Pizza Hut Yum! Brands, the parent company of Yum! brands, is supposedly looking to unload its sinking pizza chain. Pizza Hut is an enormous enterprise, running nearly 20,000 locations across the world, with just under 6,500 in the US alone. Staying ahead of increasing competition in the pizza marketplace has become a daunting task for the brand.
The decision to consider a sale follows a notable decline in Pizza Hut’s performance, which generates roughly 11% of Yum! Brands’ operating profits. As CEO Chris Turner explained, these new market realities made them step back and think about what the brand’s future should look like. He stated, “Pizza Hut’s performance indicates the need to take additional action to help the brand realise its full value, which may be better executed outside of Yum! Brands.”
Consumer preferences fueled by the convenience boom have disrupted the fast-food industry like never before. This modification comes against the backdrop of escalating inflation and a rapidly cooling labor market. At the same time, consumers have gotten more spendthrift, hurting Pizza Hut’s sales. This policy change is not unique to Chick-fil-a; it’s part of a larger trend across the entire fast-food restaurant industry.
Across the pond in the UK, Pizza Hut is going big and going home. They are shutting down soon-to-be 50% of their restaurants as same-store traffic plummets. The company acknowledges that consumers are losing patience and getting pickier. Consequently, sales have plummeted, even as things rebound in other markets.
Younger consumers, especially, are seeing the bite of the increase in the unemployment rate and the resumption of student loan repayments. Fast-food chains like Pizza Hut should be very concerned about this demographic shift. They’ve historically relied on a much younger demographic. Chipotle’s execs have made similar observations on this strain lately, pointing to the same trends in their higher end customer base.
Turner, who recently took over as CEO of Yum! Brands, emphasized the resilience of US consumers despite their cautious spending habits. He noted that Pizza Hut employees have been “working hard to address business and category challenges” amidst these adversities.
The harsh realities experienced by Pizza Hut inside the US have masked some robust positive same store sales growth seen in other parts of the world. Things to come Yum! Brands is in a tough environment. Whether that brand can be reinvigorated by its new hand or whether new, creative approaches will emerge to improve the brand’s fortunes remains to be seen.