Pizza Hut wants a larger pie

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The most recent offering by Pizza Hut is an extended menu of 15 localised pizzas derived from regional tastes like Sev puri, Chettinadu paneer, Chicken achari, Nimbu mirchi, to name a few. The new offerings, marketed heavily through a 360 degree campaign celebrates the Kansas based chain’s 15 year anniversary in India. It also reflects the brand’s aggression in a market where several new brands have entered the fray.

Many global pizza chains have been eyeing this space with interest. While Dominos, with its 400-plus stores continues to be the largest, in terms of spread, many others like Smokin’ Joes, California Pizza Kitchen, Papa John’s Pizza are slowly increasing their reach. UK-based Pizza Express, which had an unsuccessful innings in its previous alliance with the VK Modi Group, is believed to be re-entering the country with a joint venture with the Bharti family. And then, there is a challenge from other food service chains like Subway, Kentucky Fried Chicken and other which are no less ambitious.

The new found aggression by global food service majors is not surprising. According to a report by Maple Capital Advisors, the middle class which is the largest patron of the food service industry is expected to grow by 67 per cent by 2015, thereby increasing the ‘dining out’ consumer base. The growth of malls and multiplexes has popularised kiosks and food courts as food centres. Flavour innovations used to create variety are an obvious way for players to create excitement in the category, but this needs to be done with care. “People eat pizzas because they want to enjoy the authentic taste,” says Harneet Singh Rajpal, vice president (marketing), Domino’s Pizza India, recalling Domino’s previous experience with regional flavour variations. “We experimented with flavours like Chettinad Chicken in the past, but realised regional flavours did well initially due to the novelty factor, but could not sustain themselves in the long run.” Hence, Domino’s answer to innovations are the cheese burst pizza or the three cheese pizza (made only for India) which are exotic but retain the international influence.

However, Pizza Hut wants to focus on more than just pizzas. It has offerings like pasta, appetisers and a larger collection of beverages. This is part of its strategy to make the transition from a quick service restaurant (QSR) to a casual dining restaurant. “We realised that if you are in the restaurant space, there are certain expectations consumers have,” says Sunay Bhasin, head (marketing), Pizza Hut. And the introduction of wine and beer in roughly ten stores some months ago, is part of the strategy. This is a model which has worked well in emerging markets where the focus for Pizza Hut has been on casual dining rather than QSR. This is unlike its arch rival Domino’s whose core strength has been home delivery.  

In terms of reach, Pizza Hut is targeting a store count of 250 (existing 131) by 2015. “There is still a huge opportunity in the metros and tier 1 towns where we are already present,” says Bhasin. Globally Pizza Hut operates several formats like Pizza Hut Italian bistro (upscale concept) and store-front delivery, but in India, the focus will be to grow the casual dining business. Bhasin says same store sales have grown in double digits in the last one year. As Pizza Hut expands, a key part of its strategy will be to maintain the in-store dining experience.

However, while expansion plans feature on the wish list of all chains, there are several hindrances to growth. “The biggest challenge is the supply of adequate manpower to run our stores,” says Rajpal of Domino’s. Add to that the challenge of a solid supply chain system, inflating real estate costs, and limited number of vendors supplying to the food service industry.

Another driver to increase the consumption base is affordability. Pizza Hut, for instance introduced less than Rs 100 offerings across its menu, from appetisers, pizzas, pastas and desserts. A few months ago, the brand also introduced the ‘3-course meal for Rs 99’ to recruit more people into the brand. Domino’s too has been following a similar strategy to expand the market.

As players use different tricks for a larger piece of the pie, consumers will definitely be spoilt for choice.