A lot of people felt a certain sort of nostalgic pang when Pizza Hut announced they would close around 500 stores, starting in 2019. What happened to this iconic pizza chain, and do they have a chance of turning it around? This is the real reason Pizza Hut is disappearing across the country.
One of the biggest problems Pizza Hut faces isn't the pizza. It's the hut.
Pizza is as popular as ever, but dining habits are changing, with more and more people opting for take-out or delivery as opposed to dining out. That's especially true when it comes to pizza, which helps explain why, according to Restaurant Business, only about 10 percent of Pizza Hut's sales come from dine-in customers.
Still, prior to the initial round of store closings, more than half of Pizza Hut locations were still primarily dine-in ventures, meaning they were paying waitstaff who didn't have customers to wait on.
In 2018, Pizza Hut CFO David Gibbs addressed the problem on an earnings call, saying
"The challenge Pizza Hut faces is that it has a large dine-in business. The drag dine-in is having on reported same-store sales masks the relative health of delivery and carryout. […] Dine-in is waning in relevance."
There is some good news, though. When Pizza Hut announced their intention to close roughly 500 locations, Gibbs suggested that many of those were dine-in venues that would be replaced by new express locations better suited to serving the nation's current need for pizza on the go.
The Pizza Hut Express format is already out there, with quick-serve counters in locations like the Miami International Airport. Pizza Hut Singapore describes the Pizza Hut Express concept as
"...a fast service counter concept specially designed to serve the busy professionals, students and all who … are looking for a filling meal while on the move."
Dozens have already opened across the UK as well, and Big Hospitality says owner/operators report huge successes with them. Featuring a smaller menu than traditional Pizza Huts, including personal sized pizzas, these Express franchises fit in locations such as stadiums and service stations where a full-sized Pizza Hut wouldn't, and they're designed to be able to have an order out in between 90 and 120 seconds.
Hey, when it comes to envisioning the future of pizza, the company has had worse ideas.
Watch the video to learn the real reason Pizza Hut might not be around much longer!
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