Pizza Index is a new measuring tool from stockbroking firm CMC Markets that attempts to predict shifts in the economy based on Australia's pizza buying habits. The idea is that consumers move away from expensive foods when times are tough in favour of the budget end of the market — namely, cheap takeaway pizza. As the Index shows, the current trend for bottom-of-the-barrel $5 pizzas paints a grim picture for the economy. Or maybe we're just a bunch of tightarses?
The Pizza index follows the same principle as the Lipstick Index; an economic model that analyses shifts from big ticket purchases to small luxuries like lipstick to predict consumer spending confidence. Similarly, the Pizza version tracks consumers' shift towards the "value" end of the takeaway pizza spectrum. Or as CMC Markets explains: "pizza sales up could equal consumer activity down."
Domino’s Pizza reported its full year numbers today with net profit up 50% to $45.8 million for the 12 months to June 30. As CMC Markets notes, much of this recent sales growth was off the back of a "Cheaper Everyday" promotion that has seen Domino's pickup prices slashed to just $4.95 per pizza. Pizza Hut has also introduced pickup $4.95 prices, with all pizzas capped at just $8.50.
On the surface, the Pizza Index appears to present a warning sign about weakening consumer activity. However, there's also the fact that Aussies love a bargain and don't seem particularly fussy when it comes to fast food.
"Let’s be clear, [these figures] are not spelling out a market disaster," CMC Markets admitted on its blog. "Taking a balanced view, data today also showed rising business confidence and better than expected lift in house prices in Q2." [Via Business Insider]