While rival Domino’s has managed to pull off a major comeback, Pizza Hut has been struggling for years to turn around slumping sales. In an effort to keep up with the competition, it seems the company figures it might as well throw a bunch of money at the problem.
Yum Brands Inc. CEO Greg Creed announced a $130 million investment the company is making as part of an agreement with its franchisees “to accelerate a bold transformation of the Pizza Hut U.S. business.”
That money will go toward upgrading equipment, improving restaurant technology and operations, and ramping up advertising in 2018, Creed said on an earnings call today.
Creed said the company is hoping to take what it learned from its successful turnaround efforts at KFC and apply those lessons to Pizza Hut. To that end, he noted that while Pizza Hut’s U.S. stores saw a 7% decline in last quarter, its corporate siblings both reported increases: KFC’s same-store sales rose by 2%, while Taco Bell’s same-store sales went up 8%.
This new agreement with franchisees is a “win-win,” Creed says, and one that includes an “aggressive investment” in the brand’s “digital delivery-centric strategy, and in short, will make it easier for our customers to get a better pizza,” Creed said, echoing comments he made in 2015 emphasizing the need for a convenient ordering experience.
President and CFO David Gibbs says that while this $130 million is a relatively modest investment in the scheme of Yum!, “it is obviously quite significant to Pizza Hut U.S. and we are confident it will unlock significant value in years to come.”