During times of uncertainty, economists note that consumers exhibit some predictable behaviors to deal with the situation. For example, even if people cannot afford to change out their entire wardrobe each season, they might achieve a pleasurable sense of novelty by buying a new lipstick. The concept of the lipstick index suggests that when markets enter a downturn, shoppers purchase fewer hedonic, unnecessary items, like new clothes, but as the downturn continues, they grow tired of being frugal all the time and turn to relatively inexpensive luxuries to boost their morale.

Although the concept of the lipstick index is well-established and widely accepted, recent economic disruptions (including tariff inconsistencies, prominent inflation rates, poor job growth, and rising consumer prices) have not prompted these predicted trends, to many economists’ surprise. For example, consumers actually made fewer impulse purchases of small luxuries, including self-care products like cosmetics, which instead exhibited declining overall sales. Faced with such a discrepancy, some economists suggest the need for a different kind of index, pinned to a different type of product that is more universally popular.

Thus, consider the pizza index.

In reporting on a novel analysis of changing purchase behaviors that they conducted in collaboration with a popular, independently owned pizza shop, researchers noted that pizza sales remained steady, but consumers had stopped adding on their usual accompaniments, like chicken wings or drinks. Because the consumers keep coming though, the restaurant needed to stay open, even as its own operating costs continued to rise. For example, the cost of bulk pepperoni had been $110 for a 25-pound package just a short time ago, but today, that same amount of product costs the restaurant $140.

Even large franchises are feeling this strain. Domino’s appears determined to keep its locations afloat by slashing prices and aggressively marketing its affordability. Papa John’s stores have reported a steady trend toward purchases of smaller, less expensive orders, though the company also can point to increasing valuation of its corporate shares.

Pizza Hut took a different tact, revising its pricing to allow its largest pizza to cost around $30, a price that would have been unheard of just a few years ago. This response appears to have been misguided though. Pizza Hut suffered two years of declining sales, leading its parent company, Yum! Brands, to begin exploring options to sell the struggling chain. In the meantime, Pizza Hut has shuttered almost one-fifth of its stores, with plans to close another 250 restaurants by the middle of 2026. Despite these bleak indicators, the CEO of Yum! Brands suggested that Pizza Hut had an opportunity to take over leadership of the pizza market, through a restructuring or sale.

Beyond the pizza index, but with a similar foundation, other restaurant companies signal the relevance of what might be called an appetizer economy: Pressed by economic insecurity, diners avoid not only expensive add-ons like dessert but also full entrees. They instead turn to relatively less expensive appetizers, which offer a lower cost per plate. For people who enjoy the experience of eating out, buying appetizers instead of a full meal represents a responsible budgetary choice, especially if they can find restaurants that offer price deals on certain items, at particular times (e.g., happy hours), or on specific days (e.g., buy one, get one on Mondays).

Each of these indicators has emerged because, at some point, economists identified correlations between purchasing trends and the shifts in the economy at large. Still, the key term to recall is correlation, which is not the same as causation. Consumer habits are important to notice and report, but purchasing behaviors surrounding any one product at any particular time cannot fully capture the state of larger, more complex systems. At best, it’s a tool, and like any other, it must be used in the right ways and trusted in the right amounts to be effective.

Discussion Questions

1. How would you gauge the validity of each of the indexes described in this abstract? Which one seems most accurate to you, and why?
2. Does the decline in lipstick purchases during today’s challenging economic times mean that the logic for this index no longer applies? Or could there be other economic forces at play that affect this particular product?

Sources: Julie Creswell, “Pizza Hut’s Parent Says Struggling Chain May Go Up for Sale,” The New York Times, November 4, 2025; Julie Creswell, “People Are Ordering Smaller Pizzas and Fewer Toppings. What Does That Tell Us?,” The New York Times, December 1, 2025; Sam Klebanov, “Appetizers Boom in Worrying Sign for the Economy,” Morning Brew, December 13, 2025; Naheed Rajwani-Dharsi, Tasha Tsiaperas, “Pizza Hut in a Rut,” Axios, November 6, 2025; “Yum! Brands to Close 250 Pizza Hut Locations Across US in 2026,” WDRB, February 4, 2026.