Pizza Hut to report third consecutive year of growth

According to BigHospitality's sister publication M&C Allegra Foodservice,​ the group is on track with its refurbishment programme and beginning to seek out new site opportunities following a positive response to the refurbishments it has undertaken since the programme began in 2013.

Speaking at the recently re-opened London flagship restaurant on The Strand, Henry Birts, deputy managing director, said the company wanted to strengthen its position with young families and regain the millennial generation who have “had their heads’ turned by strong competition throughout the 2000s."

To achieve this the brand has redesigned its restaurants with a 'modern retro feel' that retains the core brand red but with a more booth seating and a greater selection of smaller and larger tables for space utilisation and to speed up table turnaround during peak times. Greater attention has been paid to creating a welcoming atmosphere including music and lighting, which changes throughout the day to allow the restaurant to feel welcoming in the evening as well as at lunch time.

Since the acquisition of Pizza Hut in 2012 by Rutland Partners more than 80 restaurant refurbishments have been completed across the country, with The Strand being the first London flagship site to have changes made.

It re-opened in February this year as the 64th in total to be refurbed, demonstrating the company’s commitment to its nationwide estate and to not be identified solely as a London-centric brand.

Birts said the results of refurbishments have exceeded expectations, but acknowledged there was still a long way to go, not least because only one third of the estate has been transformed.

Sales growth​

The results are beginning to be reflected in year on year sales growth - which is up 5 per cent based on 82 sites being refurbished by the end of the financial year in April.

Chief finance officer Adrian Walker said that by the end of this year 50 per cent of refurbishments will have been completed, representing 66 per cent of total sales. By the end of this year two thirds of all sales are expected to be generated from new-look restaurants.

Walker said he expects the sales growth to gain momentum as more refurbishments are completed over the next two years.

At the time of acquisition the company was in negative growth, but over the past two and half years it has turned to positive growth and is outperforming its competitors.

The group is due to report its full-year figures next month, when it will report its third consecutive year of growth. To provide perspective, Walker cited last year’s £15.7m restaurant EBITDA, which was 5 per cent growth on the previous year.

At individual sites the sales growth ranges from between 15 per cent and 40 per cent dependent upon the location and extend of rebranding, with investment ranging from £50k to £600k for sites that required a total overhaul.

Menu changes​

Incremental spend on food has increased with the sharing dishes and sides being added to meals. Fries, which feature on the menu for the first time, are now ordered by 20 per cent of diners. The menu changes, which include new dishes that have an emphasis on choice but with pizza still at the heart of the menu, will continue as the brand is committed to continued evolution to remain ahead of what consumers demand. There are now lighter pizza options with thinner bases and meals under 500 calories, as well as the extensive choice of side dishes.

The menu also includes a broad choice of sharing dishes and starters such as fried shrimp, onion rings, fries and ribs.

A key change to the new design, in an attempt to attract more young adults, is the expansion of the alcoholic drink selection to include cocktails, craft beers and wine. A cocktail bar has been added in Crawley, Reading and The Strand and there are plans to add a handful more in locations that would support the evening trade.

Since the first refurbished site re-opened in Crawley in October 2013 the group has found confidence in customer response and in understanding the direction it wants to go in as a company, something Rutland Partners fully supports.

As a result of the remodelling, inclusion of bars and an extended choice of alcoholic drinks the company has seen positive growth in the evening and day but Walker said there is still a long way to go across the country and the company is only at the start of this journey.

Cocktail sales are exceeding expectations but the group believes there is potential for more growth in the longer term. Cocktail bars will be included in a “handful more restaurants” tailored to the estate depending on the results of the first sites.

Pizza Hut began the £60m programme to re-establish the company’s position as a casual leading casual dining brand with customers who may have become disconnected in recent years.

The refurbished look is designed to remind existing customers what they enjoy about the brand, and to appeal to others who have never eaten at a Pizza Hut or ‘lapsed’ customers who had not visited a branch for some years.

As well changing the design of the restaurants the menu has been updated to appeal to a broader spectrum of tastes. While keeping pizza at its heart, the menu also includes a broad choice of sharing dishes and starters such as fried shrimp, onion rings, fries and ribs.

The group is remaining focused on its existing core estate but Birts said they are looking at some “interesting” acquisition options, though he stressed they will only make moves to expand that are right for the company.

Birts said: “We are starting to look at a number of opportunities but only the right ones. Expansion has not been a part of the plan before but we are starting to look at a small handful of options.”

He said the group would consider returning to towns and cities it has exited if a more suitable location or a new development that would suit the Pizza Hut model became available.

Going forward the company wants to continue to develop a mix of sites, but admits the restaurants which suffered the most were high street locations while those in big shopping centres and on leisure or retail parks remained strong.