Pizza Hut aims for hotter pizzas

by Monica Watrous
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Pizza
Pizza Hut's new delivery pouch hasthree layers of thermal insulation, resulting in a pizza that is 15 degrees hotter upon arrival.
 
LOUISVILLE, Ky. — Executives of Yum! Brands Inc., hope a hotter pizza will help heat up business at Pizza Hut in the United States, where system sales declined 1 percent in the recent quarter. The company has introduced a new delivery pouch with three layers of thermal insulation, resulting in a pizza that is 15 degrees hotter upon arrival, said CEO Greg Creed.

Greg
Greg Creed, CEO of Yum! Brands

“When you bite into the pizza, it will be crispier as a result of our new proprietary sheet included inside every box,” Creed said during a Nov. 2 earnings call. “Each of these changes are designed to deliver on our commitment to hot. These changes were rolled out to all Pizza Huts across the US just after the end of the third quarter and will be part of your next Pizza Hut experience.”

That and other efforts under way at Pizza Hut are showing steady, but early, progress, which Creed described as a “nice positive build.”

“Don't expect any heroics, but we do believe we can, by getting the foundations in place and doing the right things, continue to progress our Pizza Hut US performance,” he said.

Recently, the company announced the hiring of 14,000 new delivery drivers by the end of the year, in addition to other operational enhancements to make the delivery system at Pizza Hut more efficient, Creed said. The pizza chain also inked a transformation agreement with franchisees in May that will increase national advertising and build awareness of the brand’s efforts around digital and delivery.

Hut
Pizza Hut launched its Hut Rewards loyalty program in August.
 
“Additionally, the Hut Rewards loyalty program was launched in August, and we are encouraged by initial trends and are confident our investment in loyalty will pay off in the long run,” he said. “As we've said before, do not expect the transformation agreement to yield results overnight, but we do expect to see improvement over time. I am confident the changes made with the Transformation Agreement will allow us to execute on our commitment to a hot, fast and reliable Pizza Hut experience over the long term.”

Net income at Yum! Brands in the third quarter ended Sept. 30 was $418 million, equal to $1.18 per share on the common stock, down 35 percent from $640 million, or $0.55, in the prior-year period. Excluding special items, earnings per share rose 22 percent to $0.68 from $0.56. Revenues totaled $1,436 million, down 5 percent from $1,518 million.

Worldwide system sales grew 6 percent, reflecting growth of 7 percent at KFC, 6 percent at Taco Bell and 3 percent at Pizza Hut. 

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