Pizza Hut franchisee admits challenges for the brand

Nov. 8, 2013

NPC International Inc., the world's largest Pizza Hut franchisee, reported a comp store sales decrease of 3.6 percent during the third quarter. This is compared to positive 1.3 percent in the same period a year ago.

On the year so far, the company's comp store sales are down 3.2 percent, rolling over a positive 3.9 percent last year.

"The third quarter remained challenging for the Pizza Hut brand, as demonstrated by our overall soft top line performance," said President and CEO Jim Schwartz. "The brand promoted significant value this quarter through our carryout channel generating growth in this occasion's sales. However, these gains were more than offset by sales declines in our delivery and dine-in channels where our value message was simply not adequate to activate the consumer."

Still, the company reported improved labor margins from initiatives put into place in the beginning of the year. Also during the quarter, NPC opened 13 Delco Lite units for a total of 34 year to date. Schwartz said the smaller footprint locations have shown encouraging results and help bring the brand to underpenetrated areas.

Schwartz said the franchisee is working closely with Pizza Hut to get back on a growth track.

"We are encouraged by the early work of the new advertising agency on behalf of the brand and believe that their messaging and creativity will play a significant role in regaining our momentum. The path forward will remain focused on delivering attractive core value to the consumer while leveraging our penchant for product innovation and our leadership position in the category," he said.

Read more about operations management.

Topics: Franchising & Growth , Marketing / Branding / Promotion , Operations Management , Pizza Hut

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