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PIZZA HUT

1958-1967
1967-1999
1999-PRESENT

Submitted by :Wasim Akram
GENERAL INFORMATION
• TYPE - PUBLIC
• FOUNDED - WICHITA, KANSAS (1958)
• LOCATION - DALLAS, TEXAS
• KEY PEOPLE - DAN AND FRANK CARNEY (FOUNDERS) DAVID C.
NOVAK (CEO)
• INDUSTRY - FOOD WHOLESALE

• PRODUCTS - PIZZA
• EMPLOYEES - 250,000 (APPROX.)
• WEBSITE - WWW.PIZZAHUT.COM
PIZZA HUT STORY
• 1958: THE LEGACY OF PIZZA HUT BEGAN, WHEN TWO COLLEGE-AGED
BROTHERS FROM WHICHITA, KANSAS, FRANK AND DAN CARNEY
OPENS FIRST PIZZA HUT RESTAURANT AFTER BORROWING $600
FROM THEIR MOTHER.
• 1959: PIZZA HUT IS INCORPORATED IN KANSAS AND THE FIRST
FRANCHISE UNIT OPENS IN TOPEKA, KANSAS.
• 1968: INTERNATIONAL MARKET ENTERED WITH OPENING OF PIZZA
HUT RESTAURANT IN CANADA.
• 1969: RED ROOF ADOPTED FOR RESTAURANTS.
• 1972: PIZZA HUT, INC. LISTED ON NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL PIZ.
• 1977: PIZZA HUT, INC. STOCKHOLDERS OVERWHELMINGLY APPROVE
MERGER WITH PEPSICO, INC. FOR AN UNDISCLOSED SUM.
• 1986:DELIVERY SERVICE, AS A NEW CONCEPT, IS
INITIATED

• 1996: PIZZA HUT COMES TO INDIA WITH A DINE IN
RESTAURANT BANGALORE THAT HAS SPECIAL
VEGETARIAN PIZZAS.
• 1997: PIZZA HUT OPENS A DINE-IN RESTAURANT IN DELHI.
• 2007: PIZZA HUT BROUGHT OUT OUR THICK N THIN PIZZA
AND BEGAN TO RE-FRANCHISE OUR DINE-IN
RESTAURANTS.
• 2009: PIZZA HUT OFFERING BAKED FILLINGS IN THE
CORNER OF THE PIZZA
OVERVIEW OF THE CASE
• BY 1986, PIZZA HUT’S LEADERSHIP OF THE OVERALL PIZZA MARKET
IS BEING CHALLENGED BY DOMINO’S, A DELIVERY-ONLY CHAIN.

• THE DELIVERY SEGMENT ACCOUNTS FOR ONLY 20% OF THE $12.7
BILLION PIZZA MARKET, BUT IT IS GROWING RAPIDLY.

• A CHANGE IN CONSUMER PREFERENCES HAS LED TO THE
INCREASED PURCHASES IN THE DELIVERY SEGMENT.

• AFTER YEARS OF RESISTING ENTRY INTO THE DELIVERY SEGMENT
FOR FEAR OF CANNIBALIZING ITS EXISTING EAT-IN
RESTAURANTS, PIZZA HUT HAS DECIDED IT IS NECESSARY TO MOVE
INTO THE DELIVERY SEGMENT.
STRENGTHS
• IT IS THE MARKET LEADER IN PROVIDING DIFFERENT VARIETIES OF
PIZZAS
• SPECIALIZES ONLY IN PIZZAS
• HAS FULL SERVICE RESTAURANT AS WELL AS DELIVERY SERVICES.

• STRONG FRANCHISEE NETWORK

WEAKNESS
• HIGH OVERHEAD COSTS DUE TO LARGE NUMBER OF RESTAURANTS.
• HIGH PRICE
• INTERNAL CONFLICTS AMONG FRANCHISEES
OPPORTUNITY
• EXPANSION THROUGH ONLINE ORDERING SYSTEM.
• INTRODUCTION OF MORE INNOVATIVE PIZZAS.
• VENTURING INTO SENIOR CITIZENS MARKET.

THREATS
• THE DIFFERENTIATION STRATEGY FOLLOWED BY ANY PIZZA CHAIN IS
SOONER OR LATER ADOPTED BY ALL PIZZA INDUSTRY PLAYERS.
• MAIN THREAT FROM COMPETITORS: DOMINOS
PORTERS 5-FORCE MODEL
EXISTING RIVALRY
• RIVALRY AMONG EXISTING PLAYERS

• AT PRESENT THERE ARE 3 MAJOR PLAYERS IN US PIZZA
MARKET MAINLY DOMINOS LITTLE CEASERS PIZZA HUT
AND THE DEGREE OF RIVALRY IS VERY HIGH

• THE REASON IS NUMBER OF COMPETITORS IS VERY
LARGE INDUSTRY GROWTH IS HIGH AND FIXED COST
INVOLVED IS HIGH
THREAT OF NEW ENTRANTS
SINCE INDUSTRY GROWTH IS HIGH IT ATTRACTS NEW
POTENTIAL FIRMS TO ENTER INTO THE MARKET.
HOWEVER, IF THE NEW ENTRANTS IS EXPERIENCED THEN
IT WILL BE ABLE TO COMPETE WITH THE EXISTING
PLAYERS ELSE THE ECONOMIES OF SCALE ENJOYED BY
THE EXISTING PLAYERS WILL FORCE THE NEW ENTRANTS
TO EXISTING MARKETS
THREATS OF SUBSTITUTE
THREATS FROM JUNK FOODS SUCH AS HOT
DOGS, SANDWICHES AND BURGERS.

THREATS OF BUYERS BARGAINING
POWER
FROM CUSTOMER OR BUYERS WHEN THERE ARE
NUMBER OF SUPPLIERS OF BUYERS CONCENTRATION
IS HIGH OR LARGE AVAILABILITY OF SUBSTITUTE
GOODS
THREATS OF SUPPLIERS BARGAINING
POWER

ALSO FROM SUPPLIERS WHEN THERE IS LARGE NUMBER
OF BUYERS FROM THESE SUPPLIERS, HIGH
CONCENTRATION OF SUPPLIERS, HIGH SWITCHING COSTS
AND NON AVAILABILITY OF RAW MATERIAL SUBSTITUTES
CONSUMER SEGMENTATION BY CHANNEL
Eat-In

Carryout

Delivery

Benefit

Atmosphere,
Quality

Time

Time factors

Price Sensitivity

Lowest

Modest

Highest

Demographic Profile

Non-families

Families, timestarved

Families,
convenience
COMPETITION FROM DOMINOS & LOCAL PLAYERS
Units

Average
Delivery
Check/Person($)

PIZZA HUT

System wide
Sales
($ millions)
1934

5025

9.99

Separate delivery units plus franchisee
add-on delivery out of restaurant

DOMINO'S

1550

3696

9.5

Delivery only

LITTLE
CAESAR
PIZZA INN

520

1308

2.75

No delivery

278.7

748

4.3

Separate delivery units

GODFATHER'S

275

650

9.75

Add-on delivery out of restaurant

ROUND TABLE
PIZZA
SHOWBIZ/CHU
CK E. CHEESE

250

535

5

Add-on delivery out of restaurant

249

268

5.2

No delivery

SHAKEY'S

197

386

4.25

Add-on delivery out of restaurant

Mr. GATTI'S

139.2

319

7.81

Add-on delivery out of restaurant
1979
System net sales ($MM) 732

1980
832

1981
1007

1982
1170

1983
1394

1984
1556

1985
1743

1986
1934

Market share
Units
Company
Franchise
Total

14.9

15.7

17

17.2

18

17.3

16

15.4

1940
1801
3741

1888
1873
3761

1843
1922
3765

1845
1975
3820

1911
2095
4006

2051
2157
4208

2224
2309
4533

2534
2491
5025

196

221

267

306

348

372
395
282

400
289

Company
PSA sales ($M)
(Traditional)
(Delivery)
PSA sales growth
Real
Price
Total
Net sales($MM)
Net sales growth (%)
Total revenues ($MM)
ROAE(%)
Franchisees:
PSA sales($M)

-3.1
6.4
3.3

4.7
8.1
12.8

11.8
9
20.8

8
6.6
14.6

9.8
3.9
13.7

1.8
5.1
6.9

2
3.4
5.4

-2
0.8
-1.2

354

399
12.7
556
6.1

476
19.3
489
8.9

556
16.8
569
16.4

678
21.9
699
21.7

766
13
795
16.9

835
9
867
15

929
11.3
967
12.4

237

280

314

350

386

400

415

495
3.5
REASONS WHY PIZZA HUT ADOPTED
“FRANCHISING” AS THE ENTRY STRATEGY
• BEST METHOD TO ESTABLISH OPERATIONS WITHOUT RISK OF
OPERATIONS IN AN UNFAMILIAR MARKET.

• FRANCHISING ROUTE HELPS IN LEARNING THE BUYER BEHAVIOUR
, CONSUMER BEHAVIOUR & MARKET REALITIES.

• IN COUNTRIES WHERE DIRECT FOREIGN INVESTMENT IS NOT
ALLOWED , FRANCHISING IS THE EASIEST ROUTE TO ENTER IN
THESE MARKETS.
ISSUES IN THE CASE - 1
SHOULD PIZZA HUT ENTER THE DELIVERY SEGMENT OF
THE PIZZA MARKET IN AN ATTEMPT TO COMBAT DOMINO’S
GROWING POPULARITY AND MARKET SHARE FROM THIS
SEGMENT?
• YES IT SHOULD ENTER BECAUSE THE PIZZA DELIVERY
MARKET IS AN ENTIRELY SEPARATE SEGMENT IN ITSELF.
MOREOVER PIZZA HUT WOULD HAVE COMPETITIVE
ADVANTAGE BECAUSE OF ITS BRAND NAME.
KEY CONSTRAINTS

• CANNIBALIZING
• CONVINCING THE FRANCHISEE
• SETTING UP THE INFRASTRUCTURE FOR DELIVERY
SYSTEM.

• COMPETITION FROM LOCAL PLAYERS.
• IT DID NOT CANNIBALIZE THE DINE IN RESTAURANT AS
BOTH HAVE ITS DIFFERENT MARKET SEGMENTS.
• PIZZA HUT WAS ABLE TO CONVINCE THEIR FRANCHISEES
AFTER SUCCESSFULLY PUTTING ACROSS THEIR POINT OF
HIGH MARKET POTENTIAL IN THE PIZZA DELIVERY
MARKET.
• THEY BUILT A VERY ROBUST AND SUSTAINABLE DELIVERY
MODEL.
• THEY GAINED COMPETITIVE ADVANTAGE BECAUSE OF
THE NEW CSC SYSTEM.
ISSUES IN THE CASE - 2
IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE
INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET,
WHAT OPERATIONAL APPROACH SHOULD THEY USE?

APPROACHES TO BE FOLLOWED
• ADOPTION OF CSC SYSTEM.
• ADEQUATE MAN POWER, DELIVERY VEHICLES AND
OTHER SUPPORTING INFRASTRUCTURES.
• PROPER TRAINING OF SALES AND DELIVERY FORCE.
• PROPER DEMARCATION AND PLANNING OF ZONES AND
DELIVERY ROUTES.
ISSUES IN THE CASE - 3
IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE
INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET, HOW
DO THEY CONVINCE THEIR EXTENSIVE FRANCHISE
SYSTEM TO PARTICIPATE WITH THEM?

• INCENTIVIZE THE FRANCHISEE.
• MAKE THE FRANCHISEE UNDERSTAND THE POTENTIAL OF
DINE AT HOME.
ISSUES IN THE CASE - 4
• IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE INTO THE
DELIVERY SEGMENT OF THE PIZZA MARKET, WHAT WILL BE THE
OVERALL EFFECTS ON THEIR EAT-IN RESTAURANT BUSINESS AND
THEIR FRANCHISE RELATIONSHIPS?

EFFECT ON EAT IN RESTAURANT
EFFECT ON THE FRANCHISES
IN THE BEGINNING THERE WAS RESISTANCE FOR THE
ADOPTION OF THE NEW DELIVERY AND CSC SYSTEM BUT
AFTER LEARNING THE ADVANTAGES OF THESE NEW
STRATEGIES AND THE GROWTH POTENTIAL THAT IT WOULD
BRING ALONG WITH IT, THEY ADOPTED THESE NEW
CHANGES.
RECOMMENDATION
• HIGH QUALITY PERSONNEL: TOTAL COOPERATION OF ITS
EMPLOYEE’S THEREBY INCREASING PRODUCTIVITY , BEATING
COMPETITION AND ENHANCING CUSTOMER SATISFACTION. FOR THIS
HIGH INCENTIVES SCHEMES MUST BE ESTABLISHED.
• FOCUS ATTENTION TO UNTAPPED SEGMENT OF SENIOR CITIZENS:
CAN ESTABLISH PIZZA HUT SENIOR CLUBS WHICH WILL ORGANISE
ACTIVITIES FOR OLDIES. INNOVATION AND LAUNCH SOME PRODUCT
FOR SENIOR CITIZENS.
• CONTINUOUS INNOVATION IN PRODUCTS
• INNOVATION THROUGH CONSUMER FEEDBACKS AND REVIEWS AND
WHAT CHANGES THEY WANT TO SEE.

• LOCATION: THE MOST CRITICAL SUCCESS FACTOR FOR ANY
HOSPITALITY BUSINESS IS “LOCATION”. PIZZA HUT DOES NOT AIM TO
BE A PREMIUM BRAND WITH SELECTIVE DISTRIBUTION, INSTEAD IT
Pizza hut final ppt

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Pizza hut final ppt

  • 2. GENERAL INFORMATION • TYPE - PUBLIC • FOUNDED - WICHITA, KANSAS (1958) • LOCATION - DALLAS, TEXAS • KEY PEOPLE - DAN AND FRANK CARNEY (FOUNDERS) DAVID C. NOVAK (CEO) • INDUSTRY - FOOD WHOLESALE • PRODUCTS - PIZZA • EMPLOYEES - 250,000 (APPROX.) • WEBSITE - WWW.PIZZAHUT.COM
  • 3. PIZZA HUT STORY • 1958: THE LEGACY OF PIZZA HUT BEGAN, WHEN TWO COLLEGE-AGED BROTHERS FROM WHICHITA, KANSAS, FRANK AND DAN CARNEY OPENS FIRST PIZZA HUT RESTAURANT AFTER BORROWING $600 FROM THEIR MOTHER. • 1959: PIZZA HUT IS INCORPORATED IN KANSAS AND THE FIRST FRANCHISE UNIT OPENS IN TOPEKA, KANSAS. • 1968: INTERNATIONAL MARKET ENTERED WITH OPENING OF PIZZA HUT RESTAURANT IN CANADA. • 1969: RED ROOF ADOPTED FOR RESTAURANTS. • 1972: PIZZA HUT, INC. LISTED ON NEW YORK STOCK EXCHANGE UNDER THE SYMBOL PIZ. • 1977: PIZZA HUT, INC. STOCKHOLDERS OVERWHELMINGLY APPROVE MERGER WITH PEPSICO, INC. FOR AN UNDISCLOSED SUM.
  • 4. • 1986:DELIVERY SERVICE, AS A NEW CONCEPT, IS INITIATED • 1996: PIZZA HUT COMES TO INDIA WITH A DINE IN RESTAURANT BANGALORE THAT HAS SPECIAL VEGETARIAN PIZZAS. • 1997: PIZZA HUT OPENS A DINE-IN RESTAURANT IN DELHI. • 2007: PIZZA HUT BROUGHT OUT OUR THICK N THIN PIZZA AND BEGAN TO RE-FRANCHISE OUR DINE-IN RESTAURANTS. • 2009: PIZZA HUT OFFERING BAKED FILLINGS IN THE CORNER OF THE PIZZA
  • 5. OVERVIEW OF THE CASE • BY 1986, PIZZA HUT’S LEADERSHIP OF THE OVERALL PIZZA MARKET IS BEING CHALLENGED BY DOMINO’S, A DELIVERY-ONLY CHAIN. • THE DELIVERY SEGMENT ACCOUNTS FOR ONLY 20% OF THE $12.7 BILLION PIZZA MARKET, BUT IT IS GROWING RAPIDLY. • A CHANGE IN CONSUMER PREFERENCES HAS LED TO THE INCREASED PURCHASES IN THE DELIVERY SEGMENT. • AFTER YEARS OF RESISTING ENTRY INTO THE DELIVERY SEGMENT FOR FEAR OF CANNIBALIZING ITS EXISTING EAT-IN RESTAURANTS, PIZZA HUT HAS DECIDED IT IS NECESSARY TO MOVE INTO THE DELIVERY SEGMENT.
  • 6. STRENGTHS • IT IS THE MARKET LEADER IN PROVIDING DIFFERENT VARIETIES OF PIZZAS • SPECIALIZES ONLY IN PIZZAS • HAS FULL SERVICE RESTAURANT AS WELL AS DELIVERY SERVICES. • STRONG FRANCHISEE NETWORK WEAKNESS • HIGH OVERHEAD COSTS DUE TO LARGE NUMBER OF RESTAURANTS. • HIGH PRICE • INTERNAL CONFLICTS AMONG FRANCHISEES
  • 7. OPPORTUNITY • EXPANSION THROUGH ONLINE ORDERING SYSTEM. • INTRODUCTION OF MORE INNOVATIVE PIZZAS. • VENTURING INTO SENIOR CITIZENS MARKET. THREATS • THE DIFFERENTIATION STRATEGY FOLLOWED BY ANY PIZZA CHAIN IS SOONER OR LATER ADOPTED BY ALL PIZZA INDUSTRY PLAYERS. • MAIN THREAT FROM COMPETITORS: DOMINOS
  • 9. EXISTING RIVALRY • RIVALRY AMONG EXISTING PLAYERS • AT PRESENT THERE ARE 3 MAJOR PLAYERS IN US PIZZA MARKET MAINLY DOMINOS LITTLE CEASERS PIZZA HUT AND THE DEGREE OF RIVALRY IS VERY HIGH • THE REASON IS NUMBER OF COMPETITORS IS VERY LARGE INDUSTRY GROWTH IS HIGH AND FIXED COST INVOLVED IS HIGH
  • 10. THREAT OF NEW ENTRANTS SINCE INDUSTRY GROWTH IS HIGH IT ATTRACTS NEW POTENTIAL FIRMS TO ENTER INTO THE MARKET. HOWEVER, IF THE NEW ENTRANTS IS EXPERIENCED THEN IT WILL BE ABLE TO COMPETE WITH THE EXISTING PLAYERS ELSE THE ECONOMIES OF SCALE ENJOYED BY THE EXISTING PLAYERS WILL FORCE THE NEW ENTRANTS TO EXISTING MARKETS
  • 11. THREATS OF SUBSTITUTE THREATS FROM JUNK FOODS SUCH AS HOT DOGS, SANDWICHES AND BURGERS. THREATS OF BUYERS BARGAINING POWER FROM CUSTOMER OR BUYERS WHEN THERE ARE NUMBER OF SUPPLIERS OF BUYERS CONCENTRATION IS HIGH OR LARGE AVAILABILITY OF SUBSTITUTE GOODS
  • 12. THREATS OF SUPPLIERS BARGAINING POWER ALSO FROM SUPPLIERS WHEN THERE IS LARGE NUMBER OF BUYERS FROM THESE SUPPLIERS, HIGH CONCENTRATION OF SUPPLIERS, HIGH SWITCHING COSTS AND NON AVAILABILITY OF RAW MATERIAL SUBSTITUTES
  • 13. CONSUMER SEGMENTATION BY CHANNEL Eat-In Carryout Delivery Benefit Atmosphere, Quality Time Time factors Price Sensitivity Lowest Modest Highest Demographic Profile Non-families Families, timestarved Families, convenience
  • 14. COMPETITION FROM DOMINOS & LOCAL PLAYERS Units Average Delivery Check/Person($) PIZZA HUT System wide Sales ($ millions) 1934 5025 9.99 Separate delivery units plus franchisee add-on delivery out of restaurant DOMINO'S 1550 3696 9.5 Delivery only LITTLE CAESAR PIZZA INN 520 1308 2.75 No delivery 278.7 748 4.3 Separate delivery units GODFATHER'S 275 650 9.75 Add-on delivery out of restaurant ROUND TABLE PIZZA SHOWBIZ/CHU CK E. CHEESE 250 535 5 Add-on delivery out of restaurant 249 268 5.2 No delivery SHAKEY'S 197 386 4.25 Add-on delivery out of restaurant Mr. GATTI'S 139.2 319 7.81 Add-on delivery out of restaurant
  • 15. 1979 System net sales ($MM) 732 1980 832 1981 1007 1982 1170 1983 1394 1984 1556 1985 1743 1986 1934 Market share Units Company Franchise Total 14.9 15.7 17 17.2 18 17.3 16 15.4 1940 1801 3741 1888 1873 3761 1843 1922 3765 1845 1975 3820 1911 2095 4006 2051 2157 4208 2224 2309 4533 2534 2491 5025 196 221 267 306 348 372 395 282 400 289 Company PSA sales ($M) (Traditional) (Delivery) PSA sales growth Real Price Total Net sales($MM) Net sales growth (%) Total revenues ($MM) ROAE(%) Franchisees: PSA sales($M) -3.1 6.4 3.3 4.7 8.1 12.8 11.8 9 20.8 8 6.6 14.6 9.8 3.9 13.7 1.8 5.1 6.9 2 3.4 5.4 -2 0.8 -1.2 354 399 12.7 556 6.1 476 19.3 489 8.9 556 16.8 569 16.4 678 21.9 699 21.7 766 13 795 16.9 835 9 867 15 929 11.3 967 12.4 237 280 314 350 386 400 415 495 3.5
  • 16. REASONS WHY PIZZA HUT ADOPTED “FRANCHISING” AS THE ENTRY STRATEGY • BEST METHOD TO ESTABLISH OPERATIONS WITHOUT RISK OF OPERATIONS IN AN UNFAMILIAR MARKET. • FRANCHISING ROUTE HELPS IN LEARNING THE BUYER BEHAVIOUR , CONSUMER BEHAVIOUR & MARKET REALITIES. • IN COUNTRIES WHERE DIRECT FOREIGN INVESTMENT IS NOT ALLOWED , FRANCHISING IS THE EASIEST ROUTE TO ENTER IN THESE MARKETS.
  • 17. ISSUES IN THE CASE - 1 SHOULD PIZZA HUT ENTER THE DELIVERY SEGMENT OF THE PIZZA MARKET IN AN ATTEMPT TO COMBAT DOMINO’S GROWING POPULARITY AND MARKET SHARE FROM THIS SEGMENT? • YES IT SHOULD ENTER BECAUSE THE PIZZA DELIVERY MARKET IS AN ENTIRELY SEPARATE SEGMENT IN ITSELF. MOREOVER PIZZA HUT WOULD HAVE COMPETITIVE ADVANTAGE BECAUSE OF ITS BRAND NAME.
  • 18. KEY CONSTRAINTS • CANNIBALIZING • CONVINCING THE FRANCHISEE • SETTING UP THE INFRASTRUCTURE FOR DELIVERY SYSTEM. • COMPETITION FROM LOCAL PLAYERS.
  • 19. • IT DID NOT CANNIBALIZE THE DINE IN RESTAURANT AS BOTH HAVE ITS DIFFERENT MARKET SEGMENTS. • PIZZA HUT WAS ABLE TO CONVINCE THEIR FRANCHISEES AFTER SUCCESSFULLY PUTTING ACROSS THEIR POINT OF HIGH MARKET POTENTIAL IN THE PIZZA DELIVERY MARKET. • THEY BUILT A VERY ROBUST AND SUSTAINABLE DELIVERY MODEL. • THEY GAINED COMPETITIVE ADVANTAGE BECAUSE OF THE NEW CSC SYSTEM.
  • 20. ISSUES IN THE CASE - 2 IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET, WHAT OPERATIONAL APPROACH SHOULD THEY USE? APPROACHES TO BE FOLLOWED • ADOPTION OF CSC SYSTEM. • ADEQUATE MAN POWER, DELIVERY VEHICLES AND OTHER SUPPORTING INFRASTRUCTURES. • PROPER TRAINING OF SALES AND DELIVERY FORCE. • PROPER DEMARCATION AND PLANNING OF ZONES AND DELIVERY ROUTES.
  • 21. ISSUES IN THE CASE - 3 IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET, HOW DO THEY CONVINCE THEIR EXTENSIVE FRANCHISE SYSTEM TO PARTICIPATE WITH THEM? • INCENTIVIZE THE FRANCHISEE. • MAKE THE FRANCHISEE UNDERSTAND THE POTENTIAL OF DINE AT HOME.
  • 22. ISSUES IN THE CASE - 4 • IF PIZZA HUT DOES PURSUE THE OPPORTUNITY TO MOVE INTO THE DELIVERY SEGMENT OF THE PIZZA MARKET, WHAT WILL BE THE OVERALL EFFECTS ON THEIR EAT-IN RESTAURANT BUSINESS AND THEIR FRANCHISE RELATIONSHIPS? EFFECT ON EAT IN RESTAURANT
  • 23. EFFECT ON THE FRANCHISES IN THE BEGINNING THERE WAS RESISTANCE FOR THE ADOPTION OF THE NEW DELIVERY AND CSC SYSTEM BUT AFTER LEARNING THE ADVANTAGES OF THESE NEW STRATEGIES AND THE GROWTH POTENTIAL THAT IT WOULD BRING ALONG WITH IT, THEY ADOPTED THESE NEW CHANGES.
  • 24. RECOMMENDATION • HIGH QUALITY PERSONNEL: TOTAL COOPERATION OF ITS EMPLOYEE’S THEREBY INCREASING PRODUCTIVITY , BEATING COMPETITION AND ENHANCING CUSTOMER SATISFACTION. FOR THIS HIGH INCENTIVES SCHEMES MUST BE ESTABLISHED. • FOCUS ATTENTION TO UNTAPPED SEGMENT OF SENIOR CITIZENS: CAN ESTABLISH PIZZA HUT SENIOR CLUBS WHICH WILL ORGANISE ACTIVITIES FOR OLDIES. INNOVATION AND LAUNCH SOME PRODUCT FOR SENIOR CITIZENS. • CONTINUOUS INNOVATION IN PRODUCTS • INNOVATION THROUGH CONSUMER FEEDBACKS AND REVIEWS AND WHAT CHANGES THEY WANT TO SEE. • LOCATION: THE MOST CRITICAL SUCCESS FACTOR FOR ANY HOSPITALITY BUSINESS IS “LOCATION”. PIZZA HUT DOES NOT AIM TO BE A PREMIUM BRAND WITH SELECTIVE DISTRIBUTION, INSTEAD IT