One of the biggest hurdles in Pizza Hut’s progress remains a physical one. The brand’s domestic same-store sales were flat in the first quarter and system sales declined 1 percent. This as the YUM! Brands chain continued “to transform its asset base from dining to off-premises focused assets,” chief executive Greg Creed said during the company’s Q1 review.
Year to date at quarter’s end, Pizza Hut shuttered 56 U.S. restaurants and opened 47.
The issue at hand isn’t a new one. Pizza Hut has 7,482 stateside restaurants. But not all of its real estate aligns with current sales trends. Currently, 90 percent of Pizza Hut’s business is off-premises. And the gap between the chain’s dine-in and take-out/delivery sales is significant, Creed said. U.S. and international see roughly seven and six point differentials between the channels, respectively.
Creed said earlier in the year that about 90 percent of Pizza Hut’s new units are built to the “Delco” model, which focuses on take-out and delivery. It’s smaller and requires a lower investment point as well. Even so, replacing old units, and “Red Roof” locations requires serious capital. To that point, 80 percent of all replacement units were delivery/carryout focused.
“Pizza Hut in the U.S., the vast majority of our business comes through the delivery carry out channels but still close to half the assets are dine-in assets and there is still a long process to take those assets—often which are in the wrong part of the trade area—and reposition them to the right part of the trade area,” COO David Gibbs said.
This is where the investment is going, too. In the U.S., Pizza Hut improved the number of ordered delivered in less than 30 minutes by 3 percentage points, year-over-year, last quarter. The company then purchased ordering provider QuikOrder in one of the largest deals in Pizza Hut’s history, YUM! Brands said (it did not provide exact figures). Pizza Hut said the acquisition, announced December 4, would improve its ability to deliver “an easy and personalized online ordering experience and accelerate digital innovation across its base of more than 6,000 restaurants in the U.S.”
On Tuesday, the chain unveiled a model that takes its take-out focus up a notch. Located in the heart of Hollywood, California, at 6660 Sunset Blvd, Pizza Hut is trying its hand at a new pick-up concept. It’s the first version of a seamless, carryout-focused experience for the brand.
Guests can order through any channel, including the Pizza Hut app, online, over the phone, or in-store, pay, then head to their personal cubby and tap twice to retrieve the pizza.
The cubbies’ have digital displays that feature the guest’s name to nix order confusion. They’re also designed with special linings to keep food hot and drinks cold.
The location opens July 23, with new stores planned in additional West Coast cities throughout 2020.
Nicolas Burquier, chief customer and operations officer for Pizza Hut U.S., said in an email to QSR that the model matches evolving consumer preference. “So many people live on-the-go and don’t have time to wait in line, especially in urban areas,” he said. “And let’s face it, many of us welcome any opportunity to skip the small talk. So we took it upon ourselves to introduce this seamless and innovative carryout experience that eliminates the lines, the wait and the conversation, allowing you to literally just grab a fresh, hot pizza and go.”
He added Pizza Hut is “focused on making this pilot concept the best it can be, however we are exploring expansion in additional West Coast cities in 2020.”
