Why the Country Lost Interest in Its Craving for the Pizza Hut Chain
At one time, the popular pizza chain was the go-to for parents and children to indulge in its eat-as-much-as-you-like offering, unlimited salad bar, and ice cream with toppings.
Yet a declining number of customers are choosing the chain these days, and it is closing 50% of its UK locations after being rescued from insolvency for the second occasion this year.
It was common to visit Pizza Hut when I was a child,” explains Prudence. “It was a regular outing, you'd go on a Sunday – make a day of it.” Today, in her mid-twenties, she comments “it's no longer popular.”
For 23-year-old Martina, some of the very things Pizza Hut has been known and loved for since it opened in the UK in the mid-20th century are now outdated.
“How they do their all-you-can-eat and their salad station, it feels like they are cutting corners and have inferior offerings... They provide so much food and you're like ‘How can they?’”
Because ingredient expenses have increased significantly, Pizza Hut's unlimited dining format has become quite costly to run. As have its restaurants, which are being cut from over 130 to a smaller figure.
The chain, in common with competitors, has also experienced its operating costs rise. In April this year, employee wages rose due to increases in the legal wage floor and an increase in employer social security payments.
A couple in their thirties and twenties mention they used to go at Pizza Hut for a date “occasionally”, but now they choose a rival chain and think Pizza Hut is “not good value”.
Depending on your selection, Pizza Hut and Domino's costs are close, says a food expert.
Although Pizza Hut does offer pickup and delivery through external services, it is falling behind to big rivals which solely cater to off-premise dining.
“The rival chain has taken over the delivery market thanks to aggressive marketing and frequent offers that make customers feel like they're getting a bargain, when in reality the standard rates are relatively expensive,” notes the expert.
Yet for the couple it is justified to get their special meal delivered to their door.
“We definitely eat at home now instead of we eat out,” explains Joanne, echoing current figures that show a drop in people frequenting informal dining spots.
Over the summer, casual and fast-food restaurants saw a 6% drop in diners compared to the year before.
Moreover, one more competitor to restaurant and takeaway pizzas: the cook-at-home oven pizza.
An industry leader, head of leisure and hospitality at an advisory group, points out that not only have retailers been providing high-quality oven-ready pizzas for years – some are even promoting countertop ovens.
“Lifestyle changes are also having an impact in the success of quick-service brands,” says the analyst.
The growing trend of protein-rich eating plans has increased sales at chicken shops, while affecting sales of dough-based meals, he notes.
Since people dine out less frequently, they may prefer a more upscale outing, and Pizza Hut's retro theme with comfortable booths and nostalgic table settings can feel more dated than upmarket.
The rise of premium pizza outlets” over the last several years, including boutique chains, has “completely altered the public's perception of what good pizza is,” says the industry commentator.
“A light, fresh, easy-to-digest product with a few choice toppings, not the overly oily, dense and piled-high pizzas of the past. That, arguably, is what's led to Pizza Hut's struggles,” she says.
“Why would anyone spend £17.99 on a small, substandard, disappointing pizza from a franchise when you can get a beautiful, masterfully-made traditional pie for under a tenner at one of the many real Italian restaurants around the country?
“The decision is simple.”
A mobile pizza vendor, who owns a small business based in a regional area comments: “People haven’t stopped liking pizza – they just want higher quality at a fair price.”
He says his mobile setup can offer premium pizza at reasonable rates, and that Pizza Hut had difficulty because it could not keep up with new customer habits.
From the perspective of a small pizza brand in Bristol, the proprietor says the industry is diversifying but Pizza Hut has failed to offer anything fresh.
“You now have individual slices, regional varieties, New Haven-style, sourdough, traditional Italian, Detroit – it's a wonderful array for a pizza enthusiast to explore.”
The owner says Pizza Hut “must rebrand” as younger people don't have any emotional connection or attachment to the company.
In recent years, Pizza Hut's share has been divided and spread to its more modern, agile competitors. To maintain its high labor and location costs, it would have to charge more – which experts say is tough at a time when personal spending are decreasing.
The managing director of Pizza Hut's international markets said the rescue aimed “to ensure our customer service and retain staff where possible”.
The executive stated its immediate priority was to keep running at the surviving locations and off-premise points and to support colleagues through the restructure.
However with so much money going into maintaining its outlets, it probably cannot to allocate significant resources in its takeaway operation because the market is “complex and using existing delivery apps comes at a cost”, commentators say.
However, it's noted, lowering overhead by leaving crowded locations could be a smart move to adapt.