Pizza Hut's answer to Lebron James and all the pizzeria upstarts

Pizza Hut has seen plenty of competitors rise and fall since it was founded in 1958. Photo / Bloomberg
Pizza Hut has seen plenty of competitors rise and fall since it was founded in 1958. Photo / Bloomberg

Americans are buying more pizza than ever, but Pizza Hut -- which has been feeding that appetite for more than a half-century -- is getting a shrinking slice of the pie.

The industry leader, owned by Yum Brands Inc, has a plan to reverse that decline, one that borrows from the upstarts nibbling at its market share. Texas is the testing ground for the 58-year-old chain's innovations, including hotter ovens that can deliver lunchtime pies faster, and sleeker interiors with bar seating for customers to enjoy a beer.

In New Zealand, Pizza Hut is owned and operated by Restaurant Brands which also owns KFC, Carl's Jr and Starbucks.

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It's an uphill task because competitors seem to have a better line on what kind of pies Americans want, and how they want them. Diners-out are drawn to a growing number of fast- casual joints where companies like Blaze Pizza -- in which LeBron James is a partner -- offer fancier toppings and customers get to watch their meals take shape.

Eaters-in increasingly prefer to tap out their orders on mobile phones -- then send them to Domino's.

"Changing their positioning with consumers is going to be really tough," said Bob Goldin, vice chairman at industry researcher Technomic in Chicago. "Pizza Hut is just kind of in the middle. The middle is a tough place to be."

So how's it going in Lantana, Texas, which hosts one of the two Pizza Hut outlets where the rebranding is on trial?

The interior has a modern look: pendant-style industrial lights, and exposed rock on the walls. New ovens can cook pizzas at 575 degrees Fahrenheit in just three minutes -- about 25 percent faster than the older version.

Our goal is to have restaurants that are easy to operate, accessible and inviting. The new concept is designed for speed.
David Gibbs, CEO of the chain

Another 1,000 of the ovens are due to be rolled out nationwide this year. The one in Lantana, says General Manager Terri Smith, is drawing crowds at lunchtimes, when 90 percent of customers are ordering the new $5 lunch special: a nine-inch, three-topping pizza and a drink.

The extra speed makes a difference "when people have 30-minute lunch breaks," she said. Diners also like the open kitchen, which allows them to watch employees take the dough out of coolers, top it, bake it and slice it, she said: "they can see it from start to finish."

But some of Pizza Hut's rivals are ahead of that curve, and they've also been more innovative with ingredients. Pie Five Pizza promises its dough and marinara sauce are made fresh in restaurants each day; Blaze has a vegan cheese option, and already cooks its pies in three minutes. All-natural bacon and whole-wheat crusts are on the menu at Pieology Pizzeria, where sales more than doubled in 2014, according to Technomic.

The competition has been difficult. Domino's has done a pretty good job.

Pizza Hut has seen plenty of competitors rise and fall since it was founded in 1958, when two brothers borrowed $600 from their mother to open their first restaurant in Wichita, Kansas. The red-roof look was adopted in 1969, and by 1971 it was the world's largest pizza chain.

It still is, but in the United States at least, Domino's is closing the gap.

Its sales reached $4.1 billion in 2014, more than half coming from digital orders, while Pizza Hut declined 3.5 percent to $5.5 billion, according to Technomic.

Domino's shares jumped almost 60 percent in the last two years, while Yum -- which also owns the KFC and Taco Bell brands -- lagged the S&P 500, declining about 3 percent.

"They've struggled, you can see it in the numbers," said Jack Russo, an Edward Jones analyst in St. Louis. "The competition has been difficult. Domino's has done a pretty good job."

Meanwhile, competitors on the other front, the fast-casual restaurants, have more flexibility on pricing, he said. Customers might be willing to loosen their purse-strings occasionally -- but not at Pizza Hut. "I think they're going to do it more at a Panera Bread."

- NZ Herald

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