How Pizza Hut is trying to reinvent itself to fend off a new generation of trendy pizzerias

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

The leader in the industry, of Yum! Brands Inc., has a intend to reverse that decline, one that borrows in the upstarts nibbling at its market share. Texas may be the testing ground for that 58-year-old chain’s innovations, including hotter ovens that may deliver lunchtime pies faster, and sleeker interiors with bar seating for purchasers to savor a beer.

It’s an uphill task because competitors appear to have a much better line on what type of pies Americans want, and just how they need them. Diners-out are drawn to a growing number of fast-casual joints where the likes of Blaze Pizza – in which LeBron James is really a partner – offer fancier toppings and customers see the meals they eat take shape. Eaters-in increasingly prefer to tap out their orders on mobile phones – then send them to Domino’s Pizza Inc.

“Changing their positioning with consumers will probably be really tough,” said Bob Goldin, vice chairman at industry researcher Technomic in Chicago. “Pizza Hut is just kind of in the centre. The middle is really 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 around the walls. New ovens can cook pizzas at 575 degrees in just three minutes – about 25 % faster than the older version. The organization plans to remodel 700 stores stores a year through 2022 towards the new look. Pizza Hut has about 6,400 U.S. locations.

“Our goal would be to have restaurants that are simple to operate, accessible and inviting,” said David Gibbs, ceo from the chain. “The brand new concept is designed for speed.”

Another 1,000 from the ovens are due to be presented nationwide this season. The one in Lantana, says Gm Terri Smith, is drawing crowds at lunchtimes, when 90 percent of customers are ordering the new US$5 lunch special: a nine-inch, three-topping pizza and a drink. The extra speed is important “when individuals have 30-minute lunch breaks,” she said. Diners also like outdoors kitchen, that allows them to watch employees take the dough out of coolers, top it, bake it and slice it, she said: “they can view it from start to finish.”

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Vegan-Friendly

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



Pizza Hut has witnessed lots of competitors go up and down since it was founded in 1958, when two brothers borrowed US$600 using their mother to spread out their first restaurant in Wichita, Kansas. The red-roof look was adopted in 1969, by 1971 it was the world’s largest pizza chain.

It is still, however in the U.S. at least, Domino’s is closing the space. Its sales reached US$4.1 billion in 2014, over fifty percent originating from digital orders, while Pizza Hut declined 3.5 per cent to US$5.5 billion, based on Technomic. Domino’s shares jumped almost 60 percent within the last two years, while Yum – which also owns the KFC and Wendy’s brands – lagged the S&P 500, declining about 3 per cent.

“They’ve struggled, you can see it within the numbers,” said Jack Russo, an Edward Jones analyst in St. Louis. “Your competition continues to be difficult. Domino’s has done an excellent 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.”

Bloomberg News