Though it's still early, Pizza Hut appears to have a way to go before it can declare victory with its new menu. The good news here is the early part. The bad news is Pizza Hut's big changes don't seem to have been met with the same degree of customer interest as Taco Bell's breakfast was when it went on sale nationally a few months back.
In November, Pizza Hut, the world's largest pizza seller, made major updates to its offerings with a line of specialty pizzas and new sauces and ingredients. So far, that hasn't done a great deal for sales growth. Pizza Hut's total same-store sales were down 1% for the year, while in the U.S. where the menu was announced, they fell 3%, according to results reported Wednesday. For the fourth quarter, same-store sales were unchanged both worldwide and in the U.S. market. Because the new menu is only a month and a half of results, it isn't a disaster. It is, however, a disappointment that sales results weren't seeing a clearer impact.
Yum Brands (YUM), its owner, says Pizza Hut did have bright spots. CEO Greg Creed and company spokesman Jonathan Blum indicated the menu is helping with planned customer return visits and that segments of the millennials, a key group every restaurant wants to get in the door, are supporting the changes. However, items like balsamic drizzle and fresh spinach perhaps haven't yet resonated with the everyday pepperoni pizza buyer who might not be after fast-casual, artisan toppings from Pizza Hut.
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This is especially notable because of the readily available contrasts. One of those is the performance of competitors Domino's (DPZ) and Papa John's (PZZA), who are getting added revenue from the perceptions of "higher end" or "better" pizzas they have. That they're increasing sales suggests pizza buyers aren't against purchasing from a large chain, whether that's for an ordinary pizza or a specialty item of the craft style. Can Pizza Hut see the same in 2015 and beyond? It needs to.
As for the second comparison, that involves another Yum company -- Taco Bell, which is getting it right with customers. Breakfast, rolled out across the country last spring, was an immediate star. Here's what David Novak, the CEO before Creed, said in the second-quarter earnings press release in July: "At Taco Bell, we're very pleased with the initial results of our national breakfast launch and have a strong new product pipeline across all day-parts to drive a strong second half." Further upbeat comments about the "new growth platform" at Taco Bell arrived with the third-quarter report. That has continued.