Pizza Hut hitting emerging markets


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Pizza Hut

Pizza Hut is back for round 2

Fast expansion into emerging markets is something Pizza Hut knows a few things about. In 25 years the pizza chain has added more than 1,300 outlets to China’s emerging market.

The General Manager of Pizza Hut in Africa, Randall Blackford says that the expansion into Africa is taking its time. Pizza Hut is small in Africa now and will stay small for some time as they get the chance to engage with the public more and respond to local taste.

“We can’t be first, can’t be the cheapest, so we can be the best,” says Blackford.

Pizza Hut failed in Sub-Saharan Africa seven years ago as a diner so as it enters the market again it is launched as a takeout and delivery service. The delivery is restricted to a few kilometres so that there is chance for more, smaller stores that can operate in neighbourhoods. At the moment there are only eight stores in South Africa and Zambia, it aims to have 200 stores across the continent within the next three years.

Randall Blackford, general manager for Pizza Hut Africa, poses for a photograph outside the Soweto store. Photographer Waldo SwiegersBloomberg

Randall Blackford, general manager for Pizza Hut Africa, poses for a photograph outside the Soweto store. Photographer Waldo SwiegersBloomberg

Fast food restaurant focus in Africa

Almost half of Africa’s fast-food restaurants are focused on chicken, then comes burgers. Pizza is a surprising distant third, accounting for about 5 percent of total spending. One reason: the more moderate cost and wider availability of poultry supplies. Some Pizza Hut toppings, such as air-dried pepperoni, have to be imported – that affects customers’ pockets. The Streetwise 5 meal from Yum’s KFC, which includes a large order of fries and five pieces of chicken, costs R63.90 in South Africa, while a fully loaded large Pizza Hut pizza approaches R89.90. In Zambia, the same pie costs about $10. “The pizza outlets are going to have to focus on pricing, bringing it more in line with what chicken costs,” says Wayne McCurrie, a money manager at Momentum Asset Management in Johannesburg.

Domino’s Pizza in Sub-Saharan Africa

Domino’s Pizza also has African dreams. It already has 19 outlets in three sub-Saharan countries, and last year it signed a 30-year agreement with Johannesburg-based Taste Holdings to develop the brand in seven African nations. Taste Holdings’s existing Scooters and St. Elmo’s pizza stores will be converted to Domino’s outlets. Domino’s plans 200 stores across Southern Africa within five years, two more years than Pizza Hut’s plan.

Pizza Hut is keeping their marketing local and lekker

Pizza Hut is also trying to resonate with locals through signage and serviettes using slang such as “laaik it local” (like it local) and with toppings such as boerewors.

Young customers queue to order food at the service desk of the Pizza Hut store in Soweto.

Young customers queue to order food at the service desk of the Pizza Hut store in Soweto.

Pizza Hut’s supply chain

Pizza Hut does benefit from being able to combine some back-office functions with the KFC chain. Even so, KFC doesn’t use its vegetable toppings, dough, and cheese, so the pizza chain has had to organize much of its supply chain on its own.

Debonairs Pizza

Debonairs Pizza, Africa’s biggest pizza chain with about 500 restaurants in more than a dozen African nations, is operated by South Africa’s holding company, Famous Brands, which owns chains such as Steers, Fish Aways, Wimpy, Mugg & Bean, Keg, Milky Lane and Wakaberry. They teamed with supermarket operator Shoprite Holdings to open its first restaurant in Angola in February and then to expand into Nigeria and Zambia.

“South Africans are extremely loyal to brands that are homegrown,” says Famous Brands Chief Executive Officer Kevin Hedderwick. “The fact that you come with global pedigree is not, on its own, a reason for consumers to vote for you with their wallets and their throats, especially in the pizza category.”

How Pizza Hut is adapting to South African pallets

To offer more affordable items, Pizza Hut has added chips (Fries) to its menu in South Africa. Chicken wings and breadsticks are also options. The chain may still have a hard sell changing local tastes.

“Not bad,” says Choombe Kalonga, 29, as he and two friends finish a pie at a new Pizza Hut in Lusaka, Zambia, recently. “But nothing beats traditional chicken. We grew up on that.”

Source: bloomberg.com

Photography by Waldo Swiegers

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