Gibbs pointed out that brands are now building assets that leverage the acceleration of digital. In 2020, Taco Bell introduced the Go Mobile restaurant, a concept featuring curbside pickup, dual drive-thrus with a priority pickup lane, and concierges called “bellhops” to maximize the ordering journey. In November, KFC unveiled its “restaurant of the future,” which boasted a modernized exterior, a single-entry-point cubby system for mobile and delivery orders, curbside delivery, a drive-thru lane for mobile orders, and self-service kiosks. And in March, Pizza Hut announced “The Hut Lane,” a dedicated digital order pickup window available at thousands of stores.
“You have a better experience when it's a digital experience,” Gibbs said. “The average check is higher. There's labor savings from processing orders on digital. So the link to development is pretty clear, right? It's going to give you better unit economics when you have higher check and less labor associated with the check and stickier customers, by the way."
Of the 603 net new units, 428 came from KFC, 99 from Pizza Hut, 74 from Taco Bell, and two from The Habit.
Among those totals, Pizza Hut’s growth is arguably the most remarkable. After closing a net of more than 500 stores in Q3 and Q4 2020, the pizza chain has debuted a net of 170 locations in the past two quarters. Gibbs said the turnaround in unit growth is a sign that Pizza Hut’s strategy to shift to delivery/carryout units is working and that the brand is strengthening.
The CEO noted that more work is to be done to transition the asset base, but the runway is there.
“Through COVID, both Pizza Hut U.S. and Pizza Hut International have continued to drive progress on that front,” Gibbs said. “If we take Pizza Hut U.S. specifically, if you saw last year, we drove a number of closures in the system that did move our mix Delco [delivery/carryout] assets by a few percentage points. So we're continuing to make progress on that transformation.”
“There is still further to go,” he added. “So we're going to continue to drive that. But in terms of net unit count, you've seen a change in that trajectory. We were actually slightly positive this quarter in Pizza Hut U.S., which we think reflects the improved unit economics in the U.S. that stem from the strength of the brand.”