Mktg - For a bigger slice

Hungry kya? Pizza kha.

More hungry kya? Pizza Hut ‘dine-in’ ja.

Therein hangs the tale, or ‘story’ if you like, for Yum! Restaurants India’s popular Pizza Hut chain. If you haven’t noticed already, the delivery pack from Pizza Hut now bears a new logo—PHD—in bright red and black to clearly differentiate the chain’s home delivery business from the ‘fine dining’ segment it has just sauntered into.

The first Pizza Hut formal dine-in outlet opened in Juhu, Mumbai, on July 16, followed by a second one in Panchkula (near Chan-digarh) on July 24. Delhi and Pune are to follow, shortly.

The brand revamp in India, says the company, is part of the company’s re-imaging exercise across the globe that aims to reorganise the Pizza Hut restaurants on the lines of premium Parisian cafes. With this new initiative, the company expects an increase of over 25% in its sales revenue in the country.

“The brand transformation will happen gradually over the next three years,” says Niren Chaudhary, managing director, Yum! Restaurants India. The chain counts Pizza Hut as one of the five brands under its umbrella. The soft peddling of the new focus is evident in the way Chaudhary refuses to admit that Pizza Hut operates in the quick service restaurant (QSR) segment, dominated by Domino’s, McDonald’s and Slice of Italy, among a few others. “We were always in the casual dining space. With this brand repositioning we are only strengthening our presence in this (dine-in) segment,” Chaudhary hurries to clarify.

The new strategy, therefore, is to launch a slew of formal dine-in outlets, while gradually transforming the look and feel of the existing QSR outlets. The group claims to have invested some Rs 50 crore into this revamp.

It’s easy to see why Pizza Hut is betting big. “Indians love to socialise,” says a south Delhi-based rest -aurant manager. “That seems to gel well with what Pizza Hut stands for as a brand.”

So is Pizza Hut headed for the market that the Baristas, Café Coffee Days and Costa Coffees are servicing so efficiently? Barista, over the last few years, has upgraded its offering from a casual café to a lounge experience, while Café Coffee Day aims to expand its franchise by harping “A lot can happen over a cup of coffee”. Pizza Hut believes these cafes cater to a different client base—typically college students. For the Yum! brand, the target is a more ‘adult’ consumer.

Pizza Hut explains that the youth who frequent its outlets are driven by the twin objectives of eating and connecting. The appropriate term to describe this activity would be “eatertainment”. These are essentially customers with large appetites and small wallets; hence their taste buds need the gastronomical prodding of meal combos, where one size does not fit all.

That’s where multiple product offerings come in. According to company estimates, ever since Pizza Hut introduced the mini meal combo, customer traffic increased almost 20%.

But why a new brand, PHD? Chaudhary says, “We are testing the standalone delivery brand. Already, we have halved our competitor’s business in the areas where we have opened, indicating acceptance is coming in quicker than we expected. Of course, we will take time to establish this brand independently. ” Three PHD outlets have been flagged off in the national capital region—the first in Sector 56, Gurgaon, the second at Alpha Commercial Belt, Greater Noida, and the third in Sector 50, Noida.

Yum! has also expanded its menu with additions such as pastas, appetisers and other non-pizza specialties, such as Florentine Fettuccine, Arabiatta Farfalle to be ordered with blended drinks such as Pink Grapefruit Sparkle, Hazelnut and Coffee, among others. All Pizza Hut communication will now focus on a new thought, “Stories Happen”, that is expected to promote the dine-in concept as opposed to takeaways and home delivery.

In all this, Pizza Hut’s key proposition remains “international product line with an Indian heart”. While a decade ago, the Pizza Hut menu was 65% international and 35% Indian, today, bowing to market demand, it is 80% Indian and 20% international.

Interestingly, Pizza Hut’s new plan comes as a sharp contrast to its 2004 gambit when, to challenge arch-rival Domino’s on its home turf, the Yum! brand went all guns blazing into the delivery market. It introduced the concept of heated pouches for the first time in India that guaranteed “sizzling hot pizzas, hotter than before, right at your doorstep”. And in a u-turn from all that it had said earlier, Pizza

Hut’s 2004 television commercial tried to ensconce itself on the ‘delivery’ platform firmly occupied by Domino’s globally.

In contrast, right from its outset, Domino’s took great pains to project itself as a delivery expert. Its commercials have driven home the point that Domino’s would deliver a hot and fresh pizza in less than 30 minutes even if it meant the delivery boy has to go swinging in a vine and deliver to cannibals in the middle of a forest. Else the consumer got Rs 30 off, or, at times, the entire meal free. Naturally, Pizza Hut’s communication promoted the chain as a place where people go to eat great pizzas and have a good time as a bonus.

Over a period, however, there has been a subtle shift from product-centric messaging to experience-centric with a clever use of new media tools that can best be described as smart. Endorsed by actors Jaaved Jaffrey, Malaika Arora Khan, Zayed Khan and Satish Shah, the brand’s positioning has evolved from ‘Treat You Can’t Beat’ to ‘Good Times, Great Pizzas’, and now finally, ‘Stories Happen’.

As things stand, both Domino’s and Pizza Hut claim to be leaders—Pizza Hut for casual dining, Domino’s for delivery. If one were to look at the total pizza market though, Domino’s continues to rule the Rs 350-Rs 400-crore segment (of this, delivery and takeouts account for about half and the segment is growing by 15-20% annually).

In short, the stakes are high. Domino’s wants 500 outlets in India by 2010. For Pizza Hut, India is one of the company’s three high-priority markets. Its projections call for 300 stores over the next couple of years. In other words, time for Yum! Restaurants India to chalk out a new roadmap for its brands.

Yum!’s current footprint in India includes 139 Pizza Hut restaurants and four Pizza Hut delivery counters in 36 cities, besides the 35 KFC (Kentucky Fried Chicken) outlets. Given the slow take-off of the latter, the company has been pussy-footing the decision to bring its third brand, Taco Bell, into the country. When questioned, Chaudhary said there is no date set on when Taco Bell will come to India.

Both Pizza Hut and Domino’s admit the food and beverages (F&B) retail sector has changed beyond recognition since the time the brands came into India in 1996. Home-grown as well as international restaurant chains present in both high street locations and malls represent the organised F&B market today. This sector, which is still in its growth phase, offers opportunities across a variety of retail formats like fast food restaurants, multi-cuisine food courts, home delivery formats etc.

According to the India Retail Report 2007, the F&B (catering outlets) sector was estimated at Rs 57,000 crore in the year 2006, out of which only Rs 3,940 crore or 6.9% was accounted for by the organised sector. F&B retail constituted about 4.7% of the $270 billion Indian retail market.

Of this, although the QSR market size is not captured by any organised database, in terms of size or growth, it is estimated to be Rs 1,000 crore, growing at the rate of 20% per annum. The out-of-home dine-in market would also be roughly the same, about Rs 1,200 crore, but the realisations in this segment are considerably higher, according to Chaudhary.

Already, the dine-in concept is paying rich dividends in Hong Kong, where it was implemented in 2003, and again in the UK, where it was introduced last year.

But as the consumer gets sophisticated and the market more competitive, will Yum! Restaurants be able to hold its own in this country? Well, that’s not something we’ll get to know in 30 minutes!