The holiday lull was kind to Pizza Hut, which experienced a nearly 30% increase in visits during the last week in December (week-over-week) and a 15.3% increase in visits the first week in January (year-over-year), according to new data from Placer.ai.
This data bucks the overall trend in the restaurant industry, which showed a 4.2% decrease in traffic year-over-year in Q4, according to data from Revenue Management Solutions.
There are several factors working in Pizza Hut’s favor of late. For starters, the holidays are busy for families who are rushing to get last-minute shopping done or preparing elaborate meals for a house full of people. Once that activity slows and consumers can catch their breath, pizza provides a convenient, easy and affordable break.
But Pizza Hut’s traffic lifts are also likely the result of the efforts the chain has made throughout the past several months to turn the business around. In Q1 2022, Pizza Hut’s sales dropped 6% largely because of “capacity constraints limiting its ability to meet demand,” according to Yum Brands’ CEO David Gibbs. In other words, the chain simply didn’t have enough drivers to fulfill its high-volume delivery business. Pizza Hut put several initiatives in place to fix these issues – adding third-party delivery aggregates to the mix, for instance, and rolling out Dragontail’s smart kitchen management and driver tracking tool. The company also adjusted its hiring practices to attract more drivers, including reducing the time it takes to apply for a delivery job.
These adjustments closed the gap between Pizza Hut’s carryout and delivery business and also helped improve same-store sales, which were negative 4% in Q2 before turning to a positive 1% in Q3. Delivery is just part of the traffic-generating equation, however. For inflation-weary consumers, the chain introduced value offerings such as the $6.99 Pairs deal and brought back the Big Dinner Box.
Pizza Hut is also working to shift its position all together. As CEO Aaron Powell explained during Yum Brands’ Investor Day in December, that means extending beyond a “Friday, Saturday, Sunday” family occasion and becoming more of an individual-use and lunch contender. Pizza Hut introduced its new Melts category in mid-October to help achieve this objective and, so far, it seems to be working. Since that launch, the chain has experienced negative traffic trends in just two out of 12 weeks compared to the year prior, according to Placer.ai data emailed to Nation's Restaurant News, and those were during the hustle and bustle of mid-December.
“This launch was intentionally designed for young people. We’re very pleased with the same-store sales growth, transaction growth, new customers and repeat customers since this has launched,” Powell said during Investor Day.
Pizza Hut intends on pushing the gas here – transitioning into a more “modern, digital-first brand” that competes for younger consumers and on everyday occasions. To illustrate the potential, Powell said within QSR, 45% of occasions are individual occasions, but in QSR pizza, that number falls to 25%.
“We want to be younger and every day. To make the brand younger, we’re doing a lot of things to resonate with younger consumers,” he said. “Every day is also important. The restaurant industry is changing in front of us, and everybody is competing with everybody. We have to get out of being a special-occasion pizza. Every day means we compete in different occasions more than ever before.”
Contact Alicia Kelso at [email protected]