Costco has 546 locations in the United States as of 2019.
While some may look to contextualize that number with comparisons to Walmart or Aldi locations, others look to place it in a different category altogether: this makes Costco one of the largest pizza chains in the United States.
Costco was ranked 15th largest pizza chain in 2011 and 14th in 2015 (*per a few flippantly reported pieces). Using that same methodology, comparing Costco locations to Pizza Today’s annual Top 100 Pizza Companies list, in 2019 Costco tied for 10th largest chain (neck and neck with Hungry Howie’s, based out of Michigan)
*[It’s important to note that because the Pizza Today list is based on total units annual sales, not number of locations, comparing the Costco warehouse numbers is a bit like apples and oranges. Noble Roman’s Pizza, for example, has 2,424 locations, making it rank 5th for number of locations, but placing it 35th on the actual list based on sales. So, fine, let’s be honest — I’m not really interested in refining the methodology used by Business Insider, I just enjoy the genre-blurring implications.]
Whenever the next Pizza Today list comes out (awards season!), the post-COVID numbers will shift the rankings. Although pizza, as a takeout dining category, has taken less of a hit than other sectors like fine dining, the landscape has already changed only seven months into the pandemic (pour one out for California Pizza Kitchen).
Costco is well-positioned to survive because it is tied to grocery. This “pizza chain” never aspired to be a pizza chain (almost certainly the pizza is a loss leader, just like their rotisserie chicken). Nevertheless, I suspect that Costco is going to come out the other side of this pandemic climbing the Pizza Today rankings, or at least expanding their lead.
It’s the other restaurants I’m more concerned about.
Who is going to survive this pandemic?
QSR is shifting, potentially permanently, to focus on off-premise dining. You can see it in the drive-thru construction boom.
CNBC reported that “Starbucks, Chipotle Mexican Grill and Shake Shack are among the chains planning to focus on drive-thru construction in the coming months.” leading to a drive-thru boom that could rival the 1970s.
“Through the pandemic, there’s been a double-digit increase in revenue among those drive-thrus, and so it’s created a buyer frenzy among restaurant chains for that real estate,” said Aaron Allen, founder of the restaurant consultancy Aaron Allen & Associates.
This drive-thru boom may very well increase as new real estate opens up from tenants going out of business.
“The good news is, in this environment, our landlords are more willing to work with us to do a remodel, and if they are not willing to work with us on a remodel, there is a site across the street that we will take a look at as well,” Chipotle CFO Jack Hartung said on the company’s most recent earnings call. [emphasis my own]
The implication there, of course, is that if you can count on one thing right now, it’s that there will be plenty of empty spaces where restaurants used to be.
The Independent Restaurant Coalition has been lobbying Congress for months to provide economic assistance for the independent restaurant industry. Specifically, the group is lobbying for the RESTAURANTS Act of 2020, which would create a $120 billion Restaurant Revitalization Fund.
To contextualize the number: according to the IRC, 58 airlines employ 621,220 Americans and received $25 billion in dedicated relief. In comparison, 500,000 independent restaurants employ 11 million Americans (17 times more) and received $0 in dedicated relief.
The House passed the revised HEROES Act in early October, and the Senate has sat on their hands. Reportedly, the Senate is planning to vote on an additional stimulus package this week, which will be the last chance before the election. This stimulus package doesn’t necessarily include the restaurant relief, although half of the Senate has signed onto the RESTAURANTS Act.
Although I am deeply cynical, I still hold my breath for some sign of movement on this bill. I love the Costco food court, but I don’t want to live in a city where Costco is my premier pizza choice and Chipotle has its pick of drive through sites.
I worked for independent restaurants for years. There are few businesses that bring more jobs, connections, and culture to a community than independent restaurants.
As cold weather approaches and the long-lasting effects of crunched finances compound, the RESTAURANTS Act could not be more urgent.