It's interesting to see this occuring. Both of these firms are going to get hurt by this, or worse both will go bankrupt. Even if one firm survives, when they raise their prices, who's to say that their customers won't go to another of the numerous pizza places that are nearby?
I think it's a real lesson for startups - don't let your pride and pig-headedness rule your head, or else that will be the end of your company!
Where I live petrol stations make relatively little profit on fuel sales, the bulk of their profit comes from "also bought" items - milk, newspapers, ... , they're essentially high markup mini malls.
The two advantages to cheap cheap pizza are firstly in can get the crowds in and secure the sales of "also bought" items with better profit margins, further it leeches the crowd away from the competitor.
I was witness to a price war in geophysical surveying, over a decade in which fuel and manpower costs rose and inflation occurred the per line/km cost of flying aircraft with state of the instrumentation onboard dropped from $17 to $7 and effectively eliminating any profit in taking on million+ dollar survey jobs with risks.
Why the hell would the companies do that?
I would hazard a guess that the owners, being part of a much larger business that profited from resource extraction, weighed the benefits of having lead information on deposits potentially worth billions over the drawbacks of having losses of several tens of thousands.
I think it's a real lesson for startups - don't let your pride and pig-headedness rule your head, or else that will be the end of your company!