SHANGHAI (REUTERS) – In a Shanghai bistro, surrounded by brass trimmed lamps and Italian marble, fashions and Chinese stars sported outfits of black, white and electrical purple, the signature colors of veteran American designer Anna Sui.
The catwalk-style event isn’t any vogue present, nevertheless. Instead it’s a part of a serious push by quick meals big Yum China Holdings Inc to present itsPizza Hut model a high-end makeover amid rising competitors and flagging gross sales.
The glitzy retailer and high fashion underscore a pointy strategic shift Pizza Hut is taking to revive its fortunes. The pizza chain has skilled tumbling similar retailer gross sales this yr that have dragged down Yum China’s general progress.
“The brand needs to be somehow rejuvenated,” stated Leon Zhang, Shanghai-based accomplice at branding consultancy Prophet, highlighting an increase in health-focused shoppers and a rising array of choices for Chinese diners that have hit the chain.
Pizza Hut has taken notice. Alongside the tie-up with Sui – extra at home at vogue reveals in New York or Milan – it is going to open a take a look at centre for modern merchandise in Nanjing this week and roll out new “Kiosk” and “Express” retailer codecs.
The chain has eliminated some badly obtained merchandise – reminiscent of pizza topped with costly abalone shellfish – and shut some idea shops, together with one with robotic waiters.
Pizza Hut says it has spent at the very least US$60 million (S$82.9 million) in upgrading its merchandise since September final yr and is introducing new applied sciences reminiscent of these permitting clients to order meals by scanning QR codes on the tables.
Jeff Kuai, the pizza chain’s basic supervisor, stated the model had “streamlined” its menu and bolstered its on-line presence to meet up with its better-performing sister model, fried hen chain KFC.
“We’ve learnt a lot from the KFC turnaround and are making progress on all aspects of the Pizza Hut revitalization plan,” Kuai stated in feedback despatched to Reuters. “We are confident in our revitalization plan and committed to returning the brand to growth.”
The Pizza Hut turnaround will not be Yum’s first salvage job in China. The agency needed to restore confidence in all its manufacturers after a meals scare in 2012 and once more in 2014. In 2015 it opened a high-end Italian restaurant as a take a look at “lab” in Shanghai.
The New York-listed agency, spun off from Yum Brands Inc in 2016, owns Pizza Hut, KFC and Taco Bell within the nation and is the biggest quick meals operator in China with greater than eight,100 retailers. It is valued at US$13.four billion and trying to greater than double its variety of shops to 20,000 within the long-run.
While it has stabilized gross sales progress at KFC with upgraded shops, a giant push on supply and automatic check-outs, Pizza Hut’s 2,200-plus shops have proved to be harder to show round. The chain has posted simply three quarters of optimistic similar retailer gross sales progress in China because the begin of 2014.
“At the moment they’re really struggling to differentiate themselves enough to stand out from the rest,” stated Andrew Atkinson, advertising supervisor at Shanghai-based analysis and advertising consultancy China Skinny.
“There isn’t a clear message about why Pizza Hut is special and why Pizza Hut has a position in the space.”
Major rivals embody Pizza Express, purchased by Chinese fairness agency Hony Capital in 2014, chains like Papa John’s and Domino’s Pizza and a rising array of smaller, native chains doing effectively with new merchandise and helped by a increase in deliveries on-line.
These embody Shenzhen-originated Le Cesar – recognized for inventing a pizza utilizing the favored Asian durian fruit – that now has over 120 shops, equally sized Mua Pizza and Magelita Pizza with 600 retailers.
Pizza Hut’s new-look for its shops and workers – which can be step by step rolled out across the nation – might assist the model stand out extra, analysts say. The shift comes at a important time for Yum China, which just lately rebuffed a US$17.6 billion buyout from a Chinese-led consortium.
The Shanghai Pizza Hut outlet, in an upscale mall, often is the future mannequin. It bears not one of the signature purple and yellow hues related to the model within the United States and pizzas will not be the primary attraction on the menu.
Instead it has stylish, trendy interiors, and common dishes in China like omelette rice and Australian steak to draw youthful shoppers. Yum China’s chief government has described the push as serving to make the model “Instagram-worthy”.
That would possibly assist win over shoppers like Wang Chupeng, 23, an undergraduate scholar in Hangzhou. While she likes the environment and scholar offers Pizza Hut provides, Wang felt the model was nonetheless caught between extra premium and price range rivals.
“If I want to eat pizza I’ll usually think of somewhere else. I’d rather pay a bit more to get a better pizza,” she stated. “Overall I think Pizza Hutis a bit expensive compared to other places with a similar quality product.”