News

Pizza Hut sales soften in U.S., but grow overseas

July 18, 2005

LOUISVILLE, Ky. — David Novak, chief executive officer of Yum! Brands, parent of Pizza Hut, reported in a July 14 analyst conference call that sales at Pizza Hut corporate units are slowing some in the United States, but revving up in international locations.

Pizza Hut posted a 2 percent same-store sales gain at its 1,760 corporate units for the second quarter of 2005, its eighth straight quarter of positive comps. The growth comes on top of 5 percent comp-sales growth for the same period in 2004. (The company does not report comps for its franchised units.)

"However, we were disappointed with Pizza Hut's same-store sales decline of 2 percent in period 7 (four weeks spread between June and July), even though it lapped a strong 6 percent last year," Novak said. "We expect roughly similar performance for the rest of the third quarter at Pizza Hut, as we lap solid performance of plus-5 percent."

Novak called the downturn "a short-term bump in the road" and said he's confident the Pizza Hut team will turn things around quickly.

"We've always acknowledged that the pizza category is our most competitive, and frankly, our competitors are doing a better job this quarter," he said. "Nevertheless, we expect to win more than we lose in this competitive category, and we look for momentum to improve at Pizza Hut with more marketing excitement coming up in the fourth quarter."

Novak said he's very encouraged by Pizza Hut's progress in China, where it has 180 casual dining locations. The company is growing at a 20 percent rate annually, and "sales growth is running solidly north year to date."

The chain has 18 delivery locations in China, and Novak said the growth of that arm of the business is steady. "More of these will open later this year as we will be entering new cities with Pizza Hut Home Service Units."

The growth pedal is to the floor in India, he added, saying the company has more than 100 Pizza Huts open there and that "We expect to have about 125 Pizza Huts in 30 cities by year end."