The Secret Way Domino’s Pizza and Papa John’s Are Killing Pizza Hut

Source: Domino's Pizza

Is my pizza there? Is my pizza there yet? How about now? With Domino's Pizza (NYSE: DPZ  ) , the answer is a tap away on your smartphone with Domino's Tracker. With the delivery app for Pizza Hut of Yum! Brands (NYSE: YUM  ) , the answer is nowhere to be found. But they're just silly fun apps, right? Not anymore. Now it's digital or die.

Snake of the 1990s
Remember back when the purpose of cell phones was actually to mainly make phone calls, but they also had the game Snake on them? Snake was like the Pong of cell phone games -- very low-budget and simple technology, kind of like using the Pizza Hut app. I'm exaggerating a bit here; but if you use it before or after using the Domino's Pizza app or the Papa John's app, you'll almost feel like you're playing Snake all over again.

Only the Snake game actually works. I tried ordering a pizza three times, each time rebooting my phone, and finally gave up. I thought it was me; but across the Internet, you'll find reviews of people complaining that the Pizza Hut app has bugs, crashes, freezes, is missing menu items...you name it.

Over 10 minutes frozen on the Pizza Hut app. Source: Author

Pizza Hut's app is not much better than pre-Internet mobile technology of the early 2000s. You can literally lose your appetite navigating the thing trying to order. As an example, with the Papa John's International (NASDAQ: PZZA  ) app, you see a 3-D pizza with toppings fall on it as you select them so that you can see what your pizza will look like with the various choices. I had planned to just play with the app and experiment; but I found myself instantly hooked and tempted, and my impulses demanded that pizza pronto.

It's all about digital and mobile
David Novak, CEO of Yum! Brands, admitted on the last conference call: "Now let's talk about Pizza Hut which clearly had a disappointing quarter." Pizza Hut saw a 5% drop in same-store sales. This is during an unprecedented new Golden Age for Pizza Hut, Domino's Pizza, and Papa John's.

The reason why these chains are -- or should be -- dominating is that around 15% of all digital orders -- and growing -- are coming through digital means through computers, smartphones, and tablets. The smaller and even regional players cannot compete on this playing field. They don't have the time, money, infrastructure, or experience to build what is needed.

Domino's is killing it, with a 4.9% jump in domestic sales last quarter. For Papa John's, it's even better, with a 9.6% leap. Both of them credit their robust platforms. Domino's Pizza boasted on its conference call that it has 9 million profiles with saved orders and credit card information ready to go that allows orders to be completed with as little as five clicks. Two million of those profiles were new last quarter alone.

Source: Papa John's

Papa John's, meanwhile, expects to be the first to hit greater than 50% of sales through digital on a sustainable basis, which means throwing old-fashioned speed-dial ordering back into the Stone Age. Novak knows Pizza Hut has dropped the ball on this, and even acknowledged Domino's Pizza and Papa John's. He stated, that Yum! Brands needs "to do a better job engaging the digital consumer where our competitors are frankly doing a better job driving activation."

Watch the app, watch the jump
Not to oversimplify things, but Pizza Hut may just be an improved app away from getting jump-started again. Of course Pizza Hut will be competing with Domino's Pizza and Papa John's too; but as long as it can significantly improve its platform, there is a an enormous and growing pie big enough for the three of them to share.

Domino's Pizza CEO J. Patrick Doyle said Domino's is "thriving in the U.S.," and he credits technology for this. Papa John's is confident it will "drive the business forward" as it continues "to capitalize on digital expertise." There is no reason Pizza Hut can't do the same.

For an example of continuous improvement, Domino's Pizza had had three press releases in less than the last month concerning digital improvements. First it announced it will accept orders using Google wallet. Second, it unveiled its new iPad app that will take the experience "to a whole new level." Third, Domino's Pizza added a group-ordering tool. This tool allows you to quickly order pizzas for 50 or 100 random people at the office, job site, or birthday party, and it helps you figure out how many pizzas and which toppings to get quickly.

The goal is to make your life easier when ordering pizza. With Domino's Pizza and Papa John's, ordering is actually fun and a pleasure. With Pizza Hut, it's such a frustrating chore that I almost threw my smartphone across the room and picked up a real phone.

Novak stated during the Yum! Brands conference call there is a high sense of urgency for its digital-ordering technology to get upgraded. Now that Pizza Hut seems to have gotten a much-needed first-quarter wake-up call, expect to see numerous changes fast.

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Read/Post Comments (15) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 25, 2014, at 11:58 AM, eddieb wrote:

    Pizza Hut needs to make a better pizza. We ordered a thin crust and truly, it was the worst pizza I ever had. All they did was mash down the thicker crust to make it thinner, it was so compacted and tasteless.

  • Report this Comment On May 25, 2014, at 12:01 PM, eddieb wrote:

    they need a better crust and a better pizza. We order a thin crust and it was the worst pizza ever. All they did was to mash down a regular crust to make it thin. The crust was so compacted and tasteless. Really skimpy on the ingredients too.

  • Report this Comment On May 25, 2014, at 12:07 PM, nobama4me wrote:

    They should all remove "pizza" from the name of their product. I only buy from local mom & pop places. May as well buy a frozen pie rather than order from one of these chains.

  • Report this Comment On May 25, 2014, at 12:51 PM, Taz wrote:

    All three could go out of business and it wouldn't affect me at all. Papa Murphy's outdoes them all.

  • Report this Comment On May 25, 2014, at 3:04 PM, Evilclown13 wrote:

    You guys need to get out more. The reason Pizza Hut isn't doing well is because they keep their employees so unhappy, not because of a stupid app, or even their food. If you bothered to talk to any of the drivers or cooks, they'll tell you, the company doesn't care about it's employees. There's no incentive for the employees to care. No benefits, low wages, and constant changes. One week pizzas are 10 dollars the next 11. And from what a friend tells me, constant micromanaging. They need to cut down their menu too. Back to what worked and do "that" well.

  • Report this Comment On May 25, 2014, at 3:08 PM, Bird5 wrote:

    Pizza Hut and Domino's both sell awful products, but the website/app quality isn't the only difference. Pizza Hut stores seem to be managed by teenagers, with slow turnaround time, below-average customer service skills and generally untidy, poorly maintained stores. Both companies serve hot circles of garbage, but at least Domino's invests in their company in order to deliver it effectively and professionally.

  • Report this Comment On May 25, 2014, at 3:13 PM, dolphin195261 wrote:

    Never had a problem ordering from Pizza Hut. Far as I am concerned none of them make a good pizza. As for Papa John's their app doesn't impress me. When the pizza is done it looks nothing like the picture on the app. I rather make my own pizza with as many toppings as I want.

  • Report this Comment On May 25, 2014, at 5:28 PM, Jeffythirteen wrote:

    Couldn't prove it to me. Unfortunately,the Papa Johns we had in my town didn't last long-alas-I like PJ's. Our Pizza Hut is really good. Now for the local Domino's-YUK YUK YUK! The last time the wife and I tried Domino's was shortly after they introduced their new 'pan pizza.' It was terrible. The thing wasn't done, and when we called to report it, we were only told that they were taking steps to correct the issue and that was IT!!! They are poor excuse for pizza in my book. Sorry Dominos, but I used to be a manager in your organization, and I can say that I was ashamed to admit that after my experience that night.

  • Report this Comment On May 25, 2014, at 8:28 PM, 7nicholas wrote:

    There is a new pizza take out/delivery in Louisville. East of Chicago Pizza. Puts Papa John's ,Pizza Hut and Dominos to shame. You got to try it. They have the Authentic Chicago Style pizza and it is to die for.

  • Report this Comment On May 25, 2014, at 9:54 PM, udontknowjack wrote:

    Pizza Hut tastes like someone took a dump on the cardboard they call the crust. It would be criminal to give it to a dog

  • Report this Comment On May 26, 2014, at 3:42 AM, cypress555 wrote:

    pizza hut makes the worst pizza ever I swear

  • Report this Comment On May 26, 2014, at 1:50 PM, Bigal141 wrote:

    I have been going to Pizza hut since the late '60's early '70's, Personally, I do not care for Domino's or Papa Johns, Pizza Hut has endured the test of time, they will live on no matter what the competition says!

  • Report this Comment On May 26, 2014, at 6:31 PM, Snakecity wrote:

    Who are all of the uber-elite pizza snobs? I'll admit that these pizza chains don't make the best, or sometimes even very good pizza. But to say that it's essentially inedible, like most of these comments are doing is just ridiculous. I briefly managed a Pizza Hut almost thirty years ago and we made all of our own dough for the various types of pizza we sold then. it was decent pizza then. Now some of their dough is frozen and the quality has dropped. But it's still at least as good as eatin at any other fast food restaurant. I was the chef at a trattoria with a $50K wood-fired oven. We made awesome food there and the pizzas were some of the best I've ever had. But if I were at someone's house and they ordered a Pizza Hut or Domino's pizza I didn't find it inedible at all. It just wasn't as good, but not bad.

    The people who are claiming Pizza Hut and the rest are cr@p pizzas are just ignorant pizza snobs. you don't really need to exaggerate your opinions just to make yourself sound important.

  • Report this Comment On May 27, 2014, at 4:35 PM, Magila wrote:

    Pizza Huts real problem with the quality of it's pizza is cheap cheese. Does anyone even remember that pizza is supposed to be made with real mozzarella? They changed to cheaper cheeses with a similar flavor years ago, but not satisfied with the savings they have been buying cheaper and cheaper cheese until now the taste of their pies is unbearable. I am not a pizza snob. I even like totinos frozen pizzas, but I cannot abide the horrific flavor of the phony substitute cheese food product Pizza Hut is shredding on top of thier Pizza. If you want sales to improve, go back to better cheese. If you want sales to skyrocket go back to real Mozzarella.

  • Report this Comment On October 08, 2014, at 1:49 AM, mikiissexy wrote:

    I really think the quality of Domino's pizzas is substantially better than the other two. To me, Domino's pizza is much more similar to what's made at a decent local pizza shop.

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