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Pizza Hut’s New Tactic: Go Very Small

The Exchange

Pizza Hut has come out with another new product, this time aiming to pull in eaters by going small.

The Plano, Texas-based pizza chain, part of Yum! Brands (YUM), has created a line of mini pizzas that will replace the personal pan pizza as the most diminutive pie on the menu.

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Pizza Hut Sliders: Image from Pizza Hut's Facebook page
Pizza Hut's slider-type pizzas each are a little more than half the size of the 6-inch personal pan, and the plan is to sell them three for $5 or nine for $10. The image here is a partial screenshot of Pizza Hut's Facebook page with a group of the little pizzas.

For what is ostensibly a pizza shop, Pizza Hut likes to mix it up, as many restaurants do, and try new things on the menu. Sure, it still has the standard thin crust and pan pizzas you know and love -- note below the more than $5 billion in U.S. sales. But over the years it's added Buffalo wings, Tuscani pastas, the calzone-like P'Zone, cinnamon sticks, Hershey's Chocolate Dunkers, and the $10 Dinner Box that features a rectangular pizza.

Pizza Hut's parent company Yum, also the owner of KFC and Taco Bell, used to be part of PepsiCo (PEP) before a 1997 spin-out. It's reporting fourth-quarter results this week, and analysts are expecting sales of $4.1 billion. Full-year sales are forecast at $13.6 billion. Yum has around 37,000 restaurants worldwide, though only 20% are operated by the company, while the rest are run by franchisees and licensees.

Pizza Huts that are company-owned are becoming less important to Yum, but franchise sales have been growing, rising from $4.1 billion in 2007 to $5.1 billion in 2011, in the U.S. The chart below shows the results for the past five years.

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Pizza Hut Sales

Source: Yum! Brands annual report. U.S. sales for franchisees. $ in billions.

Franchisee sales aren't included in Yum's company sales, though franchise and license fees are counted in revenue.

Pizza Hut got its start in 1958 in Wichita, Kan., and since then it's made its way 97 countries. At the end of 2011, it had about 13,700 locations globally, 7,600 of which are in the U.S. The question now is whether smaller helps translate to even bigger sales.

Do you like the idea of the pizza slider option? Will this be a hit or a miss for Pizza Hut?

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