Food Business News - July 10, 2018 - 68
to drive share gain over a longer period
While Mr. Lawrence of Domino's
spoke of aggressive action, Arthur F.
Starrs, president of Pizza Hut U.S., a
division of Louisville, Ky.-based Yum!
Brands, Inc., discussed a different approach at the Oppenheimer conference.
Mr. Starrs said the company is in
the early stages of a focused turnaround
strategy that is expected to be "a long,
"We're extremely pleased with the
progress that we've made in the business
over the last year," Mr. Starrs said. "I
think a couple of data points to provide. I
think, No. 1, we have over 2,200 restaurants that have changed hands in the last
18 months, so a lot of new franchisees are
extremely excited about the brand. The
mindset that, that brings, which is new
capital coming in, new bases, things like
that have our team really energized. And
No. 2, we're in the high 50% on digital,
55% to 58% digital mix right now, which
we're extremely excited about. And then
our delivery metrics have got meaningfully better."
Whereas Mr. Lawrence of Domino's
was open about the successes of the pizza
chain's digital and mobile applications,
Mr. Starrs was more guarded in specifics,
saying only that Pizza Hut's loyalty program "is having an impact on the business
that we're very happy with," is "profitable
for our franchisees," and that the technology "is working very seamlessly."
Technology has been
a game-changer for
Domino's, according to the
'Long, slow build' at Pizza Hut
Pizza Hut hopes to get a boost from its
new sponsorship deal with the National
Football League (N.F.L.), which parted
ways with the No. 4 pizza chain, Papa
John's International, earlier this year. Pizza Hut has been a sponsor of the National
Collegiate Athletic Association (NCAA),
and by adding the N.F.L. to the mix the
company aims to be "fortressing Thursday
to Monday in the fall," Mr. Starrs said.
"We think associating the traditions
of eating Pizza Hut and the traditions
of watching football as a family and the
at-home shareable occasion, just part and
parcel," he said. "And we're the ideal partner for the N.F.L. They're extremely excited about what we're doing. I've seen a lot
of great ideas from our agency, partners in
terms of how we're going to activate it."
Asked by an analyst to describe what
will have gone right two years from now
if Pizza Hut is hitting on all cylinders,
Mr. Starrs said one key will be that the
Over 2,200 Pizza Hut restaurants, out of 16,750 locations worldwide, have changed hands in the
last 18 months.
Food Business News
"big bet" on football will have paid off. A
second key will be that the company is no
longer playing catch up in digital.
"I think we were actually a leader in
digital at one point," he said. "We were
the first retail company to execute an
online order in 1994. We recognize that
we did fall behind in that area, but I'm
extremely proud of the progress that
we've made. As I said, our metrics are extremely strong, but we expect to be really
leading that area in a couple of years."
A focused approach
Papa John's may have stepped away
from its partnership with the N.F.L., but
the Louisville-based company is full
speed ahead on its five strategic priorities for 2018. Steve M. Ritchie, who was
promoted to chief executive officer of the
company on Jan. 1, told analysts during
a May 8 conference call that Papa John's
is continuing to refine its comprehensive
approach to improving the business.
The company's net income fell 41%,
to $16,737,000, in the first quarter ended
April 1, while year-over-year sales dipped
4.9% to $427,369,000. The lower results
contributed to a slump in the company's
stock price, which closed at $59.12 on
May 7, the day before first-quarter results
were announced, and dipped to $51.09 on
Chris O'Cull, an analyst with Stifel
Nicolaus, lowered his price target on Papa
John's shares to $50 from $57 in a mid-June
report, noting, "We believe the problem
primarily relates to a negative consumer
brand perception that is tied to the founder/spokesperson John Schnatter and his
past comments about social issues affecting his profits. Management is employing
various measures, but we believe fruits
could take some time to manifest."
The five strategies Mr. Ritchie and
July 10, 2018