Earlier this week, Yum! Brands' (NYSE:YUM) Pizza Hut chain updated its Facebook cover photo with this intriguing message:
Now that's a bold claim, even if it does come from the nation's largest pizza chain, with more than 6,300 domestic locations. But make no mistake: This marks the beginning of what Pizza Hut chief marketing officer Carrie Walsh called "the biggest change that we've ever made as a brand."
On Nov. 19, Pizza Hut will roll out a new logo, new packaging, new uniforms, a refreshed website, and, most importantly, an overhauled menu including 11 new specialty pizzas, 10 different crust flavors, six new sauces, and a handful of new ingredients. Among the new crusts will be salted pretzel, honey sriracha, toasted cheddar, and even curry and ginger varieties. Sauces will include options such as premium crushed tomato, buffalo, and a balsamic drizzle, while the new specialty pizzas sport punny names including Old-Fashioned Meatbrawl and Cock-A-Doodle Bacon. On the lighter side, the menu will also feature five crafty "Skinny Slice" options, each of which have been successful in early test markets and offer 250 or less calories per slice.
The overarching theme, Pizza Huts says, is not just about higher-quality, craft-style pies, but also giving diners unrivaled options for customization, with "more than two billion" ways to build a pizza.
Pizza Hut's end game
I suppose this shouldn't come as a big surprise. Last quarter, Pizza Hut's same-store sales fell about 1%, marking its eighth-consecutive quarter of declining sales at established locations.
Yum! Brands' earnings press release last month also vaguely stated that Pizza Hut had "major actions in place to drive same-store sales" going forward. When I subsequently asked a Yum! Brands executive to elaborate on those plans, he hinted that Pizza Hut would be "aggressively marketing product innovation and value all around the globe." There's arguably no better place to start than in Pizza Hut's core U.S. market.
After all, Domino's Pizza (NYSE:DPZ) successfully implemented a similar brand overhaul five years ago, and recently capped its 14th-consecutive quarter of domestic same-store sales growth. Papa Murphy's has also enjoyed 14 consecutive quarters of positive comps, thanks to its fresh "Take 'n Bake" options, while Papa John's last quarter achieved impressive comparable-store sales growth of 8.4%.
Customizable craft pizza is also all the rage right now, most notably with small fast-casual pizza chains. Take Chipotle Mexican Grill (NYSE:CMG), for example, which last year announced a collaboration with craft pizza specialist Pizzeria Locale. Now, Chipotle owns and operates two Pizzareia Locale locations of its own, and has plans to gradually expand the chain.
Or consider that Buffalo Wild Wings (NASDAQ:BWLD) holds a minority stake in PizzaRev, which patrons affectionately call the "Subway of Pizza" given its ability to cook a custom, high-quality pizza in less than three minutes. Most telling, however, is that Buffalo Wild Wings has made it clear it only invests in brands that have the potential for nationwide expansion, so you can bet we'll see more PizzaRev locations pop up around the country for years to come.
Confidence as a bad thing?
But these competitors aren't Pizza Hut's biggest challenge. Rather, I think Pizza Hut is its own biggest hurdle to success.
Remember, much of the reason Domino's succeeded in its comparable brand overhaul was because consumers reacted favorably to the startling ad campaign admitting its pizza just wasn't that good. That message has continued through to today with Domino's popular "Failure is an option" campaign, and culminated in the chain boasting unrivaled consumer loyalty earlier this year.
Pizza Hut's sweeping menu and brand overhaul seems to be setting a much higher bar, and relies on a decidedly less humble approach to building rapport with consumers. Of course, that doesn't mean diners won't respond favorably to what could very well be a delightful end result. But if they don't, and given the pomp and circumstance surrounding Pizza Hut's bold initiative, I'm afraid the subsequent fall could be harder than it expects.
Steve Symington owns shares of Buffalo Wild Wings. The Motley Fool recommends Buffalo Wild Wings, Chipotle Mexican Grill, and Facebook. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.