Sweet Sweet Pizza

Back in my left-leaning; USA-bashing; early-to-mid-teens days, long before I had any exposure to economics, I’d wonder why the only bus that stops near my house everyday couldn’t arrive once every 15 minutes instead of every hour; or why the local Woolies couldn’t be open 24/7 so people like me can beat the crowds and shop any time I want to. Of course, I soon came to realise that if people have money to spend, then there will also be people competing for that money by offering incentives through lower prices and better quality goods over others. Over the last few years, nothing has reinforced my faith in the wonders of free and unregulated markets and competition more than that shining little sector of the economy known as the pizza industry. I remember when we first moved here almost 10 years ago we couldn’t order pizza because 1) It was out in whoop-whoop, 30 minutes away from the nearest pizza store and 2) Pizzas were darn expensive. Finally when a Domino’s Pizza finally did appear in our area, we’d look forward to getting that voucher in the mail which entitles you to large pizzas for $8.95 each pickup. Since then there’s been bittersweet competition. A new Pizza Hut (where this blogger makes his dough) opened only a few hundred metres away from Domino’s, as did a Pizza Haven much further down the road. Right now there are three major take-away delivery pizza chains operating in the area and, to my knowledge, at least two other smaller local ones near by. Prices have dropped too. And boy have they dropped. Voucher prices for a large pizza dropped from $8.95 to $4.95 almost overnight. It would cost less to have your pizza delivered than to pick-up from the store without a voucher. Today, inflation in the pizza sector is non-existent. The average price has leveled around $5.95, although I have seen $3.95 Pizza Hut vouchers floating about. Pizza stores also accept competitors’ vouchers, and (here’s a little trade secret) have to accept expired ones. Most delivery drivers don’t even bother asking you for the voucher. You can imagine the sort of horrified reactions these consumer-benefiting, price-dumping practices would evoke from the ACCC, the Australian Democrats and other pro-regulation freaks if pizzas were say, airline tickets, books or petrol. Why, we’d have whinging about ‘anti-competitive behaviour’, government legislation, and all sorts of craziness. It should be interesting to note that the gourmet pizza market has not suffered during this price war. If you’re an upper class-wine-tasting cultural prick and want ‘real’ pizza, then there are more places than ever these days where you can fork out $20 for a pizza that’s only half the size of one from the take-away chains but with ‘real’ ingredients. Remarkable isn’t it? If the whinging wisdom from the Australian book industry (where major chains are prevented from lowering prices so that smaller local ones can survive) were applied here, we would be seeing the death of gourmet pizza outlets, and in turn see the fleecing of pizza consumers as the evil ‘big business’ take-away chains jack up prices and lower quality. Instead, the take-away pizza market is prospering with more suppliers, higher-quality products and lower prices, while the gourmet pizza sector has succeeded superbly by adapting themselves to a niche not served by the major chains. Everybody wins!

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