Table of Contents
Company Profile ……………………………………………………………………….02
Industry profile…………………………………………………………………………10
Major competitors profile……………………………………………………….……13
Literature review……………………………………………………………………….20
Marketing Mix Analysis………………………………………………………………..23
Marketing Mix Of Competitors……………………………………………………….29
Pizza Hut Competitive Advantage……………………………………………………32
Restaurant Management/ job description…………………………………………39
Present promotion and Pricing strategies…………………………………………41
Trend Spotting…………………………………………………………………………..43
Government Regulations in Fast Food Industry……………………………………45
Existing Marketing Strategies………………………………………………………….51
Recommendations……………………………………………………………………..55
Company profile
Company History: Pizza Hut Inc
Incorporated:1959
Pizza Hut Inc. is the largest pizza restaurant company in the world in terms of both the
number of outlets and the percentage of market share that it holds. A subsidiary of
PepsiCo, Inc., the company oversees more than 11,000 pizza restaurants and delivery
outlets in 90 countries worldwide. In October 1997, the company expected to become a
subsidiary of Tricon Global Restaurants, Inc., formed from the spin-off of PepsiCos
restaurant holdings.
Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of
Wichita, Kansas. When a friend suggested opening a pizza parlor–then a rarity–they
agreed that the idea could prove successful, and they borrowed $600 from their mother to
start a business with partner John Bender. Renting a small building at 503 South Bluff in
downtown Wichita and purchasing secondhand equipment to make pizzas, the Carneys and
Bender opened the first Pizza Hut restaurant; on opening night, they gave pizza away to
encourage community interest. A year later, in 1959, Pizza Hut was incorporated in
Kansas, and Dick Hassur opened the first franchise unit in Topeka, Kansas.
In the early 1960s Pizza Hut grew on the strength of aggressive marketing of the pizza
restaurant idea. In 1962, the Carney brothers bought out the interest held by Bender, and
Robert Chisholm joined the company as treasurer. In 1966, when the number of
Pizza Hut franchise units had grown to 145, a home office was established to coordinate
the businesses from Wichita.
Two years later, the first Pizza Hut franchise was opened in Canada. This was followed by
the establishment of the International Pizza Hut Franchise Holders Association (IPHFHA).
It aimed at acquiring 40 percent of the companys franchise operations, or 120 stores, and
adding them to the six outlets wholly owned by Pizza Hut.
The acquisitions, however, brought turmoil to the chain. Varied accounting systems used
by the previous franchise owners had to be merged into one operating system, a process
that took eight months to complete. In the meantime, sales flattened and profits tumbled.
In early 1970 Frank Carney decided that the company practice of relying on statistics from
its annual report to inform its business strategy was inadequate, and that a more developed,
long-term business plan was necessary. The turning point occurred when Pizza Hut went
public and began growing at an unprecedented pace.
Pizza Huts corporate strategy, arrived at after much consultation and boardroom debate,
emerged in 1972.The corporate strategys first priority was increasing sales and profits for
the chain. Continuing to build a strong financial base for the company to provide adequate
financing for growth was the second priority. The strategy also called for adding new
restaurants to the chain in emerging and growing markets.
In 1970 Pizza Hut opened units in Munich, Germany, and Sydney, Australia. That same
year, the chains 500th restaurant opened, in Nashville, Tennessee. Further acquisitions that
year included an 80 percent stake in Ready Italy, a frozen crust maker, and a joint venture,
Sunflower Food Processors, formed with Sunflower Beef, Inc. The same year, the menus
for all restaurants added sandwiches to the staple “Thin n Crispy” pizza offering.
In 1971 Pizza Hut became the worlds largest pizza chain, according to sales and number of
restaurants–then just more than 1,000 in all. A year later the chain gained a listing on the
New York Stock Exchange. Pizza Hut also achieved, for the first time, a one million dollar
sales week in the U.S. market.
At the end of 1972 Pizza Hut made its long-anticipated offer of 410,000 shares of common
stock to the public. The company expanded by purchasing three restaurant divisions: Taco
Kid, Next Door, and the Flaming Steer. In addition, Pizza Hut acquired Franchise Services,
Inc., a restaurant supply company, and J & G Food Company, Inc., a food and supplies
distributor. The company also added a second distribution center in Peoria, Illinois.
In 1973 Pizza Hut expanded further by opening outlets in Japan and Great Britain. Three
years later the chain had more than 100 restaurants outside the United States and two
thousand units in its franchise network. The companys 2,000th restaurant was opened in
Independence, Missouri. It also established the 35 by 65 meter red-roof Pizza Hut
restaurant building as the regulation size for all its new establishments. The new
construction standard called for free-standing buildings built in a distinctive one-story
brick design. The sites seated from 60 to 120 people.
Advertising played an increasingly influential role at Pizza Hut at this time, broadening the
chains public profile. Campaigns were run on both a national and local level in the U.S.
market. Spending on local advertising increased from $942,000 in 1972 to $3.17 million in
1974.
In 1977 Pizza Hut merged with PepsiCo, becoming a division of the global soft drink and
food conglomerate. Sales that year reached $436 million, and a new $10 million dollar
headquarters office opened in Wichita. PepsiCo had clearly seen potential in Pizza Hut.
People continued to eat outside their homes, especially as convenience and
price-competitiveness in the fast food industry gained importance.
The 1980s brought new competitors to Pizza Hut, all challenging its number one position
in the pizza restaurant trade, then worth $15 billion in sales annually in the United States
alone. While in the 1970s the companys main competitors had been regional chains like
Dallas-based Pizza Inn, Denver-based Shakeys, and Phoenix-based Village Inn and Straw
Hat, fierce competition in the 1980s brought new entrants into the quick-service pizza
category, including Little Caesars, Dominos Pizza International, and Pizza Express.
To raise its profile, Pizza Hut introduced “Pan Pizza” in 1980 throughout its network. The
product, with a thicker crust made in deep pans, soon became popular. The success of new
additions to Pizza Huts menu was facilitated by the marketing resources provided by
PepsiCo.
For example, in 1983 Pizza Hut introduced “Personal Pan Pizza,” offering customers a
five-minute guarantee that their single-serving pizzas would arrive quickly and steaming
hot. The aim was to make a quick, affordable pizza the ideal lunchtime meal. Another
addition to the chains menu was “Hand-Tossed Traditional Pizza,” which would be
introduced in 1988.
In 1984 Steven Reinemund was appointed president and chief executive officer of Pizza
Hut. He oversaw a period of unprecedented growth for the pizza chain. In 1986 Pizza Hut
opened its 5,000th franchise unit, in Dallas, Texas, and began its successful home delivery
service. By the 1990s the delivery and carryout business had grown to account for
approximately 25 percent of the companys total sales.
In 1990 Pizza Hut opened its first restaurant in Moscow. Russians pizza of choice,
“Moskva,” a pie topped with sardines, tuna, mackerel, salmon, and onion, became a
favorite at the Moscow Pizza Hut. The Moscow location quickly established itself as Pizza
Huts highest volume unit in the world. Restaurants just behind in total volume served were
found in France, Hong Kong, Finland, and Britain. Other favorite toppings for pizzas in
countries other than the United States included sauerkraut and onion, and spinach, ham,
and onion. In Hong Kong corned beef and Canadian bacon were favorites, while Asians
and Australians seemed to enjoy various curry pizzas.
Competition in the United States was heightened in 1991 when McDonalds, the worlds
largest hamburger fast food chain, put “McPizza” on its menu in several test markets and
even offered home delivery to customers. Despite this effort and the economic recession of
the early 1990s, Pizza Hut continued to profit. Company sales at the pizza chain were up
ten percent worldwide to $5.3 billion in 1991 as growing health awareness and the
popularity of vegetarian lifestyles had prompted many people to reconsider pizza as a
nutritious alternative to greasy fast food fare. Pizza Hut Delivery, the home delivery
operation, provided $1.2 billion in sales alone, and overall Pizza Hut sales, added to those
of PepsiCo subsidiaries Taco Bell and KFC (formerly Kentucky Fried Chicken), gave the
parent company more than $21 billion in sales that year on its restaurant and fast food side.
In the early 1990s Pizza Hut was concerned with making itself more accessible.
Drive-through units were added for customers convenience, and Pizza Hut Express units
were being developed. The Express unit originated in shopping malls, where it provided
customers with fast food at affordable prices made possible by lower operating overheads.
Since that time, Pizza Hut positioned Express units in school cafeterias, sports arenas,
office buildings, and major airports. The company saw nontraditional locations as the
fastest-growing sector of its operations in the first half of the 1990s.
PepsiCos corporate sponsorship of Pizza Hut included funding the Book It! National
Reading Incentive Program, which encouraged higher literacy rates among young people.
The reward for better reading ability was free pizza at any Pizza Hut. In 1992, the Book It!
program involved more than 17 million students in North America alone, and Pizza Hut
received letters of endorsement that year from President George Bush and Secretary of
Education Lamar Alexander.
