New product rollouts shine positively on Pizza Inn

 
June 8, 2004

Pizza Inn is hoping a combination of new products and cost-cutting measures will help reinvigorate profits and growth at the struggling 400-unit company, headquartered in The Colony, Texas.

In early May, the company cut some 20 members from its corporate staff and earmarked the estimated $1 million savings for franchisee benefits.

Most significant, however, was the chain's late May roll-out of a new 4 Pack Sampler pizza, essentially a four-mini-pizza offering analogous to Pizza Hut's hugely successful 4forALL. A take-and-bake pizza is in test markets as well, and the company has plans for additional new products.

That's all good news to Pizza Inn stockholders, who see the activity as signs the company's board battles are behind it and that it's focused on growing sales and unit numbers.

"Whether the new pizza is going to be successful or not, I don't know, but it's great that the company is coming up with new things," said stockholder Sterling May, a broker for May/Southwest Securities, Inc. in Dallas. "I think the consumer wants to see variety, change and innovation."

According to Danny Meisenheimer, vice president of marketing at Pizza Inn, variety made the 4 Pack Sampler

a hit in the chain's Missouri and North Carolina test markets. The $12.99 offering features three savory pizzas and one sweet one, called the Dessert Stromboli. Customers get their choice of two crusts (pan or thin) and three toppings per pizza. Unlike Pizza Hut's square 4forALL product, the Sampler's pizzas are 8-inch rounds.

The finished product requires a 16-inch box (1 inch larger than Pizza Inn's "large" 15-incher) that with a cardboard cross placed in the middle to keep the pizzas separate. Boxes are assembled in the stores.

Meisenheimer said operators participating in last year's tests faced some executional hurdles, such as the labor required to make four pizzas in place of one. But with good communcation through regular conference calls, they fixed the problems.

"Our franchisees have been extremely useful in helping work out these issues," he said. "From an operational standpoint, this promotion is doable and we're executing it extremely well."

Since the Sampler is an optional menu addition, not all the chain's 320 U.S. units are selling it.

"Right now, we've got about 50-percent participation," Meisenheimer said. "It's clear a lot of operators want to watch and see how this goes before they do it."

The Sampler is not on the menu in any of the chain's 80-plus international units

Four-runner?

While Meisenheimer expects some will view Pizza Inn's Sampler as a coincidentally close cousin of the 4forALL, he said the item wasn't a "we too," knee-jerk reaction to Pizza Hut's January 4forALL rollout.

"We started the testing process last summer, and as you know, things like this don't just suddenly appear," he said. But is the 4 Pack Sampler a forerunner to the 4forALL? "Well, we won't lay claim to that."

According to May, the release of the nearly yearlong effort is—coincidentally or not—nicely timed on the heels of the 4forALL. In Texas in particular, where both companies are headquartered, May said customers commonly confuse Pizza Inn and Pizza Hut, and that Pizza Hut's well-funded ad campaigns tend to benefit Pizza Inn.

Will the success of Pizza Hut's four-square feast be the rising tide that floats both companies' ships? If history repeats itself, May thinks it could.

"People within the company have told me in times past that customers would walk in to a Pizza Inn and ask for whatever new thing Pizza Hut had just put out," May said. "So in some cases, Pizza Inn had better have what Pizza Hut was doing" or the customer left.


Topics: Marketing


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