyone?
An ad for Arby’s. Is sugary bacon really a selling point?
Of course, Boost Juice, Guzman y Gomez and Roll’d are all examples of local fast food chains growing very quickly and being very successful. But there are still far more independent juice bars, independent Mexican outlets and independent Vietnamese outlets than there are chain outlets. The chain restaurant does not dominate like it does in America.
CHAINS — NOT THE WEAKEST LINK
The reason people choose a chain restaurant is they know it will meet a certain minimum standard. That’s why chains are always in tourist areas and on highways where people won’t have local knowledge. You know the chain won’t be too bad. It won’t be too good either, but that’s not what you’re worried about.
Chains are popular because of consumer fear, not consume hope for something new and exciting.
Americans, research suggests, seek out chain restaurants because they travel more and also move to a new city far more often than Australians. To compensate, they want to eat in a familiar restaurant. Research from 2012 found “national chain stores do better in residentially mobile places than in residentially stable places (controlling for other economic and demographic factors)”.
Australia, meanwhile, has a long and deep tradition of independent fish and chip shops, (once run by people from the Mediterranean, now mostly by people from Asia), independent kebab shops (run by people from the Middle East), independent cafes (overrun by hipsters) and actual restaurants run by people from all over the place.
It will be very interesting to see if the space created as the Eagle Boys crash to earth is captured by Domino’s, or if independent pizza operators can grab a slice.
Jason Murphy is an economist. He publishes the blog Thomas The Think Engine. Follow him on Twitter @jasemurphy.