Pizza Hut Yesterday’s Brand: Why Franchisee Bankruptcy Filings Will Continue

 

When it comes to the pizza industry, few names have been as iconic as Pizza Hut. However, the landscape of the pizza market has dramatically shifted over the years, leading to a decline in Pizza Hut's dominance. To understand why franchisee bankruptcy filings will likely continue, we once again asked Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® for his insights as we need to delve into the historical context, analyze current market dynamics, and explore the numbers that tell the tale of a brand in decline.

The Rise of Pizza Hut

Pizza Hut, founded in 1958, quickly became a household name. By the late 1970s, it was the largest pizza chain in the world. The brand's expansion was meteoric, with store counts soaring. At its peak in the early 2000s, Pizza Hut boasted over 18,000 locations globally. The company's innovative dining experiences, like the iconic red-roofed restaurants and the introduction of the stuffed crust pizza, helped cement its position at the top.

Market Share Dominance

During its heyday, Pizza Hut held a substantial share of the U.S. pizza restaurant market. In the late 1980s and early 1990s, Pizza Hut controlled nearly 25% of the market, a testament to its widespread popularity and consumer loyalty. However, this dominance was not to last.

The Decline Begins

The turn of the millennium marked the beginning of a slow but steady decline for Pizza Hut. Competition intensified with the rise of new, agile players like Domino's and Papa John's. These competitors leveraged technology, streamlined operations, and aggressive marketing to chip away at Pizza Hut's market share. By the late 2010s, Pizza Hut's market share had dwindled to around 14%, and the store count had dropped to approximately 16,000 locations worldwide.

Store Numbers: Highs and Lows

From a high of over 18,000 stores, Pizza Hut's global footprint has contracted. As of 2023, the number of Pizza Hut locations stands at approximately 13,000, reflecting a significant retrenchment. In the U.S., the store count has decreased from a peak of around 7,500 to about 6,500. This contraction is a clear indicator of the brand's struggles to maintain its relevance in an increasingly competitive market.

Market Share Capitulation

The capitulation of Pizza Hut's market share is a case study in how rapidly changing consumer preferences and market dynamics can upend even the most established brands. The shift towards convenience and technology-driven solutions, embodied by Domino's emphasis on online ordering and delivery logistics, left Pizza Hut scrambling to catch up. The rise of fast-casual and artisanal pizza brands further eroded its market position.

The Financial Strain on Franchisees

As Pizza Hut's market share declined, the financial strain on its franchisees increased. Lower sales volumes, coupled with rising operational costs, have made it challenging for many franchisees to remain profitable. This strain has culminated in a wave of bankruptcy filings. In recent years, several large franchise operators have sought bankruptcy protection, citing unsustainable debt levels and declining revenue.

Why Bankruptcy Filings Will Continue

The trend of bankruptcy filings among Pizza Hut franchisees is likely to persist due to several factors:

1.       Operational Costs: The fixed costs associated with maintaining physical storefronts, especially dine-in locations, are high. With declining foot traffic, these costs become burdensome.

2.       Competitive Pressure: The aggressive expansion and innovative strategies of competitors continue to siphon market share from Pizza Hut.

3.       Changing Consumer Preferences: Modern consumers favor convenience and technology integration, areas where Pizza Hut has lagged behind.

4.       Brand Perception: Pizza Hut's brand, once a symbol of quality and innovation, is now often viewed as outdated compared to fresher, more dynamic competitors.

5.       Economic Factors: Broader economic pressures, such as inflation and labor costs, add to the financial challenges facing franchisees.

Think About This

Pizza Hut's story is a cautionary tale of how market leadership can erode when a brand fails to adapt to changing consumer preferences and competitive pressures. The continued financial strain on its franchisees, evidenced by ongoing bankruptcy filings, underscores the need for a strategic overhaul. For Pizza Hut to reclaim its former glory, it must innovate, streamline operations, and reconnect with consumers in a meaningful way. Until then, the shadow of bankruptcy will likely loom over its franchisees.

By understanding the historical trajectory and current challenges of Pizza Hut, we gain insight into the broader dynamics of the fast-food industry and the importance of agility and innovation in maintaining market leadership.

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit GrocerantGuru.com, FoodserviceSolutions.US or call 1-253-759-7869

Subway is no Longer Stagnant It’s Back on Track

Success does leave clues and at times chain restaurants need to refocus, renew, and rewrite its brand message to edify relevance with consumers according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. 

Johnson stated, “Under pressure from franchisee Subway raised prices, shifted it brand messaging, and went adrift with once loyal customers.  Then in an effort to reclaim some loyal customers they returned to brand messaging with the ‘halo’ of better for you.” Well guess what it worked.

Last week Subway stated that its sales performance improved steadily throughout 2021, sending its average unit volumes to their highest level since 2014. That is a big step forward.

While Subway did not provide the exact number of its average unit sales.  Technomic went to work and calculated that Subway’s “average unit volumes in 2014 were $446,000. They would fall to $425,000 the next year. That suggests the 2021 figure was somewhere in between.”

Technomic continued saying “For the system, same-store sales were flat for the full year 2021. But for the top 75% of its locations, about 16,000 locations in all, same-store sales were up 7.5% over 2019 levels.”

Subway did say that sales improved throughout the year for that group. By December, same-store sales were up 8.7% on a two-year basis. Subway also said that same-store sales for the entire system were positive the last three quarters of the year.

In a Battle for Share of Stomach

You Can Win

Subway’s CEO John Chidsey, stated, that the results “indicate we have the right team and strategy to bring our multi-year transformation journey to life,”.

But the data also suggests that about 5,000 locations are still well under what they were before the pandemic. Many are believed to be in urban areas, business districts and in retail shops such as Walmart.

Technomic suggest that much of that recent improvement in sales at Subway can be chalked up to store closures. The brand has closed about 4,900 locations since 2017. That includes about 1,000 locations in 2021, based on an unofficial count of its online store directory.

So, let us be clear for Subway, the 2021 sales results represent the first real green shoots in what has been a long and difficult decade for the brand. The chain has seen thousands of closures since that 2012 peak. It also lost its founder, its spokesman and went through multiple changes in management and executives.

We must note that, Chidsey took over the brand in 2019 as part of the latest management overhaul. The brand last year made a massive change to its menu, upgrading its bread and other ingredients, in what it called the “Eat Fresh Refresh.” Getting back to the basic messaging of the brand.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information.  

Four Smaller Walls Too Drive Relevant Growth at TGI Friday’s

 

When consumers are evolving faster than your brand, customer relevance ebbs to the point your franchisees close stores, your profits trail off, and you watch your customers migrate to any brand that is more relevant to them. 

That said, brands have value, consumers know just what they like from your brand but at times they need something additional, different, or fresh according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

The grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food continues to drive top-line sales and bottom-line profits in every sector of retail foodservice today. In fact, TGI Friday’s was one of the first branded chain restaurants to place products in the Frozen Food Court and continues to find success their according to Johnson.

When your primary target consumers age there is no reason to abandon them according to Johnson.  TGI Friday’s clearly understands the importance of developing their brands off-premise business while extending a customer’s life time value.

In an effort to edify its brand, and extend its best customers life time value, TGI Fridays is launching a small-format spinoff called Fridays on the Fly with more fresh food fast.

In a Battle for Share of Stomach

You can Win! 

These smaller footprint units focus is on meal delivery and takeout.  In addition, they will serve multiple virtual brands out of a single kitchen, adding customer relevance by day-part, flavor profile, price.

Not able at this time to move on completely, each new unit for now will also have a dining room for on-site guests. While the new smaller footprint format may appear is a product of the pandemic, which has enabled the brand to do more off-premise business. The trending growth of the grocerant niche filled with fresh prepared Ready-2-Eat and Heat-N-Eat food has been top-of-mind at TGI Friday’s for a good 20 years.

TGI Friday’s CEO Ray Blanchette, stated, "Now that 30% of our revenue comes away from restaurant, we can actually do both," Our Grocerant Guru® has been helping brands do just that for 28+ years.  Hint; there is no sign of consumers desire not to continue to evolve garnering branded fresh food from new non-traditional points of distribution.

At TGI Friday’s as regular readers of this blog know part of the off-premise revenue is coming from a host of virtual brands. Fridays has its own online-only concepts such as Conviction Chicken and has also partnered with C3 to offer some of its brands out of its restaurants. Krispy Rice, for instance, is now in test at 14 locations in Southern California and the Washington, D.C., area with promising results, said John Neitzel, Fridays' president and COO. 

So, the first On the Fly location is currently under construction, and executives did not say how many units it ultimately expects to open. The company expects the stores to generate $2 million average unit volumes with annualized earnings before interest, taxes and depreciation of $300,000. "The sky's the limit in terms of potential," Neitzel said. The team at Foodservice Solutions® agrees.  How are you evolving? Where are you evolving?

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

Harpoon Brewery and Dunkin’ Fall Lineup of Beers Are Out

 

You do not have to be in Massachusetts, or visit Salem, Massachusetts to get a Midnight American Porter beer this fall. However, Boston, based Dunkin’ is rolling out four new beers again this year all in time for Halloween according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Get this, to mark the occasion, Harpoon Brewery and Dunkin’ aren’t just stocking shelves with the new beers, but in Boston they’re creating the first-ever Dunkin’ Walk-Thru at Harpoon Brewery. Now that’s an urban experience we all might like to walk through.

That’s right, for the fourth year in a row, Harpoon Brewery and Dunkin’ are giving fans a fresh way to celebrate fall. Joining fan-favorite Harpoon Dunkin’ Pumpkin Spiced Latte Ale, three new beers are hitting stores this September all made with coffee, donuts or matcha tea from Dunkin’: Harpoon Dunkin’ Blueberry Matcha IPA, Harpoon Dunkin’ Maple Crème Blonde Ale and Harpoon Dunkin’ Midnight American Porter.

To mark the occasion, the brands aren’t just stocking shelves with the new beers, but in Boston they’re creating the first-ever Dunkin’ Walk-Thru at Harpoon Brewery. Open for one day only – on August 30, 2021 from 10 a.m.-1 p.m. ET – the local pop-up experience will give fans a first taste of the new beers by ordering a pack to go.

Yet there more, as an added treat, at the Boston event, anyone who orders the new beers at the walk-thru will also receive a free Dunkin’ Harpoon IPA Donut filled with a Harpoon IPA jelly and topped with a candied malt crumble — made just for the occasion and the first Dunkin’ donut to be made with beer as an ingredient*. Attendees can also enjoy a cup of Dunkin’ coffee while waiting for their orders.

Dan Kenary, Harpoon CEO and co-founder, stated, “Our collaborations with Dunkin’ are highly anticipated by our fans each fall, so this year we wanted to help them crack a cold one open just a little earlier. Our Dunkin’ Walk-Thru experience takes everything we love about ordering Dunkin’ at a traditional Drive-Thru with the addition of a first taste of our new beers,”. The four beers available this season include:

1.       Harpoon Dunkin’ Pumpkin Spiced Latte Ale | Our new fall favorite returns! Inspired by Dunkin’s Pumpkin Spiced Latte, this “Spiced Latte Ale” is brewed with Dunkin’ coffee, pumpkin puree, cinnamon, and lactose for a delightfully autumnal beer that’s equal parts creamy, roasty, pumpkin-y, and spiced. ABV: 5.2%.

2.       NEW Harpoon Dunkin’ Blueberry Matcha IPA | This hazy IPA is inspired by Dunkin’s Blueberry Matcha Latte. Brewed with blueberries, matcha, and a blend of traditional and modern hops, it’s both tea-like and tropical with bright, juicy notes of mixed berry. ABV: 6.6%.

3.      NEW Harpoon Dunkin’ Maple Crème Blonde Ale | Nothing says “fall in New England” quite like maple! Brewed with actual Dunkin’ donuts and maple syrup, this easy-drinking Blonde Ale combines everything we love about Dunkin’ Maple Crème donuts with a subtle, malty, not-too-sweet base. ABV: 5.5%.

4.       NEW Harpoon Dunkin’ Midnight American Porter | The beer that started it all just got even better. This riff on our classic Dunkin’ Coffee Porter is brewed with Dunkin’s new Midnight Roast coffee for some extra roasty aromatics, dark chocolate notes, and an espresso-like finish. ABV: 6%.

Brian Gilbert, Vice President of Retail Business Development at Dunkin, stated, “We have elevated our collaboration with Harpoon this fall with three new beers, all made with Dunkin’s iconic coffee, donuts and matcha tea,” ... “Beer, matcha, coffee and donuts, we can’t think of a better combination.”

Time to stock up, as Harpoon Dunkin’ Pumpkin will be available on draft and in bottled 6-packs as well as in the new Harpoon Dunkin’ Dozen mix pack, which features three cans of each seasonal beer flavor. These limited releases will be available everywhere Harpoon is sold beginning in September. How many of you will keep some around for Halloween?

Partnership+, Buffalo Wild Wings in the Boston area will also exclusively serve all four Harpoon x Dunkin’ beers on draft starting in October. You simply have to love how good food retailers have embraced the undercurrents of the grocerant niche to drive relevance, top-line sales, and bottom-line profits.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

Dickey's Virtual Franchise Driver

 

Virtual restaurants are garnering attention from everyone including chain restaurants the ilk of Brinker with Just Wings, Lazy Dog with Jolene’s Wings, Bloomin’ Brands with Tender Shack, Nathan’s Famous with Arthur Teacher’s.  

Dickey’s Barbecue Pit is just might be taking over as the next big deal in the virtual concept space with the launch of its newest delivery-only brand and it’s not a wings concept. That’s a good thing according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

In a focused effort to create a new revenue stream for its franchisees, the world’s largest barbecue concept recently added Big Deal Burger to its growing virtual brand portfolio.  Dickies knows that differentiation does not mean different it means familiar but with a twist.  So, the virtual burger and sandwich concept first launched in Dallas and has since expanded to 45 locations across 12 states, including Arizona, California, Colorado, Florida, Louisiana, Michigan, Nevada, New York, North Carolina, Oklahoma, Texas and Wyoming with five more locations opening this month. Since introducing Big Deal Burger, Dickey’s has tripled average weekly volume by store.

Laura Rea Dickey, CEO of Dickey’s Barbecue Restaurants, stated,  “As the world’s largest barbecue franchise, Dickey’s is actively creating innovative opportunities for our Owner/Operators to yield additional revenue.” …“After seeing success with our first virtual brand, Wing Boss, we started exploring other delivery-only concept ideas. Big Deal Burger makes perfect sense for us. Our franchisees already have the right equipment to execute it, so it’s a convenient way to capitalize on the growing delivery trend. We can’t wait to see how guests respond as we continue to expand this concept across more markets.”

Chain restaurants that franchise need to drive top line sales and bottom-line profits for their franchisees and creating a new avenue of distribution via a virtual brand is a great way to do that according to Johnson.

Consumers can build their own all-star burger or sandwich by choosing a protein – a single or double all-beef patty, Impossible Burger patty, pit-smoked marinated chicken, Polish sausage or spicy cheddar sausage – then adding toppings and a mouthwatering sauce to finish, all served on a buttery, toasted brioche bun.  Once again interactive and participatory customer touchpoints are so very important as regular readers of this blog know.

A key Hallmark of the grocerant niche is mix and match meal component bundling at Big Deal Burger’s you can pair your delicious creation with one of savory sides: seasoned, brisket cheese, Cajun or buffalo ranch fries; coleslaw; or mac and cheese.

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.

In a Battle for Share of Stomach

Are You Winning?