Why the Public Lost Its Appetite for Pizza Hut
At one time, the popular pizza chain was the favorite for parents and children to indulge in its unlimited dining experience, unlimited salad bar, and self-serve ice-cream.
Yet fewer diners are visiting the brand these days, and it is shutting down 50% of its UK restaurants after being rescued from insolvency for the second instance this calendar year.
I remember going Pizza Hut when I was a child,” notes Prudence. “It was a tradition, you'd go on a Sunday – make a day of it.” But now, aged 24, she states “it's fallen out of favor.”
For a diner in her twenties, certain features Pizza Hut has been famous for since it launched in the UK in the 1970s are now outdated.
“The manner in which they do their all-you-can-eat and their salad bar, it appears that they are cheapening on their quality and have lower standards... They're giving away so much food and you're like ‘How?’”
As ingredient expenses have soared, Pizza Hut's all-you-can-eat model has become very expensive to run. The same goes for its locations, which are being reduced from over 130 to 64.
The business, like many others, has also experienced its operating costs rise. Earlier this year, labor expenses rose due to increases in the legal wage floor and an higher rate of employer social security payments.
Chris, 36, and Joanne, 29 explain they used to go at Pizza Hut for a date “from time to time”, but now they choose Domino's and think Pizza Hut is “not good value”.
Depending on your order, Pizza Hut and Domino's rates are close, explains a food expert.
Although Pizza Hut provides pickup and delivery through delivery platforms, it is missing out to larger chains which solely cater to the delivery sector.
“The rival chain has taken over the takeaway pizza sector thanks to intensive advertising and constantly running deals that make consumers feel like they're saving money, when in reality the base costs are on the higher side,” explains the expert.
However for the couple it is justified to get their date night sent directly.
“We predominantly have meals at home now rather than we eat out,” comments Joanne, reflecting recent statistics that show a decrease in people frequenting casual and fast-food restaurants.
In the warmer season, casual and fast-food restaurants saw a six percent decline in customers compared to the previous year.
Additionally, a further alternative to ordered-in pies: the supermarket pizza.
An industry leader, head of leisure and hospitality at a major consultancy, notes that not only have supermarkets been offering premium prepared pies for years – some are even selling countertop ovens.
“Shifts in habits are also playing a factor in the popularity of quick-service brands,” says the analyst.
The rising popularity of low-carb regimens has driven sales at chicken shops, while reducing sales of carb-heavy pizza, he notes.
Since people dine out less frequently, they may look for a more premium experience, and Pizza Hut's American-diner style with booth seating and red and white checked plastic table cloths can feel more retro than luxurious.
The growth of high-quality pizzerias” over the last several years, for example boutique chains, has “completely altered the general opinion of what quality pizza is,” explains the food expert.
“A thin, flavorful, gentle crust with a carefully curated additions, not the massively greasy, heavy and overloaded pizzas of the past. That, arguably, is what's led to Pizza Hut's struggles,” she says.
“Who would choose to spend nearly eighteen pounds on a tiny, mediocre, unsatisfying pizza from a franchise when you can get a gorgeous, skillfully prepared classic pizza for less than ten pounds at one of the many real Italian restaurants around the country?
“The decision is simple.”
An independent operator, who owns a pizza van based in a county in England says: “The issue isn’t that fallen out of love with pizza – they just want higher quality at a fair price.”
He says his mobile setup can offer high-quality pie at reasonable rates, and that Pizza Hut had difficulty because it failed to adapt with new customer habits.
From the perspective of Pizzarova in a city in southwest England, the founder says the pizza market is broadening but Pizza Hut has neglected to introduce anything new.
“You now have individual slices, regional varieties, new haven, fermented dough, traditional Italian, deep-dish – it's a heavenly minefield for a pizza enthusiast to discover.”
The owner says Pizza Hut “should transform” as the youth don't have any fond memories or allegiance to the company.
Gradually, Pizza Hut's customer base has been sliced up and spread to its fresher, faster rivals. To sustain its costly operations, it would have to increase costs – which industry analysts say is tough at a time when family finances are decreasing.
A senior executive of Pizza Hut's overseas branches said the rescue aimed “to safeguard our dining experience and save employment where possible”.
He said its key goal was to continue operating at the open outlets and off-premise points and to support colleagues through the transition.
But with significant funds going into maintaining its outlets, it likely can't afford to spend heavily in its off-premise division because the market is “complex and working with existing third-party platforms comes at a cost”, analysts say.
Still, experts suggest, reducing expenses by leaving crowded locations could be a effective strategy to adjust.