Industry News | May 4, 2017 | By Alex Dixon | QSR Exclusive Brief

Yum! Brands' $130 Million Plan to Fix Pizza Hut

Pizza Hut’s same-store sales declined 7 percent in the U.S. in the first quarter. Pizza Hut
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While Taco Bell’s same-store sales grew 8 percent in the first quarter of 2017 for Yum! Brands, the company didn’t have as much success with Pizza Hut.

Pizza Hut’s same-store sales declined 7 percent in the U.S., and Yum! plans to invest $130 million to transform the brand.

The investment will go toward upgrading restaurant equipment to improve operations, accelerate improvements in restaurant technology, enhance digital and ecommerce capabilities, and boost advertising dollars, Yum! executives said in a conference call Wednesday.

“This agreement will improve brand marketing alignment, accelerate enhancements to operations and technology, and include a permanent commitment to incremental advertising,” Yum! CEO Greg Creed said. “This is a win-win agreement that importantly includes explicit alignment on aggressive investment in a digital delivery-centric strategy, and in short, will make it easier for our customers to get a better pizza.”

Pizza Hut’s competitors certainly aren’t feeling the same effects; Papa John’s North American comparable sales rose by 2 percent during the quarter while Domino’s domestic sales grew by 10.2 percent.

“As with all turnarounds, this is a journey that will happen hand-in-hand with our franchise partners,” Creed said. “And it will not be complete in 2017, but I do believe you will see the results pay off in 2018 and beyond, so stay tuned.”

A brand turnaround agreement has worked so far for Yum’s KFC, Creed says, which has posted comparable sales growth for 11 consecutive quarters. In Q1, KFC’s same-store sales increased by 2 percent in the U.S.

Yum! announced the $180 million investment plan in early 2015, and it is set to last through 2018.

At Taco Bell, new menu innovations—such as the $1 double stacked tacos, naked chicken chalupas, and triple double crunchwrap—drove customer traffic. The brand sold more than 25 million naked chicken chalupas, and will soon roll out its naked chicken chips nationwide.