This restaurant chain has been named the most affordable in America

By Charles Passy

Little Caesars, once known for its $5 pizza pies, is still the low-cost champ, according to a new survey

At a time when restaurant customers are clearly becoming frustrated with higher dining costs, a number of fast-food chains are trying to appease them with a range of offers. McDonald's (MCD) is bringing back its $5 value meal. Jack in the Box (JACK) is introducing a "Munchies under $4" deal.

But, according to a new report, the restaurant that's perceived as the ultimate low-cost leader is Little Caesars, the privately held pizza chain with the cartoonish, Ancient Rome-inspired mascot. It was once known for its $5 pies and continues to tout its affordable offerings today.

Datassential, a food and beverage market-research company, recently released its annual report for the U.S.'s top 500 restaurant chains. The findings include a ranking of the restaurants deemed the most affordable, based on a consumer survey.

Little Caesars came out on top, with 72% of diners rating it above average when it comes to affordability, followed by Freshii (65%), Papa Murphy's (CA:MTY) (64%), Cici's Pizza (62%) and Pollo Tropical (59%). Little Caesars was also the low-cost favorite in a Datassential 2023 survey.

"Little Caesars has historically leaned on low prices and affordability as a core brand strategy and traffic driver," said Huy Do, a Datassential research and insights manager.

Also read: Dining out is increasingly a domain of the wealthy. Restaurants are feeling it.

While Little Caesars' prices vary by location (with 80% of stores franchised), the chain, founded in 1959, says it aims to price its traditional pizzas as the lowest in each market. In New York City, for example, a full-size pizza with two toppings can be had for $7.99 as part of a current promotion.

That comes out to be lower than the city's famed $1-a-slice pizza parlors, which now generally charge $1.50 - or $12 for a pie. And, needless to say, you can spend a lot more than that in the ever-pricey metropolis: At many New York establishments, a plain pie can easily run more than $25.

According to one estimate, Little Caesars has roughly 4,200 locations spread across all 50 U.S. states - it also says it operates in more than 28 countries and territories abroad - and generates $4 billion in annual sales. That ranks it among the biggest pizza chains, behind only Domino's Pizza (DPZ) and Pizza Hut (YUM). Little Caesars doesn't share any sales or other data itself.

'Little Caesars has historically leaned on low prices and affordability as a core brand strategy and traffic driver.'Huy Do, Datassentials

Little Caesars takes its knocks from some pizza aficionados, who argue that you get what you pay for - and, in this case, that means a lesser-quality product. "The crust of the pizza tastes like cardboard that was in a flooded basement," said one particularly harsh critic on the Medium site.

But others say it's good pizza for the money. Maybe even better than good.

"Little Caesars pizzas are my comfort food," said one commenter on Quora.

Others call the chain their salvation in a world where fast-food burger meals can now run above $10.

"Cheapest dinner around that can feed everybody easily," said another Quora commenter.

More: Will Pizza Hut's new burger sell better than McDonald's pizza did?

A Little Caesars spokeswoman said the chain prides itself on the pizza it serves and the pricing it offers.

"Our top three priorities are to provide quality, value and convenience to our customers," she told MarketWatch.

The spokeswoman added that part of the reason Little Caesars is able to offer better pricing is because it makes its dough fresh daily in-house, thus saving on purchasing a frozen product. She also pointed to "our world-class supply chain" as another cost-saving factor.

But restaurant-industry professionals point to something else in Little Caesars' favor - namely, the fact that its locations don't offer seating and are essentially carry-out and delivery operations. That means a smaller physical footprint, which translates into savings.

Clark Wolf, a veteran restaurant consultant based in New York and California, also notes that it doesn't cost a fortune to make pizza, since we're talking dough, cheese and sauce as the main components.

"It's inexpensive ingredients, not shrimp," he said.

-Charles Passy

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05-25-24 1258ET

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