Building business beyond pizza

June 9, 2008
Pizza Hut, the world's largest pizza chain, hopes the introduction of its new pasta dishes can help the company revive its flagging U.S. business.
The company, a division of Louisville, Ky.-based Yum! Brands Inc., launched the product April 1 with the faux rebranding of its Dallas headquarters as "Pasta Hut." The new dishes, dubbed Tuscani Pasta, come in two styles, Meaty Marinara or Creamy Chicken Alfredo.
Each 3-pound order, which comes with five breadsticks and serves four, sells for $11.99.
"There is no restaurant-quality home-meal replacement pasta available today," said Scott Bergren, Pizza Hut's president and chief concept officer. "This is a first for our QSR business, and is a completely unmet need in the QSR category."
Initial indications are that pasta is a hit for Pizza Hut. The company said it sold 2 million pans of Tuscani Pasta during the first month, making it one of the most successful product launches in Yum's 50-year history.
Pizza Hut's pasta offerings are one component of a strategy to move beyond simply selling pizza to offering "home meal replacement." Another component is WingStreet, the chicken-wing chain cobranded with more than 1,100 Pizza Hut locations.
While Pizza Hut is experiencing tremendous growth overseas, the company clearly needs a boost in its U.S. business. Although comparable-store sales for Pizza Hut rose 2.8 percent in 2007, the number of Pizza Hut units operating in the U.S. fell slightly to 7,515 from 7,532 the year before.
While Yum! doesn't break out financial information by brand, the company, which also includes the Taco Bell, KFC, A&W and Long John Silver's concepts, recorded a 5-percent decline in operating profit in the 2008 first quarter ended March 22, compared with the previous year.
Brian Niccol, Pizza Hut's chief marketing officer, told USA Today that Tuscani Pasta could comprise 15 percent of Pizza Hut's business within a year, without cutting into pizza sales.
April Fools
Pizza Hut launched Tuscani Pasta with an advertising campaign that had many people scratching their heads. Although the "Pasta Hut" rebranding announcement came on April 1, many customers, and some media outlets, bought into the ruse.
The company also took over the New York restaurant Provence one evening in February to film a "hidden camera" commercial. According to Advertising Age magazine, 50 guests were recruited from the surrounding neighborhoods for an invitation-only event, where they were served their choice of Tuscani Pasta dishes.
Only the wait staff was in on the secret and the guests' positive reactions to the dishes were real, the magazine said.
According to surveys by PR Week magazine, the campaign was extremely effective. Indicators measuring consumer brand awareness for Pizza Hut shot up in the days following the pasta rollout.
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Whether pasta will last is another question, and ome experts disagree about whether the company can make a go of pasta delivery for the long term. Pasta doesn't reheat as well as pizza, and if not prepared correctly, can end up turning off customers.
"The sustainability of pasta in fast food delivery is questionable for several reasons," said Cindy Rakowitz, a hospitality expert and co-founder of Encino, Calif.-based Blackman Rakowitz Public Relations. "If it is prepared for the masses, it can get soggy very quickly."
Neither of the other two top pizza delivery chains have plans to get into the pasta delivery business, spokesman for those companies said.
"Our plan is to stay focused on delivering a superior-quality pizza," said Chris Sternberg, spokesman for Louisville, Ky.-based Papa John's, the country's third-largest pizza chain. "Our menu innovation revolves around limited time offering pizzas that combine ingredients our customers want, and most recently, we are proud to be the first national pizza chain to offer a whole-wheat pizza crust."
But that's not to say that other companies won't take a stab at pasta delivery if it proves to be a long-term hit for Pizza Hut.
"Obviously, we're paying attention to what they're doing, just as they pay attention to what we're doing," said Tim McIntyre, spokesman for Ann Arbor, Mich.-based Domino's.
"We don't make it a point to talk about what we're considering, what we're testing or what we plan to launch before we launch it. That being said, pasta has not had any serious consideration here in recent years," McIntyre said. "Could it have a place in our future? Time will tell. Right now, we're focusing on perfecting pizza delivery."

Topics: Delivery , Domino's Pizza , Marketing , Operations Management , Papa John's , Pizza Hut

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