Pizza Hut Stuffs Competition With Cheesy Commercials, Crust

Earlier this year, Pizza Hut was in a rut. Sales had been weak for more than a year. The allure of Big Foot, the giant pizza introduced in 1993, was wearing thin. Franchisees were restless.

Enter the Stuffed Crust pizza.

Accompanied by a massive advertising blitz, the introduction of the unique pizza pie with melted mozzarella in the crust has given a jolt to Pizza Hut’s sales and profits. When parent company PepsiCo Inc. released second-quarter earnings last week, sales at Pizza Hut restaurants open at least 12 months were up 14 percent, and the chain’s operating profit was up 68 percent from a year ago.

“Stuffed Crust pizza has had a dramatic impact on this company,” said analyst Emanuel Goldman, who follows PepsiCo for PaineWebber. “It has brought people back to Pizza Hut.”

How long the surge from Stuffed Crust will last is anybody’s guess. Rivals suspect the product is generating a lot of first-time users but not as much repeat business, a point Pizza Hut officials deny vehemently.

But whatever the future of the new product, it represents a major victory for 51-year-old chief executive Allan Huston and his executive team. Faced with weak sales and restive franchisees, Pizza Hut management knew it had to do something.

“There was tremendous grumbling,” says Wayne Jones, executive director of the chain’s franchisee association. “We felt (the company) wasn’t focusing enough on product quality, customer service and new product development.”

That is no longer the case. In the past 18 months, for instance, the company has installed a consumer hotline that enables customers to call the company to register comments and complaints. The hotline generates 7,000 calls a week and is a great motivator for restaurant managers to improve service - half their bonus pay is tied to customer-satisfaction levels.

The company also started rolling out new menu offerings, including Stuffed Crust pizza. Introduced at the end of March, the product already accounts for 25 percent of all Pizza Hut sales. In tandem with the development of Stuffed Crust pizza, the company also revamped its food-preparation systems, improving food quality and consistency.

The company is also focusing on increasing its dine-in business. Although dine-in accounts for just 27 percent of sales, Huston has no intention of abandoning the dine-in customer.

“We believe dine-in business is very important,” says Huston, who has headed Pizza Hut since June 1992. “It’s a major part of our heritage.”

In an effort to boost dine-in traffic, Pizza Hut is adding a variety of new sandwiches and pasta dishes to the menu, such as a four-cheese baked pasta, chicken-vegetable alfredo and lasagna. The company is also experimenting with cobranding by having Pizza Hut units sell sandwiches under the D’Angelo Sandwich Shops brand name, a New England chain acquired in 1993.

The outside of the restaurants is getting attention, too. A focus panel of mothers in Kansas City, Mo., told Pizza Hut its traditional darkly hued, pizzeria-style decor with the red-and-white tablecloths was out of date. So a major remodeling program, featuring brighter wood trim, window shutters, plants and books, was launched.

All 5,500 company-owned restaurants will be remodeled by the end of 1996, but that won’t be all. The company is working on a restaurant design that could be a radical departure from the traditional redroofed Pizza Hut. The new design will determine the look of all new Pizza Huts and may be retrofitted to existing units, company spokesman Robert A. Doughty said.

“We need to make sure our concept is contemporary,” he said. “Consumer tastes change frequently.”

The success of Stuffed Crust, in particular, has raised hopes that Pizza Hut is once more moving forward.

“What they’ve done with Stuffed Crust pizza is probably just the beginning in terms of new ideas,” Goldman says. “You’ll see a lot more in the future.”