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Pizza Hut’s Lack of Foot Traffic Plagues Store Sales

Danni Santana
Pizza Hut’s Lack of Foot Traffic Plagues Store Sales

Pizza Hut’s parent company, Yum Brands, is still dissatisfied with the brand’s store sales, which have been plagued by low foot traffic in recent quarters.

The Plano, Texas-based chain reported flat comparable-store growth in the fourth quarter, with a small 1 percent uptick in system-wide sales for the entirety of 2018. Results, however, lag in comparison to the 3 percent and 6 percent comparable sales bumps posted by other Yum Brands subsidiaries KFC and Taco Bell, respectively, in the fourth quarter of 2018.

In December, Pizza Hut publicly acknowledged its intentions of changing the narrative around its business from one fixated on dine-in experience to a delivery-first model. The company is relying on the opening of more Delco store locations to achieve this, according to Greg Creed, CEO of Yum Brands. Beer delivery has also become another key selling point for the company.

“For both the U.S. and international business, sustainable improvements in sales growth will remain a slow build as we update and reposition the asset base and make the messaging more distinctive,” Creed told investors on the restaurant group’s earnings call, Thursday.

Both Pizza Hut’s domestic and international store locations witnessed a stark difference between dine-in and off-premise sales in the latter half of 2018, he added.

Off-Premise Shakeup?

On Grubhub’s earnings call, Thursday, CEO Matt Maloney disclosed the food delivery giant recently began piloting some Pizza Hut locations in its marketplace, and is “planning on expanding to several hundred stores in the coming months.” Grubhub became Yum! Brands official delivery partner in February 2018.

Pizza Hut now has 18,000 restaurants worldwide, thanks in large part to its agreement with European pizza chain Telepizza last spring. Unit growth, excluding converted Telepizza locations, grew by 2 percent in the U.S. and 5 percent internationally in the fourth quarter. About 90 percent of those new locations are Delco delivery-first express units.

To this point, Pizza Hut has run its own proprietary delivery program, similar to competitors Domino’s and Papa John’s, averaging delivery times of around three minutes. As for Grubhub, the third-party deliverer has readily been open to partnering with large chains in recent months, in order to penetrate smaller markets in the U.S.

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