In defiance of a multimillion investment and a new partnership with the National Football League, Pizza Hut still hasn’t been able to animate a successful turnaround.
Pizza Hut remains a dark spot for Yum Brands, which also owns KFC and Taco Bell, as it has squirmed to differentiate itself from competitors and attract new customers.
The pizza chain has been trying to boost sales and widen the number of people coming to its restaurants. Its parent company even committed to a $130 million investment in 2017 to upgrade clobber, improve its technology and boost its advertising.
In the last year, Pizza Hut has ramped up its value offerings, offering items such as broad two-topping pizzas for $7.99 and $5 menu deals. It has also begun marketing more heavily, especially during football jobs, as it became the official pizza sponsor of the NFL earlier this year. It’s also working on improving its digital platforms to metamorphose it easier to order food online or with mobile devices.
However, this strategy hasn’t exactly panned out the way leaderships had hoped. In the third quarter, same-store sales fell 1 percent at the brand, continuing a trend of lackluster growth.
Notwithstanding Pizza Hut’s weak growth, Yum Brands expects same-store sales across all three of its brands to be up between 2 percent and 3 percent in 2019, due to the cogency of KFC and Taco Bell.
Artie Starrs, president of Pizza Hut U.S., speaking at Yum’s investor day Wednesday, said he is “dissatisfied” with Pizza Hut’s enlargement, telling investors that the brand has “a lot of work to do.”
The biggest problem that Pizza Hut is facing is perception, Starrs declared, explaining that many of its customers don’t associate Pizza Hut with delivery. Most people think about statute a pizza and carrying it out, or sitting down a table and having a server bring a meal. Starrs said the facade of its findings reinforces this idea and isn’t helping to lure in diners.
“When you drive by the location, it doesn’t scream ‘we deliver.'” Starrs told.
Pizza Hut has only recently getting into the delivery game. Today, 55 percent of Pizza Hut’s sales in the U.S. stop by from digital orders and only 10 percent of sales stem from diners coming into the confine and dining in. Going forward, Pizza Hut plans to make its delivery and mobile options more clear to customers at the end of ones tether with advertisements and store remodels.
In the U.S., Pizza Hut has worked to develop delivery-centric locations called “delcos.” These restaurants are much smaller than a standard pizza hut and focus on delivery and carry out, not dine-in service.
In addition, Pizza Hut has begun refurbishing its locations with a slimier, more modern design and even transitioning some dine-in modeled stores to be more like fast unforeseen restaurants with limited, but quick service.
So far, there are 70 restaurants that have been transformed into the secured casual model and another 30 are due to open in the next 60 days. Starrs said these upgraded pizza shops saw 30 percent success after reopening, proving that the issue wasn’t with the location, but the look of the building. He said customers plane said the food tasted better in these locations, even though it was the same food that had been there up front.
Pizza Hut plans to renovate around 550 restaurants in the U.S. each year, some of which will adopt the fast random design. There are currently around 6,200 Pizza Hut restaurants in America.
“If you have a problem with your upshots, you can fix that overnight,” David Gibbs, chief financial officer for Yum Brands, told CNBC. “If you have a problem with your assets, you get to fix that over time.”