We’ll be supreme again: Pizza Hut boss

Fast-food corporate veteran Phil Reed believes he can resurrect Pizza Hut and knock Domino’s off its perch.

Fast-food corporate veteran Phil Reed believes he can resurrect Pizza Hut and knock Domino’s off its perch. Picture: AFP

Fast-food corporate veteran Phil Reed, who has run a smorgasbord of chains including McDonald’s, Burger King, Taco Bell and Dairy Queen, believes he can resurrect Pizza Hut in Australia and knock Domino’s off its perch.

Mr Reed is two years into the protracted turnaround of the once mighty Pizza Hut brand in Australia and is not letting the distractions of a messy legal fight with its franchisees or a parliamentary inquiry into the franchise sector distract him from his goal.

Addressing the Turnaround Management Association national conference on Tuesday, the chief executive of Pizza Hut Australia said the chain was looking to grow its stores beyond its current portfolio of 260 and ramp up its technology platform to meet growing demand for digital orders.

“Rather than a simple turnaround, Pizza Hut Australia has been transformed. This sets us nicely to grow further across Australia — today 45 per cent of Australians still do not live in a Pizza Hut trade zone, and there are three Domino’s for every one Pizza Hut,” Mr Reed told the TMA conference. “Expansion is certainly a clear opportunity for us. We must continue to build our restaurants’ performance and our franchise partners’ businesses. There is still a great deal to do.”

The hard work of the turnaround is starting to deliver results. Mr Reed said in the three quarters to September 2020 Pizza Hut had been the fastest-growing brand in Australia with growth of 16.1 per cent, twice that of competitors such as KFC.

In 2016, private equity firm Allegro Funds and a local management buy-in team acquired the master franchisee licence for Pizza Hut in Australia from US-based parent Yum! Brands, global owner of the Pizza Hut brand.

It brought Mr Reed in two years ago. He had previously turned Pizza Hut around in The Philippines and operated fast food chains in Europe.

Mr Reed said COVID-19 had prompted the chain to bolster its digital platform.

“Rather than stifling our business, COVID-19 acted as a catalyst that created extra demand for our digital store (and) our delivery business. Our digital business grew and represents 75 per cent of all transactions. In 2018, we were a delivery business that would not deliver; in 2018 our e-commerce revenues were negligible.”

Mr Reed said in 2019 same-store sales growth for Pizza Hut in Australia was 5 per cent, while 3 per cent growth was viewed as very strong for fast food.

Mr Reed told The Australian the business was aiming to return as the No 1 pizza brand in Australia through growing its smaller stores rather than traditional large format restaurants.

“With COVID-19 the world has changed so much and what is going to be so interesting is how transferable the brand is, and that is what really excites me,” he said.

“What I am very much hoping for is the Pizza Hut brand is naturally synonymous not only with delivery but also those fabulous red roofs (restaurants) and unfortunately the economics of the extremely high labour rates in Australia … I’d love to be in a position to one day say I’m expanding those but I think in the short term more focusing on the smaller delivery and carry-out stores.

“I think we go step by step and start opening and start growing.”