This article is part of a multi-part story on Yum! Brands' newest marketing strategies. See more coverage here.
Pizza Hut is locked in a very competitive battle with Domino’s and Papa John’s for market share in an environment that has fostered aggressive discounting for much of the past two years. But the 5,977-unit chain may have to blame its same-store sales declines of 3 percent and 2 percent the last two quarters on its performance from a year earlier.
Pizza Hut’s comparable-sales decreases are lapping gains of 5 percent and 8 percent in the first two quarters of 2010, and the brand’s comparisons will remain tough throughout 2011, thanks to increases of 8 percent and 10 percent in the third and fourth quarters of last year, respectively.
Pizza Hut kicked off much of the segment’s discounting activity with its popular $10 any-size, any-crust pizza offer, which it is currently reprising. The chain also simplified its pricing structure in 2010, making all medium pizzas $8 and all large pizzas $10, which Novak told analysts during the earnings call took the chain’s value perceptions from worst to first among pizza players.
“For Pizza Hut, we feel fairly good about their performance,” Novak said. “We had a tremendous turnaround last year in the value program, and we’ve maintained that and haven’t had a boom-splat. This will be the first year we’re going to have net new-unit development [in a while].”
In addition to getting its deals on TV and radio, Pizza Hut will push its mobile-ordering applications, which have already produced 3 million orders over the past several years. In May, Pizza Hut rolled out its mobile app for Android-powered phones, as well as an Apple iPad app.
Analyst take: “Discounting activity helped Pizza Hut do better than expected against a tough plus-8-percent year over year comparison,” wrote Mark Kalinowski of Janney Capital Markets.
Watch a commercial for Pizza Hut's mobile apps.