Takeda Phar­ma­ceu­ti­cal looks out­side Asia for a cure to its blues

Bloomberg Businessweek (North America) - - Contents -

The middle is a tough place to be.”

At a Pizza Hut in Lan­tana, Texas, one of the restau­rants where the re­brand­ing is on trial, the in­te­rior has a mod­ern look: pen­dant-style in­dus­trial lights and ex­posed rock on the walls. Rather than sit­ting down and wait­ing to place their or­der, din­ers can pick what they want at the counter and watch their food be­ing as­sem­bled. New ovens can cook a pizza at 575F in just three min­utes. The reg­u­lar cook time at lower tem­per­a­tures, used dur­ing less­busy hours, is six and a half min­utes. “Our goal is to have restau­rants that are easy to op­er­ate, ac­ces­si­ble, and invit­ing,” says David Gibbs, chief ex­ec­u­tive of­fi­cer of the chain. “The new con­cept is de­signed for speed.”

An ad­di­tional 1,000 of the speedy ovens will be rolled out na­tion­wide this year. The eatery in Lan­tana, says Gen­eral Man­ager Terri Smith, is draw­ing crowds at lunchtime, when 90 per­cent of cus­tomers are order­ing a new dis­counted $5 lunch spe­cial: a 9-inch three-top­ping pizza and a drink. The ex­tra speed makes a dif­fer­ence “when peo­ple have 30-minute lunch breaks,” she says. Din­ers like the open kitchen, which lets them watch the cooks take the dough out of a cooler, top it, bake it, and slice it. “They can see it from start to fin­ish,” Smith says.

Still, some of Pizza Hut’s ri­vals are ahead of that curve. They’ve also been more in­no­va­tive with in­gre­di­ents. Pie Five Pizza prom­ises its dough and mari­nara sauce are made fresh in restau­rants each day; Blaze has a ve­gan cheese op­tion and al­ready cooks its pies in three min­utes. All­nat­u­ral ba­con and whole-wheat crusts are on the menu at Pieol­ogy Pizze­ria, where sales more than dou­bled last year, Tech­nomic says.

Pizza Hut has seen plenty of com­peti­tors rise and fall since its found­ing in 1958, when two brothers bor­rowed $600 from their mother to open a pizze­ria in Wi­chita. By 1971 it was the world’s No. 1 pizza chain; it still is, but Domino’s is clos­ing the gap in the U.S. That ri­val’s sales reached $4.1 bil­lion in 2014, more than half com­ing from dig­i­tal or­ders, ac­cord­ing to Tech­nomic, while Pizza Hut’s U.S. sales de­clined 3.5 per­cent, to $5.5 bil­lion.

“They’ve strug­gled. You can see it in the num­bers,” says Jack Russo, an an­a­lyst at Ed­ward Jones. “Domino’s has done a pretty good job.” Mean­while, fast-ca­sual ri­vals have an eas­ier time charg­ing more for their fare. Cus­tomers might be will­ing to loosen their purse strings oc­ca­sion­ally—but not at Pizza Hut, he says. “I think they’re go­ing to do it more at a Pan­era Bread.” �Les­lie Pat­ton

-3.5% The bot­tom line To woo din­ers, Pizza Hut is shak­ing up its order­ing process and in­stalling ovens that cook pies in just three min­utes.

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