With health and wellbeing high on the consumer agenda, Pizza Hut, with its cheese-heavy pizzas and unlimited 'ice cream factory' has found itself out in the cold. The brand, which is a 50:50 joint venture between Whitbread and Yum!, has struggled to shake off its down-market and unhealthy image in the face of growing competition.
Last month, Whitbread's high-street restaurants division reported a 13% decline in profits for the past six months to 拢7.3m, despite a strong performance by Costa Coffee. The departure of marketing director Martin Pugh earlier this month after less than a year has put the Pizza Hut brand in the spotlight once again (Marketing, 9 November).
With a stream of companies entering the sector and intensified activity from existing players, consumers have a wide array of choices. Pizza Hut is being squeezed by its competitors in the value end of the market, from KFC to Domino's, as well as by more premium rivals such as ASK and Pizza Express.
At the same time, Pizza Hut faces the emergence of restaurants such as Strada and Prezzo that have marketed themselves on providing consumers a more authentic high-end option. That these outlets offer a more sophisticated dining experience could be seen as placing further pressure on Pizza Hut's casual approach.
The chain's plans to extend its menu to include healthier options, a bigger range of salads and low-fat pizzas, have failed to excite consumers.
According to Mintel, Domino's clearly leads the home delivery and takeaway market, being marginally ahead of Pizza Hut in terms of market share - although Pizza Hut remains the dominant player in the eat-in market.
Brand revitalisation is imperative if Pizza Hut is to grow its share. Until now, the chain has lacked a central theme for its campaigns, the latest of which, 'Who's in the Hut?', features people dressed as birds enjoying their meal in a bird box. The campaign was Wieden & Kennedy's first work for the Pizza Hut since it won the 拢13m business in February, and heralds an attempt to reinvigorate the chain.
We asked Sean Burke, retail activation director of The Marketing Store, which works with fast-food chain McDonald's, and Sue Wright, chief executive of brand engagement consultancy The NKD Group, which specialises in hospitality, how Pizza Hut can increase its market share.
DIAGNOSIS 1 - SUE WRIGHT CHIEF EXECUTIVE, THE NKD GROUP
My eight-year-old nephew's birthday is coming up. 'Fancy taking some mates to Pizza Hut?' I asked. 'We'd rather go for a Chinese' came the reply. How times have changed since going to the 'Hut' was something special.
We have all changed our approach to takeaways and eating out - we are more health-conscious, we want 'authentic', good-value food and we want a great experience as an extra topping. Mid-market competitors are responding and Pizza Hut needs to work out how it can grab its share of this changing sector.
Pizza Hut has a strong profile, but what does the brand stand for? Restaurant brands have to satisfy four key consumer needs: menu innovation, food quality, service excellence and atmosphere. Pizza Hut's traditional focus seems to have been menu innovation, overlooking the other three factors to its detriment.
New product-based ads and product offers are not enough to reinvigorate this - it needs to go back to basics and re-connect with its heartland by focusing on food quality, service and brand experience.
REMEDY
- Get fresh insights into the target market's changing habits and attitudes.
- Work out what this brand stands for - what it is promising to consumers in both the take-out and eat-in markets.
- Re-brief the ad agency to bring this promise to life and create a sense of intrigue about the new 'Pizza Hut Experience'.
- Excite the whole organisation to deliver a truly differentiated customer experience.
DIAGNOSIS 2 - SEAN BURKE RETAIL ACTIVATION DIRECTOR, THE MARKETING STORE
Authenticity in food is key now. Consumers are looking for a more genuine experience than the somewhat generic Pizza Hut offering. With pizza being such a ubiquitous part of the British diet, many customers are choosing to spend their money in Pizza Express, Zizzi or ASK, where they get a more genuine Italian experience, but with the comfort of a food that is already familiar to the children.
In addition, product innovation - formerly a major pillar of Pizza Hut's strategy - seems to have been overlooked of late, allowing Domino's to steal the high ground with its regular introduction of new toppings alongside traditional favourites.
Another major challenge for Pizza Hut is the debate over obesity. Pizza chains have generally avoided most of the bad press when it comes to unhealthy eating, with the media choosing to focus on McDonald's and Burger King.
However, Pizza Hut's well-known 'all you can eat' offer is badly out of sync with consumer thinking and may be jeopardising the all-important family business as a result.
REMEDY
- A three-pronged approach is needed to break the downward spiral, tackling menus, ingredients and the eating environment.
- Develop new menus and new offers to bring families into the restaurants.
- Address concerns about obesity - a salad bar is not enough.
- Improve the restaurant environment to create a more unique dining experience.