Pizza Hut's Largest Franchisee Says Menu Revamp Hasn't Helped Sales
Pizza Hut's move to double its menu hasn't come close to doubling sales.
NPC International, Pizza Hut's largest franchisee, reported last week that sales at the company's Pizza Hut locations fell 3.5 percent in the fourth quarter from the same period last year. As a result, the company generated a net loss of $100,000 for the quarter.
The company pointed to Pizza Hut's 'Flavor of Now' brand positioning as partially responsible for the decline. Pizza Hut introduced the brand revamp in November, with quirky new crusts, sauces and toppings, as well as a redesigned website, logo, pizza boxes and employee attire.
"While we continue to see a significant increase in our digital business mix, the new positioning is not yet yielding the improved sales results that we were anticipating," NPC CEO Jim Schwartz said in a statement. "We believe that the transition to the 'Flavor of Now' positioning provides a diverse flavor platform that better connects with millennials and provides the brand a leveragable point of differentiation. However, there is much work to be done to bring more awareness of the 'Flavor of Now.'"
NPC International operates 1,277 Pizza Hut locations in 28 states, as well as 143 Wendy's locations in five states.
Yum Brands has posted similarly disappointing earnings for Pizza Hut. In February, the company reported that in the fourth quarter, Pizza Hut same-store sales were flat from the same quarter a year ago. Same-store sales for the full-year were down 1 percent.
At the time, Yum CEO Greg Creed acknowledged that the revamp had not yet translated into sales. “While the initial relaunch of the Pizza Hut brand in the U.S. did not deliver the sales lift we expected, consumers have responded positively to the new menu and we intend to leverage this more effectively going forward,” he said.
The Flavor of Now has the potential to set Pizza Hut apart from the competition, as no other pizza chain is serving up honey Sriracha sauce or fresh spinach toppings. However, to successfully set themselves apart, Pizza Hut needs to prove that these new offerings are something that customers are actually craving.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.