Pizza Hut is the most popular casual dining brand in China. Pizza Hut reached the 3,000 store milestone in China in June 2023. This is a feat very few casual dining chains can claim. Since its first location in Beijing, China in 1990 the brand has expanded to more than 650 cities.
The revitalization program launched by Pizza Hut in 2017 has played a key role in the success of the brand in China.The company won over customers with a refreshed brand identity, new concepts in stores, and an ever-improving menu.The brand has also been able to increase its membership to 145 million across the country thanks to improved digital capabilities. Digital tools, such as robot servers, have increased efficiency and improved customer satisfaction on the operations side.
Pizza Hut’s incredible growth in China contributes to strong results for Yum China, whose parent company recently announced record earnings in the second half of 2023. Total revenue of $2.65bn was a record for Q2, while same-store sales and system sales increased by 32% and 15 % respectively. The company’s operating profit of $257mn for the quarter reached a new record, more than tripling the previous year. Pizza Hut achieved a 13% increase in same-store sales year-over-year during the third quarter despite a difficult macroeconomic environment. The impressive 27% increase in transactions was the main driver.
Brand continues to strengthen its image as a “Pizza Expert”, by experimenting with different flavor profiles and ingredients in order to meet the changing tastes of customers.In Q2, we introduced Bolognese Pizza with Beef, capturing the familiar flavor of Spaghetti Bolognese, and it has become a favorite among customers, especially children.
Pizza Hut is expanding beyond pizza and now offers a wide variety of entrees including pizzas and steaks. It also has a large selection of pastas, rice dishes, appetizers and beverages. Pizza Hut is already a top steakhouse in China, with steak accounting for 10% of its sales. The company has been able to fuel growth by using a variety of channels including dine-ins, deliveries, takeaways, and pre-packaged meals.
Pizza Hut’s new store openings have increased in the last few years. In 2022, 313 net new Pizza Hut stores were opened compared to only 41 in 2019. In the first half 2023, 169 new net stores were opened. This shows the brand’s continued focus on growth. Pizza Hut has expanded its reach with the help of smaller format satellites. Lower capex and cost have enabled better margins, and a quicker payback period as compared to traditional stores.
Yum China believes there is ample room to grow the Pizza Hut in China. Yum China CEO Joey Wat stated that the company believes the Pizza Hut brand has tremendous growth potential in China.We actively commit to seeking expansion opportunities to grow the brand.
