In August 2020, deliveries contributed 63% (including food aggregators) to the company’s sales, and the rest came from takeaways and dine-ins
Before the pandemic hit, 50% of Pizza Hut’s business came from dine-ins. Although restaurants have opened, deliveries continue to bring in the lion’s share of sales for the QSR player. Merrill Pereyra, tells Devika Singh, that the company is refurbishing its digital infrastructure to augment sales, launching value deals during these times, and more.
Pizza Hut started its contactless dine-in service in June. What has been the response so far?
Our dine-in business was big in India before the pandemic hit. We expect it to remain subdued; it will take 12-18 months for this business to recover. At the moment, over 80% of our restaurants are open. The restaurants located in malls are seeing a slow recovery. Also, most food joints are situated next to multiplexes in malls, and since theatres are yet to open, it has affected footfall and business.
As the lockdown hit and our restaurants shut overnight, we realised that we have to come up with something that makes consumers feel safe about experiencing our brand, and hence we introduced contactless takeaways and contactless deliveries. In August 2019, 50% of our sales came from dine-in, 35% from delivery, and the rest from takeaways. In August 2020, deliveries contributed 63% (including food aggregators) to our sales, and the rest came from takeaways and dine-ins.
Pizza Hut does not have a strong online presence, unlike its competitor Domino’s Pizza. How has your digital strategy changed in the past few months?
It cannot be denied that the competition has had a presence on the channel for some time now. However, Domino’s has maintained that it’s a technology company before being a pizza seller.
We have been present online for a while, but have been focussing on it only in the last couple of years. With this pandemic, we had to fast-track all our plans for the online channel. We recently upgraded the infrastructure of all our digital assets — the website, mobile site and the app. We have also introduced more digital payment gateways to make it easier for customers to transact online. Data and analytics are being employed to offer personalised products and services to our customers. These also help us in creating more effective marketing campaigns and improving customer engagement. We currently invest 95% of our total marketing budget on digital.
We have done better sales from deliveries and takeaways, as compared to last year. In the last few months, our online platforms, too, have seen growth; sales through our app have grown 50-60% as compared to the pre-Covid period, and our mobile site has seen a growth of 30%. We have noticed an increase in first-time buyers coming to our platforms. The average order value from online has also gone up, as consumers are now ordering in for the entire family. Many professionals, who are working from home, are opting for delivery instead of preparing food due to paucity of time.
Have you revisited pricing or changed product offerings, keeping in view the decline in discretionary spends?
Our research has shown that consumers are increasingly seeking value. We understand that it is a tough time for everyone, and hence, we have offers running on all channels. For deliveries and takeaways, we have value deals such as ‘buy one get one’ on medium pizzas and ‘Hut Treat Meal’ (save up to 40%) catering to families and larger group sizes.
We have also introduced ‘My Box’ in select cities for solo consumption, as people are conscious of sharing their food. For the upcoming festive season, too, we are working on value deals that are designed for group occasions. We also plan to bring out a new product around our core offering, pan pizza, for the festive season.
Coming to your offline presence…where will your new outlets be concentrated?
We have about 431 stores in the country, and we plan to keep adding 60-100 stores every year, for the next three to five years. Our focus, however, is going to remain on tier I — for the next two years — as we see a lot of untapped potential in these markets. Presently, about 58% of our stores are in tier I and 42% in tier II; going ahead, 70% of our new store openings will be in tier I and 30% in tier II.