Pizza Hut lays out a vision of the future, but it’s just the same old thing.
Ah, the three big pizza chains: Pizza Hut, Domino’s and Papa John’s. What are we to think about them?
I’ve lauded the advertising campaigns of Domino’s and they’ve had a positive effect on its market share. Papa John’s has smartly positioned itself within the sports realm, specifically the NFL. But its success depends on what you think of founder John Schnatter because the brand is linked so much to him. (God forbid if he gets involved in a scandal. Papa John’s will plummet.)
But what about Pizza Hut, long the market leader? David Novak, CEO of Yum! Brands, which owns Pizza Hut, told analysts recently that the pizza chain’s sales will fall below expectations in its third quarter annoucement but there are reasons to be optimistic. Revenue was flat in the third quarter and profit was down by two percent, but that is better news than the 17 percent decline it suffered earlier this year.
Novak is counting on menu changes (the addition of a dessert cookie and bacon & cheese-stuffed-crust pizza) as part of a turnaround plan that goes along with a new campaign that emphasizes Pizza Hut’s leadership and quality.
Basically, Pizza Hut is rolling out the same strategy it’s been doing for years: Playing defense. As a market leader, that is not a terrible strategy because, when all things are equal (the competition is marketing the same things as you are), the market leader becomes the default choice. It’s the reason why Walmart continues to be the retail market leader because so many of the other big box chains compete on Walmart’s forte. Price.
In the case of Pizza Hut, price, menu choices and quality have been the hallmarks of its leadership position. But Papa John’s has found a niche (while still playing the price card) and Domino’s has made great strides by positioning itself as a brand that’s willing to take chances.
The new “effort” by Pizza Hut will have limited effect as it continues to see its leadership erode. It has relied on the table stakes to be in the category, but the competition is getting better. Pizza Hut must stop using tired strategies and become something new. Because preference is shifting.