Pizza Hut changes tack

In a bid to capitalise on the growing trend of eating out, Pizza Hut, the flagship brand of US-based Yum! Restaurants, has switched to an affordable casual dining model from a quick-service format. In the process, its popular pizza express delivery, part of the quick-service format, has been hived off into a separate unit.

Called Pizza Hut Delivery (PHD), the unit has some 40 stores at the moment. The gameplan, according to officials at Yum!, is to increase the number of stores rapidly under PHD. The quick-service restaurants, which number 120 at the moment, will also be increased over time.

The need for scale, say company officials, is imperative, since rivals in the space are far larger. Domino's Pizza, operated by Delhi-based Jubilant FoodWorks, for instance, has some 339 stores at the moment. Jubilant is looking to add another 36 stores by the end of the current fiscal to take its overall tally to 375.

Yum! is also bracing up for the challenge. Its India managing director, Niren Chaudhary announced last week that the firm, which has three brands - Pizza Hut, KFC and Taco Bell in the country, would be investing close to Rs 450 crore to treble the number of stores in the next five years. At the moment, the company has a total of 250 stores under Pizza Hut and KFC in India. Taco Bell, its Mexican-inspired fast food joint, which was launched recently, has just one company-owned outlet in Bangalore.

Of the 120 Pizza Hut stores, says marketing director Anup Jain, close to half have moved to the affordable casual dining model. The balance are slated to migrate in the next few months, he says.

The transition, he explains, is being spearheaded by eight regional franchisees including bottling king Ravi Jaipuria’s Devyani International in the north and east, and the DodSal Group in the south and west. “The Pizza Hut model is a completely franchisee-based model,”he says. “KFC, on the other hand, is largely company-owned,”he adds.

The switch in format involves a change in decor, menu and overall presentation, he says. The menu, for instance, is being expanded to include pastas, soups and salads. “We will introduce main course meals such as rice and grills in the near term,” he says.

All of this is aimed at getting a larger share of wallet of the consumer.

According to a retail report prepared by consultancies Technopak and Cushman & Wakefield, eating out as a segment will touch Rs 37,000 crore by 2015 from the current Rs 24,000 crore. The growth therefore is almost 54 per cent, the report says.

Organised retail, the report adds, will mirror this explosion in eating out.