Is Pizza Hut In Decline?

With the surging popularity of fast casual restaurants, it sounds like a logical move that’s going to allow Pizza Hut to shift their branding and service model to be more of what people want — and in this case, the closures really do seem like a way of moving forward.

PMQ reported that after the menu revamp, Pizza Hut saw a 3.5 percent drop in quarterly sales. The Motley Fool suggests that the failed rebrand might have done some lasting damage, sending a mixed message and making customers unsure of just what Pizza Hut was trying to be and what patrons should expect when they got there.

When the closures stop and Pizza Hut stores start to reopen, they’re going to look very different. Their Express store format is already out there, and if you’re wondering what your neighborhood Pizza Hut is going to look like, think of a quick-serve counter and a shop like the one that’s already at the Miami International Airport .

According to Restaurant Business, only about 10 percent of Pizza Hut’s sales come from dine-in customers. At the same time, about half their locations were paying a wait staff and supplying dine-in facilities. It doesn’t take a business major to know that just doesn’t add up.

What is the problem with Pizza Hut?

According to MarketWatch, part of Pizza Hut’s problem is that students are preferring to get their pizza from Papa John’s and Domino’s, and market analysts say their recent efforts to wade deeper into the technological world is only addressing part of the problem.

When Pizza Hut gave themselves that major overhaul in 2014, they made more than one mistake. On one hand, there’s nothing wrong with menu changes. Menus should be updated every so often, but here’s the thing — they shouldn’t be so different that they alienate a customer base that’s already there.

Then, in 2017, Pizza Hut paid $9 million to settle a lawsuit brought after a 2009 accident where one of their delivery drivers hit and seriously injured a motorcyclist, who spent months in the hospital (via the Las Vegas Review-Journal ).

The Express format has already seen some success in international locations, and Pizza Hut Singapore describes it like this: “Pizza Hut Express is a fast service counter concept specially designed to serve the busy professionals, students and all who … are looking for a filling meal while on the move.”

When Pizza Hut CFO David Gibbs addressed the problem of earnings back in 2018, he had this to say: “The challenge Pizza Hut faces is that it has a large dine-in business. The drag dine-in is having on reported same-store sales masks the relative health of delivery and carryout. … Dine-in is waning in relevance.”

According to Restaurant Business, only about 10 percent of Pizza Hut’s sales come from dine-in customers. At the same time, about half their locations were paying a wait staff and supplying dine-in facilities. It doesn’t take a business major to know that just doesn’t add up.

Between 2015 and 2016, their share of the pizza market rose from $38.5 billion to $45 billion, and that meant they were a huge part of the industry’s revenue stream.