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Yum!'s Bigger Slice of Pie

By Steven Mallas – Updated Nov 16, 2016 at 4:36PM

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Pizza Hut comes out with a new size, a subtle yet clever innovation.

I have a confession to make: I'm a pizzaholic. I love pizza, and I'm not alone; we are a nation not of apple pie, but of the Italian tomato-and-cheese variety. As Jerry Seinfeld might say, not that there's anything wrong with that. Unless, of course, you're watching your weight, which I should do more often -- I mean my weight, not yours.

Which brings me to Yum! Brands' (NYSE:YUM) Pizza Hut's latest marketing innovation, one that, although simple, should be effective: an extra-large offering dubbed The Full House XL Pizza. The press release says it will be 30% bigger than the large size. Although my stomach is growling already (while my bloodstream is quivering in fear of all the cholesterol molecules such a product implies), the company is obviously not targeting single people... this pie is meant as a solution for family dinners and parties.

It's an affordable solution, too: The basic price is $9.99. Can you say smart on the part of Pizza Hut? Value pricing is not an original concept (neither is the large pizza -- anyone remember the Hut's Bigfoot?), to be sure, but I think Yum!'s timing in promoting such an item is fitting, with consumer sentiment possibly being tested by the day-in/day-out gloomy news of oil futures hitting record high after record high. Fast-food patrons love the marriage of cheap prices and generous portions (that's a wedding we all want to go to), and even though pizza isn't the fastest food, this still will afford a nice bit of competitive edge in Yum!'s quest to take customers away from McDonald's (NYSE:MCD), Wendy's (NYSE:WEN), and Sonic (NASDAQ:SONC). Oh, and how could I forget Domino's (NYSE:DPZ) --which is getting into dishes fit for the dieters out there-- and Papa John's (NASDAQ:PZZA)? The initiative is also comparable to Yum!'s Taco Bell unit and its "filling" value menu.

New menu items drive the business of fast-food concerns just as new salty-snack edibles drive PepsiCo's (NYSE:PEP) Frito-Lay operation. I like this sizing strategy and believe it could drive sales for the Pizza Hut operating segment in the months to come.

Here are some more Takes on Yum!, including the latest earnings report, which was solid:

Fool contributor Steven Mallas owns none of the companies mentioned.

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Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$245.95 (-0.80%) $-1.99
The Wendy's Company Stock Quote
The Wendy's Company
WEN
$19.07 (-0.37%) $0.07
Yum! Brands, Inc. Stock Quote
Yum! Brands, Inc.
YUM
$110.65 (-0.13%) $0.14
Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$168.52 (-0.05%) $0.08
Papa John's International, Inc. Stock Quote
Papa John's International, Inc.
PZZA
$75.15 (1.39%) $1.03
Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
DPZ
$330.00 (3.08%) $9.86
Sonic Corp. Stock Quote
Sonic Corp.
SONC

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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