NEW YORK, N.Y. – Yum CEO Greg Creed thinks he figured out why sales at Pizza Hut have gone cold: The chain needs to be more like the car-hailing service Uber.
“If you think about the Uber experience, it’s easy to use, it’s easy to pay, it’s very easy to track,” Creed said in a phone interview from Dallas late Thursday after Yum Brands’ investor day.
During a presentation, Creed said there was a time when the way to beat the competition was to have a better product. He now believes that convenience trumps quality.
Creed said the insight that “easy” beats “better” will help Yum energize its three fast-food chains, which also include KFC and Taco Bell. That means everything from shaving time off drive-through waits to pushing into areas like catering, delivery and mobile ordering.
With Pizza Hut in particular, Creed said the chain hasn’t paid as much attention to making life easier for customers as it focused on being “better.” Yum notes the chain’s sales have flagged even as Pizza Hut is often cited as a favourite among consumers. It turns out people who prefer the chain’s pizzas are only willing to wait about two minutes more for it, Creed said. Yet Pizza Hut takes more than two minutes longer to deliver than its competitors.
It’s one of the reasons Yum thinks Pizza Hut has flagged in the U.S. as rivals have prospered. In recent years, Domino’s has credited the convenience of its online ordering and mobile app for fueling its steady growth. Last year, its sales rose 7.5 per cent at established U.S. locations, following growth of 5.4 per cent the previous year.
In the meantime, Pizza Hut’s sales fell 3 per cent at established locations last year, following a 2 per cent drop in 2013.
To get the chain back on track, Creed said he made Pizza Hut’s management team get in a room about a month ago to come up with a “clear brand identity.” They were told not to come out until they did.
“One of the joys of being the boss, you can lock other people away,” said Creed, who stepped into the CEO role this year.
Nine hours later, Creed said he got a text from Pizza Hut’s chief brand officer Jeff Fox asking for permission to leave the room — they thought they had an answer. That’s when they came up with the insight that “easy” beats “better.”
In addition to Uber, executives cited online retailer Amazon as an example of how being easy for customers wins business. Creed noted that the insight doesn’t mean the company is giving up on being better as well.
It’s not yet clear exactly how Pizza Hut plans to act on its new mantra. As part of its menu revamp late last year, the chain also redesigned its website. Creed assured investors Thursday the company had a plan in store, but that he couldn’t share details yet for competitive reasons.
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