Pizza Hut cuts prices again to counteract slow recovery
Published 5:00 am Friday, August 20, 2010
- With the economic recovery moving at a snail's pace, Pizza Hut is adding an 18-slice pizza and setting a single price for all small, medium and large pizzas.
Months after stirring up the pizza category with promotional price cuts, Pizza Hut is putting its products on sale.
Pizza Hut, part of Yum Brands, plans to introduce a campaign Sunday for new everyday low prices on its mainstay menu items. Most medium pizzas will cost $8, most large pizzas will be priced at $10 and most so-called specialty pizzas — like the new behemoth Big Italy pie, which has 18 slices — will cost $12 each.
“Every pizza price slashed,” signs for the menu deals promise, with the word “slashed,” well, slashed almost in half, as if Pizza Hut were advertising the latest installment of “A Nightmare on Elm Street.”
The campaign comes after Pizza Hut introduced in early February what it called its “$10 any” promotion — any pizza, any size, any crust, any toppings, for $10 each. Special deals on pasta dishes on Tuesdays, and wings on Wednesdays, will continue to be offered in addition to the new pizza prices.
The $10 promotion has stimulated business, according to Pizza Hut executives. Revenue rose 6 percent to 7 percent in the first quarter compared with the same period a year ago, they said, and rose about 10 percent in the second quarter compared with the second quarter of 2009.
The price changes at Pizza Hut are indicative of how marketers are scrambling to address changing consumer behavior as the economy remains sluggish. Not that long ago, it was believed that marketers would soon be able to stop running price-oriented ads, or at least fewer of them.
But the most recent economic news, suggesting that the recovery has slowed, is calling into question those assumptions. That is why, for instance, Quiznos is promoting a value menu with sandwiches priced at $3, $4 and $5, and the Campbell Soup Co. is running ads in Sunday newspaper coupon inserts that proclaim Chunky soup can help make “dinner for $4 in under 4 minutes!”
“We want to make sure we can provide people’s favorite foods at accessible prices,” Brian Niccol, chief marketing officer at Pizza Hut, said at a news conference Tuesday afternoon at the Institute of Culinary Education in Manhattan.
In some cases, the sale represents “almost a 50 percent reduction” in menu prices, Niccol said.
Niccol’s use of the phrase “favorite foods” was no accident. Pizza Hut also plans to introduce a brand campaign that will carry the theme, “Your favorites. Your Pizza Hut.” The brand campaign is likely to begin appearing in early September, Niccol said, and will be interspersed with ads for the sale and ads for the new menu items like the Big Italy.
“We want to build loyalty beyond the price,” Niccol said in an interview, adding that the way to do that was to make sure consumers “see the value in the brand that goes beyond the price.”
“Ten dollars for the type of pizza product we provide,” he added, “it’s tremendous value.”
To that end, a television commercial about the sale addresses the quality of Pizza Hut menu items. “We’ve changed just about everything,” an actress playing a restaurant employee says at the end of the spot, “except how your favorite pizza tastes.”
That Pizza Hut sells consumers’ “favorite food” will be just as important to Pizza Hut’s marketing efforts, Niccol said, as providing their “favorite value, favorite experiences and favorite thing you didn’t even know yet.”