Vous êtes sur la page 1sur 25

PIZZA HUT

1958-1967
1967-1999
1999-PRESENT
Submitted by :-
Wasim Akram

GENERAL INFORMATION
TYPE - PUBLIC
FOUNDED - WICHITA, KANSAS (1958)
LOCATION - DALLAS, TEXAS
KEY PEOPLE - DAN AND FRANK CARNEY (FOUNDERS) DAVID C.
NOVAK (CEO)
INDUSTRY - FOOD WHOLESALE
PRODUCTS - PIZZA
EMPLOYEES - 250,000 (APPROX.)
WEBSITE - WWW.PIZZAHUT.COM
PIZZA HUT STORY
1958: THE LEGACY OF PIZZA HUT BEGAN, WHEN TWO COLLEGE-AGED
BROTHERS FROM WHICHITA, KANSAS, FRANK AND DAN CARNEY
OPENS FIRST PIZZA HUT RESTAURANT AFTER BORROWING $600
FROM THEIR MOTHER.
1959: PIZZA HUT IS INCORPORATED IN KANSAS AND THE FIRST
FRANCHISE UNIT OPENS IN TOPEKA, KANSAS.
1968: INTERNATIONAL MARKET ENTERED WITH OPENING OF PIZZA
HUT RESTAURANT IN CANADA.
1969: RED ROOF ADOPTED FOR RESTAURANTS.
1972: PIZZA HUT, INC. LISTED ON NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL PIZ.
1977: PIZZA HUT, INC. STOCKHOLDERS OVERWHELMINGLY APPROVE
MERGER WITH PEPSICO, INC. FOR AN UNDISCLOSED SUM.
1986:DELIVERY SERVICE, AS A NEW CONCEPT, IS
INITIATED
1996: PIZZA HUT COMES TO INDIA WITH A DINE IN
RESTAURANT BANGALORE THAT HAS SPECIAL
VEGETARIAN PIZZAS.
1997: PIZZA HUT OPENS A DINE-IN RESTAURANT IN DELHI.
2007: PIZZA HUT BROUGHT OUT OUR THICK N THIN PIZZA
AND BEGAN TO RE-FRANCHISE OUR DINE-IN
RESTAURANTS.
2009: PIZZA HUT OFFERING BAKED FILLINGS IN THE
CORNER OF THE PIZZA
OVERVIEW OF THE CASE
BY 1986, PIZZA HUTS LEADERSHIP OF THE OVERALL PIZZA MARKET
IS BEING CHALLENGED BY DOMINOS, A DELIVERY-ONLY CHAIN.

THE DELIVERY SEGMENT ACCOUNTS FOR ONLY 20% OF THE $12.7
BILLION PIZZA MARKET, BUT IT IS GROWING RAPIDLY.

A CHANGE IN CONSUMER PREFERENCES HAS LED TO THE
INCREASED PURCHASES IN THE DELIVERY SEGMENT.

AFTER YEARS OF RESISTING ENTRY INTO THE DELIVERY SEGMENT
FOR FEAR OF CANNIBALIZING ITS EXISTING EAT-IN RESTAURANTS,
PIZZA HUT HAS DECIDED IT IS NECESSARY TO MOVE INTO THE
DELIVERY SEGMENT.


STRENGTHS
IT IS THE MARKET LEADER IN PROVIDING DIFFERENT VARIETIES OF
PIZZAS
SPECIALIZES ONLY IN PIZZAS
HAS FULL SERVICE RESTAURANT AS WELL AS DELIVERY SERVICES.
STRONG FRANCHISEE NETWORK

WEAKNESS
HIGH OVERHEAD COSTS DUE TO LARGE NUMBER OF RESTAURANTS.
HIGH PRICE
INTERNAL CONFLICTS AMONG FRANCHISEES

OPPORTUNITY
EXPANSION THROUGH ONLINE ORDERING SYSTEM.
INTRODUCTION OF MORE INNOVATIVE PIZZAS.
VENTURING INTO SENIOR CITIZENS MARKET.


THREATS
THE DIFFERENTIATION STRATEGY FOLLOWED BY ANY PIZZA CHAIN IS
SOONER OR LATER ADOPTED BY ALL PIZZA INDUSTRY PLAYERS.
MAIN THREAT FROM COMPETITORS: DOMINOS

PORTERS 5-FORCE MODEL
EXISTING RIVALRY

RIVALRY AMONG EXISTING PLAYERS

AT PRESENT THERE ARE 3 MAJOR PLAYERS IN US PIZZA
MARKET MAINLY DOMINOS LITTLE CEASERS PIZZA HUT
AND THE DEGREE OF RIVALRY IS VERY HIGH

THE REASON IS NUMBER OF COMPETITORS IS VERY
LARGE INDUSTRY GROWTH IS HIGH AND FIXED COST
INVOLVED IS HIGH

THREAT OF NEW ENTRANTS
SINCE INDUSTRY GROWTH IS HIGH IT ATTRACTS NEW
POTENTIAL FIRMS TO ENTER INTO THE MARKET. HOWEVER,
IF THE NEW ENTRANTS IS EXPERIENCED THEN IT WILL BE
ABLE TO COMPETE WITH THE EXISTING PLAYERS ELSE THE
ECONOMIES OF SCALE ENJOYED BY THE EXISTING
PLAYERS WILL FORCE THE NEW ENTRANTS TO EXISTING
MARKETS
THREATS OF SUBSTITUTE
THREATS FROM JUNK FOODS SUCH AS HOT DOGS,
SANDWICHES AND BURGERS.
THREATS OF BUYERS BARGAINING
POWER
FROM CUSTOMER OR BUYERS WHEN THERE ARE
NUMBER OF SUPPLIERS OF BUYERS CONCENTRATION
IS HIGH OR LARGE AVAILABILITY OF SUBSTITUTE
GOODS
THREATS OF SUPPLIERS BARGAINING
POWER
ALSO FROM SUPPLIERS WHEN THERE IS LARGE NUMBER
OF BUYERS FROM THESE SUPPLIERS, HIGH
CONCENTRATION OF SUPPLIERS, HIGH SWITCHING COSTS
AND NON AVAILABILITY OF RAW MATERIAL SUBSTITUTES

CONSUMER SEGMENTATION BY CHANNEL
Eat-In Carryout Delivery
Benefit Atmosphere,
Quality
Time Time factors
Price Sensitivity Lowest Modest Highest
Demographic Profile Non-families Families, time-
starved
Families,
convenience
COMPETITION FROM DOMINOS & LOCAL PLAYERS
System wide
Sales
($ millions)
Units Average
Check/Person($)
Delivery
PIZZA HUT 1934 5025 9.99 Separate delivery units plus franchisee
add-on delivery out of restaurant
DOMINO'S 1550 3696 9.5 Delivery only
LITTLE
CAESAR
520 1308 2.75 No delivery
PIZZA INN 278.7 748 4.3 Separate delivery units
GODFATHER'S 275 650 9.75 Add-on delivery out of restaurant
ROUND TABLE
PIZZA
250 535 5 Add-on delivery out of restaurant
SHOWBIZ/CHU
CK E. CHEESE
249 268 5.2 No delivery
SHAKEY'S 197 386 4.25 Add-on delivery out of restaurant
Mr. GATTI'S 139.2 319 7.81 Add-on delivery out of restaurant
TOP PIZZA CHAINS, 1986 (Adapted from Nation's Restaurant News)
1979 1980 1981 1982 1983 1984 1985 1986
System net sales ($MM) 732 832 1007 1170 1394 1556 1743 1934
Market share 14.9 15.7 17 17.2 18 17.3 16 15.4
Units
Company 1940 1888 1843 1845 1911 2051 2224 2534
Franchise 1801 1873 1922 1975 2095 2157 2309 2491
Total 3741 3761 3765 3820 4006 4208 4533 5025
Company
PSA sales ($M) 196 221 267 306 348 372
(Traditional) 395 400
(Delivery) 282 289
PSA sales growth
Real -3.1 4.7 11.8 8 9.8 1.8 2 -2
Price 6.4 8.1 9 6.6 3.9 5.1 3.4 0.8
Total 3.3 12.8 20.8 14.6 13.7 6.9 5.4 -1.2
Net sales($MM) 354 399 476 556 678 766 835 929
Net sales growth (%) 12.7 19.3 16.8 21.9 13 9 11.3
Total revenues ($MM) 495 556 489 569 699 795 867 967
ROAE(%) 3.5 6.1 8.9 16.4 21.7 16.9 15 12.4
Franchisees:
PSA sales($M) 237 280 314 350 386 400 415
Net sales($MM) 378 433 531 613 715 799 908 1005
REASONS WHY PIZZA HUT ADOPTED
FRANCHISING AS THE ENTRY STRATEGY

BEST METHOD TO ESTABLISH OPERATIONS WITHOUT RISK OF
OPERATIONS IN AN UNFAMILIAR MARKET.

FRANCHISING ROUTE HELPS IN LEARNING THE BUYER BEHAVIOUR ,
CONSUMER BEHAVIOUR & MARKET REALITIES.

IN COUNTRIES WHERE DIRECT FOREIGN INVESTMENT IS NOT
ALLOWED , FRANCHISING IS THE EASIEST ROUTE TO ENTER IN
THESE MARKETS.

ISSUES IN THE CASE - 1
SHOULD PIZZA HUT ENTER THE DELIVERY SEGMENT OF
THE PIZZA MARKET IN AN ATTEMPT TO COMBAT DOMINOS
GROWING POPULARITY AND MARKET SHARE FROM THIS
SEGMENT?
YES IT SHOULD ENTER BECAUSE THE PIZZA DELIVERY
MARKET IS AN ENTIRELY SEPARATE SEGMENT IN ITSELF.
MOREOVER PIZZA HUT WOULD HAVE COMPETITIVE
ADVANTAGE BECAUSE OF ITS BRAND NAME.


KEY CONSTRAINTS

CANNIBALIZING
CONVINCING THE FRANCHISEE
SETTING UP THE INFRASTRUCTURE FOR DELIVERY
SYSTEM.
COMPETITION FROM LOCAL PLAYERS.

IT DID NOT CANNIBALIZE THE DINE IN RESTAURANT AS
BOTH HAVE ITS DIFFERENT MARKET SEGMENTS.
PIZZA HUT WAS ABLE TO CONVINCE THEIR FRANCHISEES
AFTER SUCCESSFULLY PUTTING ACROSS THEIR POINT OF
HIGH MARKET POTENTIAL IN THE PIZZA DELIVERY
MARKET.
THEY BUILT A VERY ROBUST AND SUSTAINABLE DELIVERY
MODEL.
THEY GAINED COMPETITIVE ADVANTAGE BECAUSE OF
THE NEW CSC SYSTEM.
IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE
INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET,
WHAT OPERATIONAL APPROACH SHOULD THEY USE?

APPROACHES TO BE FOLLOWED
ADOPTION OF CSC SYSTEM.
ADEQUATE MAN POWER, DELIVERY VEHICLES AND
OTHER SUPPORTING INFRASTRUCTURES.
PROPER TRAINING OF SALES AND DELIVERY FORCE.
PROPER DEMARCATION AND PLANNING OF ZONES AND
DELIVERY ROUTES.


ISSUES IN THE CASE - 2

IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE
INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET, HOW
DO THEY CONVINCE THEIR EXTENSIVE FRANCHISE
SYSTEM TO PARTICIPATE WITH THEM?


INCENTIVIZE THE FRANCHISEE.
MAKE THE FRANCHISEE UNDERSTAND THE POTENTIAL OF
DINE AT HOME.

ISSUES IN THE CASE - 3
IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE INTO THE
DELIVERY SEGMENT OF THE PIZZA MARKET, WHAT WILL BE THE
OVERALL EFFECTS ON THEIR EAT-IN RESTAURANT BUSINESS AND
THEIR FRANCHISE RELATIONSHIPS?
ISSUES IN THE CASE - 4
EFFECT ON EAT IN RESTAURANT
EFFECT ON THE FRANCHISES
IN THE BEGINNING THERE WAS RESISTANCE FOR THE
ADOPTION OF THE NEW DELIVERY AND CSC SYSTEM BUT
AFTER LEARNING THE ADVANTAGES OF THESE NEW
STRATEGIES AND THE GROWTH POTENTIAL THAT IT WOULD
BRING ALONG WITH IT, THEY ADOPTED THESE NEW
CHANGES.
RECOMMENDATION
HIGH QUALITY PERSONNEL: TOTAL COOPERATION OF ITS
EMPLOYEES THEREBY INCREASING PRODUCTIVITY , BEATING
COMPETITION AND ENHANCING CUSTOMER SATISFACTION. FOR THIS
HIGH INCENTIVES SCHEMES MUST BE ESTABLISHED.
FOCUS ATTENTION TO UNTAPPED SEGMENT OF SENIOR CITIZENS:
CAN ESTABLISH PIZZA HUT SENIOR CLUBS WHICH WILL ORGANISE
ACTIVITIES FOR OLDIES. INNOVATION AND LAUNCH SOME PRODUCT
FOR SENIOR CITIZENS.
CONTINUOUS INNOVATION IN PRODUCTS
INNOVATION THROUGH CONSUMER FEEDBACKS AND REVIEWS AND
WHAT CHANGES THEY WANT TO SEE.
LOCATION: THE MOST CRITICAL SUCCESS FACTOR FOR ANY
HOSPITALITY BUSINESS IS LOCATION. PIZZA HUT DOES NOT AIM TO
BE A PREMIUM BRAND WITH SELECTIVE DISTRIBUTION, INSTEAD IT
AIMS TO BE MAKE ITSELF AVAILABLE ANYWHERE AND EVERYWHERE.
THUS, PIZZA HUT MUST INCREASE ITS COVERAGE