For all its innovation and newer products, Pizza Hut is still struggling.
Nation’s Restaurant News reports that Pizza Hut‘s same-store sales for the second quarter of 2014 fell 5.6 percent. NPC International, INC, the largest Pizza Hut franchisee, reported same-store sales down by 3.7 percent. “Our second quarter was an extremely difficult and, frankly, disappointing quarter for our Pizza Hut business,” NPC president and chief executive Jim Schwartz told analysts on a call Monday. “We continue to work very closely with the leadership team at Pizza Hut on revised advertising positioning and related innovation,” Schwartz added.
“This revised positioning is designed to better connect with the Millennials while improving the brand’s overall relevancy, as well as improving our overall digital access,” he said.
In May, Schwartz said in a conference call that the chain was lagging in innovation, but inroads were being made. “The promotions we’ve had recently really focused around one of our key product innovations, which is Cheesy Bites,” Schwartz said. “That has been a terrific promotion for us this quarter. And we have coupled that with providing the consumer access to value through our online or digital channels, which is becoming a much greater part of our business as well as the category’s business.”
Pizza Hut currently has two online-only deals: the $11 Any Pizza and the large $7.99 two-topping pizza, Schwartz said.
“So balancing innovation that can be accessed through all of our order channels, like Cheesy Bites, and then providing additional value opportunities for the consumer when you order online seems to have improved our overall trends,” Schwartz said.
Bloomberg Business Weekly reports that while Domino’s and Papa John’s have experienced same-store sales increases, this is the seventh quarter Pizza Hut same-store sales have fallen. What’s ironic is that Pizza Hut continues to grow, currently at 7,800 stores and adding more all the time. However, Pizza Hut can expect to see Papa John’s, Domino’s, and Little Caesar’s cut into their business, as well as newer fast-casual, made-to-order pizza concepts, says Darren Tristano, executive vice president at research firm Technomic.
Pizza Hut’s recent menu launches—such as crazy cheese crust pizza, three cheese stuffed crust pizza and Blake Shelton-endorsed BBQ sauce pizza–have failed to improve results. Though innovations have taken place, such as the Hershey’s 8-inch chocolate chip cookie pizza and selling Wing Street chicken, more innovations are on the way. David Novak, chief executive of Pizza Hut’s parent company YUM! Brands said Pizza Hut will “launch a number of major initiatives in the United States to reignite sales beginning in the fourth quarter,” including plans to boost millennial-targeted advertising and digital marketing and a greater focus on value.