Market Overview

How KFC Could Save Sister Brand Pizza Hut

How KFC Could Save Sister Brand Pizza Hut

The colonel's coming to the rescue. 

Under the leadership of CEO David Gibbs, restaurant operator Yum! Brands, Inc. (NYSE: YUM) will tap its KFC brand to help rejuvenate the struggling Pizza Hut chain.

Yum's Pizza Hut Strategy 

Yum's recent fourth-quarter earnings report showed that same-store sales at Pizza Hut deteriorated from negative 3% in the prior quarter to negative 4%.

Part of the problem the pizza chain faces is a lack of consistent menu innovation and sending mixed messages about its brand.

Consumer research and industry strategist Gary Stibel told Nation's Restaurant News Pizza Hut has shown some improvements and changes to the menu, but it's "average, at best."

In contrast, Pizza Hut's sister chain KFC has seen benefits from its "re-colonelization" marketing strategy, he said. 

KFC is lending a helping hand to Pizza Hut, as the chicken chain's president of the U.S. division Kevin Hochman will serve as interim president of Pizza Hut.

Hochman is bringing reinforcements to the pizza chain, including KFC Global former director of marketing Geroge Felix, who will take charge on public relations and marketing.

KFC's 'Dramatic Turnaround'

Felix is a recognized marketing expert and played an important role in KFC's turnaround through a series of playful ad campaigns highlighting the iconic Colonel Sanders.

"Thanks to daring and totally unexpected ideas centered largely around bringing founder Colonel Sanders into the heart of pop-culture, the once-flailing brand has seen a dramatic turnaround," AdAge wrote.

What's Next For Pizza Hut 

Stibel told NRN that Pizza Hut's first objective will likely focus on sending a clear message to consumers, unlike a prior "OG" campaign that ran counter to the pizza chain's goal of transitioning away from its legacy full-service dine-in restaurant.

"We know the formula for success," Gibbs said. "In markets where we deliver a great customer experience with the best tasting pizza, unbeatable value, distinctive food innovation, a best-in-class digital experience and modern assets, we grow sales consistently."

Yum shares were up 1.29% at $105.37 at the time of publication Wednesday.

Related Links:

The M&A History Of Yum Brands

Goldman On Restaurants: Buy Texas Roadhouse, Sell Yum, Hold Starbucks

Photo courtesy of Pizza Hut.


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