Yum's Pizza Hut to Refresh Brand and Menu - Analyst Blog

Yum! Brands, Inc.'s (YUM) Pizza Hut is reportedly going for a massive makeover at a time when the U.S. fast-casual pizza industry is growing by leaps and bounds. Pizza Hut is seeking to turn around almost two years of disappointing comps in the country with its biggest-ever alteration, and meet the increasing demand for unique pizza flavors and customized pizza.

Pizza Hut will reportedly add 10 crust flavors, six  sauces, five toppings — such as Peruvian cherry peppers, salami and fresh spinach — and four flavor-pack drizzles including balsamic and barbecue sauces.

Apart from this, the crust flavorings will include salted pretzel, toasted cheddar and a curry variety. Also, crushed tomato, garlic parmesan and buffalo-flavored sauces will be available.

Pizza Hut will also introduce 11 pizza recipes like Old-Fashioned Meatbrawl, Sweet Sriracha Dynamite, Garden Party and Barbeque Bacon Cheeseburger, along with five lower-calorie Skinny Slice pizzas. Each of these pizzas will contain only 250 calories per piece. These new menu items will be available from Nov 19.

The pizza chain will also reportedly give its logo a facelift, and revamp employee uniforms and packaging. In addition, the company is modernizing its online ordering sites and launching a Spanish-language version since more than 40% of its orders come from the digital platform.

We believe the latest overhaul by Pizza Hut will turn around its fortunes and result in comps growth over the long run.  

In fact, revamping the brand is not a new phenomenon in the pizza industry. Pizza franchises often innovate traditional pizza concepts in keeping with the current trends in the food industry. Back in 2009, Domino's Pizza, Inc. (DPZ) successfully overhauled its pizza recipe, which boosted sales and re-established the brand.

Other pizza companies are also catering to the more health-conscious market and trying to match the growing popularity of fast-casual pizza chains which offer more customized pizzas. In fact, both Domino's and Papa John's International Inc.'s (PZZA) have introduced pizzas catering to health-conscious consumers. Additionally, these chains are extensively using technology, like mobile and online ordering, to target tech-savvy consumers.

Yum! Brands currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is BJ's Restaurants, Inc. (BJRI), which sports a Zacks Rank #1 (Strong Buy).

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