OVERLAND PARK Kan. Pizza Hut’s largest franchisee, NPC International Inc., said its third-quarter double-digit decline in same-store sales came about as the franchisor, Yum! Brands Inc., “struggled to find the proper message to connect with the consumer in this new recessionary environment.” It has tasked the franchisor with finding a new brand strategy.
Both Domino’s and Papa John’s reported flat domestic same-store sales for their most recent quarters, while Pizza Hut franchisor Yum! Brands said Pizza Hut same-store sales fell 13 percent for the third quarter ended Sept. 5. At NPC, which operates 1,150 units, same-store sales fell 12.9 percent for its third quarter ended Sept. 29.
“We are clearly not performing on par with our two primary national competitors in the pizza segment,” Jim Schwartz, NPC president and chief executive, said last week. “We believe that value and consumer reaction to our brand positioning are chief among the issues we face as we determine the best go-forward strategy for this great brand in this new consumer paradigm.”
Schwartz said NPC will remain engaged with the Pizza Hut leadership team to determine ways to combat the consumer environment, as well as develop internal tactics in the operator’s local markets. Pizza Hut recently debuted a national advertising campaign focused on its co-branded Wing Street chicken wings concept, and found success last year with its Tuscani pastas.
NPC’s third quarter net income increased 17 percent to $1.3 million from the same quarter a year ago, which the company attributed to higher revenue from new store openings and acquisitions, lower product ingredient costs, lower interest expense and lower income tax expense.
Latest-quarter revenues rose 31.6 percent to $214 million. NPC acquired 288 units in last year’s fourth quarter and another 105 locations in the first quarter of fiscal 2009, with 294 of those restaurants coming from franchisor Pizza Hut of Dallas and another 99 from a single franchisee.
For the 39 weeks ended Sept. 29, NPC reported a 45.6-percent increase in net income to $10.7 million, on a 36.1-percent hike in revenue to $670.1 million. Same-store sales fell 10.1 percent, the company said.
NPC was able to pay down $5 million in debt and accumulate additional cash reserves of $4.3 million.
Contact Alan Liddle at [email protected].