OVERLAND PARK Kan. Signaling a possible turnaround for the 7,500-unit domestic Pizza Hut system that suffered through falling sales throughout 2009, NPC International Inc., the chain’s largest franchisee, said it expects double-digit growth in same-store sales for fiscal 2010’s first quarter.
The Overland Park-based company with 1,149 Pizza Hut restaurants, on Friday reported a small loss for its Dec. 29-ended fourth quarter and said it swung to a profit from a year-ago loss for the full fiscal 2009.
Jim Schwartz, NPC’s president and chief executive, expressed his disappointment with the marketing performance of the Pizza Hut brand for much of 2009, but noted that the chain recently “focused upon giving the consumer a combination of the value and abundance that they have been searching for.”
“We believe that our new value initiative has reset the quality/value bar in the pizza segment,” he said.
Ongoing promotions by Dallas-based Pizza Hut, which is owned by Yum! Brands Inc. of Louisville, Ky., include the “Big Eat – Tiny Price Menu” starting at $5; a “Tuscani Tuesday” offer of two trays of pasta and five breadsticks for $10; and a Wednesday discount on sister concept WingStreet’s chicken wings to 50 cents apiece.
“Our stores are reaping the benefits of this change with improved sales and traffic,” he said. “We expect to generate comparable-store sales of around 10 percent during the first quarter of 2010.”
While he expressed satisfaction with the current direction in which the Pizza Hut chain is headed, Schwartz said NPC was “not pleased with the performance of the Pizza Hut brand and consequently, our own performance during fiscal 2009 and the fourth quarter’s results were essentially a continuation of this disappointment.”
For the recent fourth quarter, which had 13 weeks compared with 2008’s 14-week fourth period, NPC had a net loss of $260,000 versus a loss of $25.4 million in the same quarter a year earlier. Contributing to that 2008 red ink was a loss from discontinued operations, net of taxes, of $28.6 million from the sale of 112 restaurants to franchisor Pizza Hut Inc. of Dallas, NPC said.
Fourth-quarter sales rose about 7.7 percent to $212.4 million, versus the same 2008 quarter, with that growth driven by a 28-percent jump in the number of stores as a result of NPC’s purchase from Pizza Hut Inc. of 288 units in the fourth quarter of 2008 and 105 units in the first quarter of 2009. The company said that increase in restaurants was offset, in part, by a 10.5-percent decrease in same-store sales for the fourth quarter, compared with a 3.4-percent dip a year earlier, as well as the additional week of sales in the prior year.
For the year ended Dec. 29, NPC said it had net income of $10.4 million, compared with a net loss of $18.1 million in fiscal 2008 that resulted from a $25.6 million charge, net of taxes, tied to the sale of restaurants to Pizza Hut Inc. Total fiscal 2009 sales were $882.5 million, up 28 percent from 2008 primarily because of the 42-percent increase in number of Pizza Hut restaurants. Partially offsetting the benefit of year-over-year growth in units was a 10.2-percent drop in same-store sales, which compares with same-sales growth of 2 percent a year ago. Fiscal 2008 also boasted an additional, 53rd week of sales, compared with the 52-week fiscal 2009.
NPC’s Schwartz commented that as the company “looks forward to fiscal 2010, the sales environment is no less challenging than it was in 2009.”
“The consumer remains under extreme pressure with unemployment stagnating at record levels and no employment recovery visible on the immediate horizon," he said.
Contact Alan J. Liddle at [email protected].