Pizza Hut looks for buyer: Inside the fast food icon’s stunning downfall
It was once one of the world’s most iconic fast food chains, but now Pizza Hut’s owners are looking to get out. Here’s where it all went wrong.
The corporate behemoth that owns Pizza Hut is done. They’ve had it up to here with the once-iconic pizza chain that is now an expensive drain on their corporate resources.
They want it gone.
Yum! Brands is the Kentucky-based franchising company that owns Pizza Hut. They just can’t make it work. The company owns KFC too, and that business has grown from a little chick into a giant crowing rooster that brings in 34 billion dollars a year in sales and truckloads of finger-lickin’ profit.
But Pizza Hut is more like an albatross. Its sales fell in the most recent quarter and the company is now ready to dump it. If they can find a buyer brave enough.
“Pizza Hut’s performance indicates the need to take additional action to help the brand realize its full value …” the company announced this week. “…which may be better executed outside of Yum! Brands.”
Yum Brands is like a family with three kids. KFC is the corporate lawyer that runs marathons.
Taco Bell is the promising junior doctor. The parents love to talk about those two. Pizza Hut once graduated from Harvard but now smokes a lot of meth. The parents shake their head in despair. So much wasted potential! What went wrong with that one?!
Yum! Brands CEO Chris Turner told investors this week that the company wanted to start “the process to explore strategic options” for Pizza Hut. Basically saying they need to kick this no-hoper out of the basement.
“Our objective is to maximize value for Yum and position Pizza Hut and its franchise partners for greater success,” Turner said.
This comes just a week after a huge UK franchisee of the pizza chain – which owned hundreds of restaurants – went into administration. It had only owned them for a few months after buying them when the previous owner went insolvent. Owning Pizza Huts is obviously not easy.
So. How on earth did this happen? How did Pizza Hut - a brand that once dominated the market for the most popular take-away food, while also offering an iconic dine-in experience – become such a great way to lose millions of dollars?
How did we go from this …
To this?
This is one of the business case studies that makes experts frown. You can’t simply blame management: the same owners turned KFC into one of the world’s biggest fast food chains.
McDonalds and Pizza Hut were neck-and-neck in the 1990s. Huge American chains with a stranglehold on popular types of food. How does McDonalds end up so strong years later while Pizza Hut is so weak?
Is it all about the lack of iconic outlets? Did Pizza hut lose its mojo when it gave up on those iconic buildings with their famous roof lines? Certainly there is nothing special-seeming about the shops they sell pizza in today.
If I get a pizza from a place like that I probably expect it to be cheaper than Dominos, and Dominos sells pizza for $5.
The Domino effect
Speaking of Dominos, they are probably a big reason why Pizza Hut is struggling.
Dominos has been surging in Australia and overseas and their aggression in pricing is probably why Pizza Hut got elbowed out. When a pizza is five bucks you don’t care too much how it tastes! That said, Domino’s is also retreating today.
Perhaps pizza overall is past its era of dominance?
In Australia
In Australia the Pizza Hut master franchise is owned by the Flynn group, which also owns loads of the franchises in the US. It bought the Australian outlets from a private equity operator just a couple of years ago, after the private equity firm got tired of running the businesses they had bought from Yum! Brands in 2016.
Flynn Group is owned by a man called Greg Flynn who started out owning a single restaurant franchise from an American company called Applebee’s. He now owns thousands of franchises worldwide, mostly Pizza Huts, and his company is the biggest franchise operator in the world.
If anyone can make Pizza Hut work, it is him. I for one hope he can – I have many happy memories of being 12 years old and attending a kids birthday party at a Pizza Hut.
The self- serve dessert bar was like the most astonishing of forbidden fruits and for me the brand holds plenty of value.
I still have the song with their phone number stuck in my head!!
Maybe the Flynn group and the new corporate owner can band together and turn Pizza Hut around. Perhaps they can even turn some of the many abandoned pizza huts around the world back into Pizza Huts. I’d like that.
