Pizza Hut

For three years running Pizza Hut figured in the magazine Restaurants and Institutions “Choice in Chains” as the favourite among sellers of pizzas, America’s best – loved food. The external ratings gathered from restaurant patrons match closely with an internal culture that focuses from telephone order takers and counter help to cooks and waitresses on creating “the perfect pizza experience.”

At Pizza Hut, they realize there’s more to good service than just providing good food. Everything counts for the customer, from the voice on the phone to the hot stuff on the table or delivered to the front door, especially when the product delivered is the country’s favourite food.

In 1987, Americans spent more than USD 20 billion on pizzas, about 12 % of their total spend in restaurants of all kinds. Growth was continuing both in dollar volume and percentage.” “The Hut” was the fastest growing company in the business.

Pizza Hut has been part of the Pepsico business since 1977.Two brothers Dan and Frank Carney launched it in 1958 , when both were University students with an equity base of USD 600.By the time it went public they had more than 300 locations and on the way to becoming the largest pizza restaurant chain in the world. The influence of Pepsico has only further enhanced their original attention to service.

To continue to build on customer- focused core values, Pizza Hut continues to aim high: In 1988 it committed itself to nothing less than “legendary service”. That according to internal training materials is “more than just good service, even great service. Legendary service is the unique and powerful sort of personal care and attention that our customers tell stories about…Even though the day to day business of Pizza Hut may look like cooking, cleaning and serving, the real thing we do is provide customer service…”

The chain started with traditional service. Then it took the lead at lunchtime several years ago by promising to put a Personal Pan Pizza at the table in 5 minutes or give customers a free one for failing to meet the clock. At the beginning the service sputtered and coughed – the average times of delivery often exceeded 6 minutes, 10 -12 minutes was not uncommon. Pizza Hut didn’t give up. It worked on its systems and personnel training. During the process the lunch trade among office workers with short- breaks, keen to get a quick meal grew by leaps in bounds. In a few years 95% of the pizzas were delivered within 5 minutes and lunch trade had grown from nearly zero percent to 20 % of the total sales.

Many operational details were re- worked .Time and motion studies were done and procedures were streamlined both on the service floor and back in the kitchen. Pizza Hut’s service very soon far exceeded competition in popularity.

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How good had the fast food lunch system become? In 1987, 50 high school students descended on the place one lunchtime. All 50 had their pizzas within the 5 minute guarantee.

Carry out which accounts for half of Pizza Hut’s total sales was next revamped and again measuring time was a key component. Previously, customers who called in an order for pickup were told their pizza would be ready in twenty minutes. As a norm that was fine, but in light periods 15 minutes or less is possible.( meaning customers were getting pizzas “aged in the box”) while in the midst of heavy rush twenty – five minutes or more might be more accurate( the result being customers waiting impatiently at the counter).

Most Pizza huts have a production – time gauge mounted near the telephone. The gauge reflects current conditions, so when customers are told their pizzas will be ready in 20 minutes, that’s “real time”. The person who cuts and boxes the hot pizzas sees the tome printed on the order ticket and adjusts accordingly. In addition, many Pizza Huts have adopted the Fast Lunch practice of having customers who dine in pay at the dinner table itself instead of queuing up to pay.

Systems, of course, are useless without efficient teams of workers to make them operative. To encourage good people to enter and stay in the system as valuable contributors to its service culture, Pizza Hut, has invested heavily in employee selection and development. That includes part- time and seasonal workers as well as full -time staff.

Their philosophy is that the future of the company will be built on people who work for it now. That means hiring even the lowest paid workers in the restaurant with an eye toward their staying power. And it means investing the time and effort to help mangers help their people. As Pizza Hut President and CEO Steven Reinmund used to say “We screen our new hires better because we realize the consequences of a bad hire. We are more willing to invest time into ‘turning around’ our people rather than turning them over.”

Result of this policy: Turnover among managers was reduced from 40% in 1984 to less than 20% in 1987, further improving service and efficiency. (it’s worth noting that restaurant managers are evaluated on overall store quality and service, not simply on volume or profitability). Pizza Hut has also developed a well – deserved reputation for the way it provides meaningful employment to the handicapped as well.

In the home delivery segment, which it next entered, Pizza Hut works by the same 30 minute delivery standard made familiar ( even legendary) by Domino’s but has added a novel twist involving a perceptive understanding of time management. Customers don’t need to figure out which outlet to contact. They call a single telephone number in a computerized service centre and the order taker notes down what they want and routes their order to the closest location for prompt preparation and delivery. In other markets

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the data base has been installed at the restaurant level so customers can call their nearby Pizza hut direct.

Pizza Hut defies the general stereotype of service work being low paid and dead – end.40% of the company’s more than thousand company owned restaurants are now managed by people who began as drivers, cooks, waiters and waitresses, host and hostesses. Higher level mangers learned the business first hand as restaurant managers. Franchisees have similar career progressions.

Questions for discussions:

1. What are the core values Pizza Hut goes by?

2. What is its service strategy?

3. What assumptions does it make about its customers?

4. What assumptions does it make about its employees?

5. What principles/ concepts that you have read about in this course are apparent in their operations?

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