PIZZA HUTPIZZA HUThen it comes to tossing dough around, no one does it more often and better than Pizza Hut. The division of YUM! Brands- operate the world's #1 pizza chain with more than 13,000 outlets in nearly 100 countries worldwide. Pizza Hut is an American restaurant chain and

international franchise based in Addison, Texas . Pizza Hut Inc. is the largest pizza restaurant company in the world in terms of both the number of outlets and the percentage of market share that it holds. A subsidiary of PepsiCo, Inc., the company oversees more than 12,000 pizza restaurants and delivery outlets in 90 countries worldwide. The chain serves a variety of pizza styles, including its flagship Pan Pizza, as well as Thin n' Crispy, Stuffed Crust, Hand Tossed, and Sicilian. Other menu items include pasta, salads, and sandwiches. Nearly 20% of its restaurants are company-operated; the remaining units are franchised or licensed.

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For the past four decades, Pizza Hut has built a reputation for excellence that has earned the respect of consumers and industry experts alike. Building a leading pizza company has required relentless innovation, commitment to quality and dedication to customer service and value. The qualities of entrepreneurship, growth and leadership have characterized Pizza Hutt’s business through more than four decades of success. Through the strength of its heritage, its culture and its people and franchisees, pizza hut looks forward to more success in the future.

History:

Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. When a friend suggested opening a pizza parlor--then a rarity--they agreed that the idea could prove successful, and they borrowed $600 from their mother to start a business with partner John Bender. Renting a small building at 503 South Bluff in downtown Wichita and purchasing secondhand equipment to make pizzas, the Carneys and Bender opened the first Pizza Hut restaurant. A year later, in 1959, Pizza Hut was incorporated in Kansas, and Dick Hassur opened the first franchise unit in Topeka, Kansas.

In the early 1960s Pizza Hut grew on the strength of aggressive marketing of the pizza restaurant idea. In 1962, the Carney brothers bought out the interest held by Bender, and Robert Chisholm joined the company as treasurer. In 1966, when the number of Pizza Hut franchisee units had grown to 145, a home office was established to coordinate the businesses from Wichita. Two years later, the first Pizza Hut franchise was opened in Canada. This was followed by the establishment of the International Pizza Hut Franchise Holders Association (IPHFHA). It aimed at acquiring 40 percent of the company's franchise operations, or 120 stores, and adding them to the six outlets wholly owned by Pizza Hut.

In early 1970 Frank Carney decided that the business strategy was inadequate, and that a more developed, long-term business plan was necessary. The turning point occurred when Pizza Hut went public and began growing at an unprecedented pace.

In 1970 Pizza Hut opened units in Munich, Germany, and Sydney, Australia. That same year, the chain's 500th restaurant opened, in Nashville, Tennessee.

In 1971 Pizza Hut became the world's largest pizza chain, according to sales and number of restaurants. A year later the chain gained a listing on the New York Stock Exchange. Pizza Hut also achieved, for the first time, a one million dollar sales week in the U.S. market.

At the end of 1972 Pizza Hut made its long-anticipated offer of 410,000 shares of common stock to the public. The company expanded by purchasing three restaurant divisions: Taco Kid, Next Door, and the Flaming Steer.

In 1973 Pizza Hut expanded further by opening outlets in Japan and Great Britain. Three years later the chain had more than 100 restaurants outside the United States and two thousand units in its franchise network.

In 1977 Pizza Hut merged with PepsiCo, becoming a division of the global soft drink and food conglomerate. Sales that year reached $436 million, and a new $10 million dollar headquarters office opened in Wichita.

The 1980s brought new competitors to Pizza Hut, all challenging its number one position in the pizza restaurant trade, then worth $15 billion in sales annually in the United States alone. Also, to raise its profile, Pizza Hut introduced "Pan Pizza" in 1980 throughout its network.

In 1984 Steven Reinemund was appointed president and chief executive officer of Pizza Hut. In 1986 Pizza Hut opened its 5,000th franchise unit, in Dallas, Texas, and began its successful home delivery service. By the 1990s the delivery and carryout business had grown to account for approximately 25 percent of the company's total sales.

By 1986 there were 100 restaurants in UK and 5000 worldwide.

In 1990 Pizza Hut opened its first restaurant in Moscow. The Moscow location quickly established itself as Pizza Hut's highest volume unit in the world. Restaurants just behind in total volume served were found in France, Hong Kong, Finland, and Britain.

PepsiCo took advantage of global change following the end of the Cold War, expanding Pizza Hut into new and emerging markets. In 1991 PepsiCo had restaurant outlets in 80 countries and by 1997, Pizza Hut restaurants had spread to 90 countries.

In 1994 several changes resulted in the company's first decline in operating profits in 15 years. The pizza market was no longer growing; fast food rivals cut prices; and investment in new outlets was draining corporate resources. PepsiCo's restaurant division saw sales in restaurants open at least one year fall six percent in 1994, contributing to a drop in profits of 21 percent (to $295 million).

Some indicators were promising: market share rose from 25.6 to 27 percent; 1995 sales increased 16 percent to $5.2 billion; and operating income rose to $414 million, up 40 percent from the year before.

In 1996 Pizza Hut planned to introduce a major new product each year and two or three line extensions. In 1996 Pizza Hut accounted for 17 percent of PepsiCo's total sales and 13 percent of its operating profit.

In the late 1990s, PepsiCo drew together its restaurant businesses, including Pizza Hut, Taco Bell, and KFC. In January 1997 the company announced plans to spin off this restaurant division, creating an independent publicly traded company called Tricon Global Restaurants, Inc. The formal plan, approved by the PepsiCo board of directors in August 1997, stipulated that each PepsiCo shareholder would receive one share of Tricon stock for every ten shares of PepsiCo stock owned. The plan also required Tricon to pay a one-time distribution of $4.5 billion at the time of the spinoff. If approved by the Securities and Exchange Commission, the spinoff would take place on October 6, 1997.

In July 2000, Pizza Hut became the first company in history to place its logo on the world’s largest proton rocket.

In 2002, Tricon Global became YUM! BRANDS INC.

In 2006, Whitbread sold their shares to the joint venture to Yum! Brands Inc. Also as a result, Pizza Hut Inc. UK was 100% owned by Yum!

Lastly, up to date in 2008, Pizza hut owners have bought Godfather’s Pizza with 28 stores in Ireland.

Enrico, who had risen to the position of PepsiCo CEO, explained the move: "Our goal in taking these steps is to dramatically sharpen PepsiCo's focus. Our restaurant business has tremendous financial strength and a very bright future. However, given the distinctly different dynamics of restaurants and packaged goods, we believe all our businesses can better

flourish with two separate and distinct managements and corporate structures."

Pizza Hut’s Mission Statement“To be the first choice among restaurants and delivering brands by

developing our people capability to deliver maniacal service, product quality , 100% customer satisfaction, innovation and building great look and feel restaurants to provide

attractive returns to our stake holders.”

And also known through the P.E.A.R.L.S concept

P.E.A.R.L.S P ASSION for excellence in doing everything. E XECUTE with positive energy and urgency. A CCOUNTABLE for growth in customer satisfaction and profitability. R ECONGNIZE the achievement of others and have fun doing it. L ISTEN and importantly, respond to the voice of the customers.

ENVIRONMENTAL AND INTERNAL ANALYSIS OF PIZZA HUT In our visit to Pizza Hut we conducted research on Economical, Social and Technological Analysis.

ECONOMICAL FACTORS: If the country’s economy is strong, hence the GDP of the country will be powerful also, this is a green signal for the business as the per capita income if the people will be increased and they will spend more money. In our survey we came to know that most of the people in the beginning of the months spend more and they visit pizza hut very often. When the inflation rate increases the cost of raw material also increases and this leads towards high prices of the products and vice versa.

SOCIAL FACTORS: Pizza hut is multinational. It has basically originated from America, so the organization is overwhelmed by the western culture. There are social forms of society which consist of upper class, middle class and lower class. Every country has cultural norms, values, beliefs and religious obligations which can affect the organization.

TECHNOLOGICAL FACTORS: Now a day’s technology is improving, where as baking and heating ovens will be of new and efficient technology and will provide efficient service. Due to new technology there are new ways of marketing like: internet, telemarketing and the organization can advertise their products with much faster pace. Computer based customer data is MIS (managing information systems) helps in collecting customer data, daily transactions, future forecasting and decision making. New vehicles will make their service more efficient.

SWOT ANALYSISIn the internal analysis of Pizza Hut we have considered SWOT of the company. Every organization has its strengths, weakness, opportunities and threats. So, the SWOT analysis for Pizza Hut is as following:

S TRENGTHS:

Company’s image Quality and hygienic products Unique pizza with cheese Brand acceptance Effective distribution network Online orders Varity of taste available Little competitors

W EAKNESSES:

Import duty Competitions High prices Customer’s loyalty towards Pan Pizza Only large size available Taste of cheese

O PPORTUNITIES:

Economic component Expansion opportunity Demands of different tastes Awareness increase

T HREATS:

Threat of upcoming competition Lowering tariffs on franchising and licensing New entrance like Domino’s Pizza in Pakistan’s market can affect their market shares. Other local restaurants can affect their market shares by providing pizzas with lower prices. Social factors can affect their image as a Western organization.

POSITIONINGPizza Hut was among the first multinational brands to enter the food retail sector in Pakistan.

When the first Pizza Hut restaurant opened in Karachi the quick service industry was at a nascent stage and the pizza category was dominated by a sole regional player who had a marginal presence. Pizza Hut

went on to play a significant role in pioneering and developing this category in Pakistan.

Worldwide and in Pakistan, Pizza Hut has become synonymous with the ‘best pizzas under one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product—which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest products the industry has to offer, while setting standards for others to strive to replicate. Pizza Hut is committed to providing uncompromising product quality, offering customers the highest value for their money and giving service that is warm, friendly and personal.

A critical factor in Pizza Hut’s success has been its unique dining experience. Crew members at Pizza hut strive each day to provide ‘CUSTOMER MANIA” – the kind of service that ensures that every visit of the customer is a memorable one.

Pizza Hut’s constant endeavor to provide extra value – whether it is pizzas which are available to suit every price range, new promotions or the introduction to innovative product ranges- that puts a ‘YUM’ on every customer’s face – has allowed it to increase its presence in Pakistan to the current 38 restaurants across 9 cities.

STRATEGIES ADOPTED BY PIZZA HUT:A business’s strategy is the pattern of decisions and actions that are taken by the business to

achieve its goals. A business has a variety of goals and objectives. All businesses need to organize their business activities in order to achieve their business objectives. Running a business involves planning the current as well as the future activities. Hence, in order to achieve the business objectives, all business organizations adopt different strategies. Similarly, Pizza Hut has adopted many strategies which help achieve the targets set by the main office. Changes are the external as well as internal environment has led Pizza Hut to rethink their past strategies and has therefore designed new strategies after noticing the changes in the environment. These environmental changes are seen through the SWOT analysis. After considering all the factors, Pizza Hut has decided upon the strategies and their current strategies are divided into five main categories and further have sub-parts. The strategies are as below:-

Functional Strategies:These are strategies designed to improve the efficiency of a business’s operations. They often focus on an area, such as marketing, human resources and etc. All business organizations adopt strategies at functional level and as the functional level is achieved, corporate objectives become easy. In order to make the functional strategy efficient, Pizza Hut has made all the functional departments cooperate with each other.

Total Quality Management (TQM):This is the most important factor for a food chain like Pizza Hut. All the employees’ back-of-the-house i.e. the kitchen assistants are trained accordingly. They are given extra classes in order to meet the quality standards set by Pizza Hut, around the world. This strategy is important in order to satisfy the customers. This strategy is strictly implemented in Pizza Hut in order to fulfill the quality standards.

Different quality management staff is also present at Pizza Hut. The shift managers have the task to observe whether the quality standards are met or not, whereas there is a total quality standards department at the main office in Karachi. This department has the task to implement quality standards and know whether they are achieved or not.

Business Level Strategy:-Business level strategies are plans made to gain a competitive advantage over its rivals in a market. Hence, all the businesses need to adopt business level strategies in order to compete in a competitive environment. If we take a look at the Pakistani market, there are no large competitors of Pizza Hut, but unlimited small competitors exist in the market. The threat of competitors is very low as there is no international food chain offering pizza in Pakistan at present. Therefore, present strategies adopted by Pizza Hut are keeping in consideration the present competition. Whereas, in the future this competition will increase and Pizza Hut will have to change all its business level strategies in order to compete with its rivals. Now as Domino’s has opened in varies cities of Pakistan, it will result as a threat for Pizza Hut and hence, their strategies are to be taken into consideration for further modifications.

Pricing Strategy: The level of competition a business faces determines its pricing strategy. Sometimes a business has the scope to set its price and other times it does not. When a business has the scope to set its prices this is a number of pricing strategies or policies it might choose. As there are no such competitors of Pizza Hut which could compete with the quality of pizza produced at Pizza Hut, therefore, the pricing strategy adopted by Pizza Hut is ‘market skimming’. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza hut is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. They satisfy the target market as the food quality is worth the price paid. The pricing strategy is not just to get the worth of quality but also to gain maximum profits before any competitor enters because then Pizza Hut will have to change its pricing strategy. Although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are not home-produced. They are imported from different countries keeping in view the best quality.

Market Share:As there are dozens of Pizza Suppliers globally providing services in different parts of the world, but Pizza Hut is the one who got the bigger market shares globally.

This is a survey taken by www.survey.com that pizza hut is having 48% of overall Pizza market in the world. After that Dominos is leading with a percentage of 20%, while the rest 32% is divided in the remaining pizza provides globally.

WHO IS THE FRANCHISER?Pizza Hut represents a strong brand that has demonstrated economic stability over time. Pizza

Hut is one of the flagships brands of YUM! Restaurant Int. which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella.

YUM! BRANDS:

Yum! Brands, Inc., based in Louisville, Ky.- it is the world's largest restaurant company in terms of system restaurants with more than 36,000 restaurants in over 110 countries and territories and more than 1 million associates. Yum! is ranked #239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. Four of our restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver's – are the global leaders of the chicken, pizza, and Mexican-style food and quick-service seafood categories.

In October 1997, Yum! Brands were spun off from PepsiCo as Tricon Global Restaurants, Inc. At that moment it established as a singular goal from which they never wavered: To be the best in the world at building great brands and running great restaurants. Now At present Yum! Brands is the worldwide leader in Multi-branding, offering consumers choice, convenience, and value by combining two brands under one roof. Multi-brand opportunities still exist across America and offer franchisees a competitive edge as well as many advantages.

The Yum! System includes three operating segments: - U.S., International (Yum! Restaurants International) and China Division (includes mainland China, Thailand and KFC Taiwan). Outside the

United States in 2008, the Yum! System opened more than four new restaurants each day of the year, making us the largest retail developer in the world.

Franchise History

When did the first Pizza Hut open? 1957When did Pizza Hut start Franchising? 1959

Year U.S.A. Canada International Corporate

2003 4725 N/A 2562 2544

2002 5901 N/A 3571 2493

2001 5974 N/A 3509 2508

2000 6126 N/A 3489 2469

1999 4277 N/A N/A 2790

How Much Does a Pizza Hut Franchise Cost?If you have a budget of between $1.3 million to $3 million and a net worth of $1 million with

$360,000 in liquid assets, you can be in business within a year, but there are other requirements as well. You must commit to building at least 3 restaurants over 3 years. Pizza Hut is part of an organization that offers tremendous franchise support including advertising, business coaching, training, development, and cooperative sourcing. Performance Improvement Programs and support are also offered to each new franchisee along with 12-16 weeks of required training.

What We LikeYum! Brands offer the power of multi-branding that includes two National Media Budgets, two Category Leading Brands, and two menus. This can broaden customer appeal, which has the potential to increase the average check size. Field offices are located throughout the U.S. to support franchise and company restaurant operations.

Pros Ranking - Ranked No. 1 in its category in 2008. Multi-Branding - Yum! Brand is the worldwide leader in Multi-branding.

Cons Operations - Can take up to 46 weeks to open the first store, but it's probably worth the wait.

FACILITIES

CoachingEach brand has Franchise Business Coaches and/or Franchise Business Leaders to provide business insight and instruction. Your coach/leader will keep you abreast of important business initiatives, organize key regional training activity, and be your primary point of contact.TrainingYum! Enlists each new franchisee in 12-16 weeks of training. A fee may be charged for the training activity, and franchisees are responsible to staff their restaurants and train the restaurant crew.Yum! UniversityYum! University is the management and development arm of Yum! Brands, Inc. Yum! University’s global curriculum covers wide-ranging subjects like:

HR College Leading Change

Coaching Leaders

Ops College

Multi-brand Operations

Development College

Finance College

Advertising & MarketingYum! is committed to making our big brands even bigger. A&W® All-American Food, KFC®, Long John Silver’s®, Pizza Hut® and Taco Bell® all have annual promotional calendars featuring a variety of special offers. These promotions are designed to excite customers and increase that store’s traffic.

Many markets have local advertising cooperatives to coordinate local marketing activity. Franchisees are encouraged, but not required, to participate in system promotions.

Local Store Marketing initiatives help you build customer loyalty with marketing programs. Franchisees are encouraged to use marketing resources made available to them.

DevelopmentFor a fee, Yum! Brands offer a Development Service Program (YDS) for franchisees that is intended to facilitate the design, approval and construction of restaurant facilities.

Services Provided:

Site selection

Contract negotiations

Corporate approval

Feasibility

Design

Permitting

Why Pizza Hut?Yum! Brands is the worldwide leader in Multi-branding, offering consumers more choice, convenience and value at one restaurant location by combining two of our great brands under one roof.Multi-branding is changing the landscape of the quick-service food industry in the United States. Yum! Brands have more than 3,400 company and franchise-owned multi-brand restaurants worldwide.

Building Diverse Partnerships through Franchising

As Yum! grows the world over, so do the ranks of our franchise business partners, who reflect the diversity of the markets we serve. Our brands are committed to ensuring our franchisees represent our diverse customers and we recruit minorities and women to our winning franchise teams.

In fact, many of our minority and women franchisees are some of the country's most successful entrepreneurs and are essential to our business growth, building thriving neighborhoods and providing economic opportunities for our customers. Often ranked as leading businesses and employers in numerous industry publications, our franchisees have used their leadership to strengthen our system and enhance our brand loyalty.

While Yum! Franchising is a fantastic opportunity for many; it may not be for everyone. Have a look at the following criteria to see if Yum! is right for you:

Do you have capital to grow? Personal Net Worth of $1m Liquidity of $360m Endorsed financial plan for future development

Do you have a passion for operations? Quick-service restaurants are a “hands-on” business We need operators that are customer focused and pay attention to details Foodservice experience is important. If you don't have it, you will need to hire an

experienced leader

Are you committed to building people capability? A commitment to management and team training

An infrastructure that supports multiple restaurant ownership

PIZZA HUT IN COMPARASION WITH THE FOLLOWING:

McDonaldsRay Kroc, a milkshake mixer salesman, ventured to California in 1954 to visit McDonald's

hamburger stand, where he heard they were running eight mixers at once. Kroc became business partner with brothers Dick and Mac McDonald and opened the first McDonald's in Des Plaines, Illinois in 1955. McDonald's and the Golden Arches have since become an internationally-recognized symbol of quick-service hamburgers, fries, chicken, breakfast items, salads and milkshakes. . In 1965 McDonald's went public and today is the leading global foodservice retailer with more than 30,000 restaurants, located in more than 100 countries.

Franchising History

When did the first McDonald's open? 1955When did McDonald's start Franchising? 1955

Year U.S.A. Canada International Corporate

2005 11632 903 9878 8096

2004 11629 860 9694 8038

2003 11533 843 9740 8065

2002 11276 832 9850 8262

2001 11051 812 9455 6918

Start-Up Cost & Franchise Fee

It takes a lot of potatoes to make these fries so come prepared. You will need a minimum of $300,000 in non-borrowed, personal resources to be considered for a franchise. Most Owner/Operators enter the System by purchasing an existing restaurant directly from McDonald’s or from a McDonald's Owner/Operator. A small number of new operators choose to purchase a new facility, but that requires an initial down payment of 40% as opposed to 25% for an existing restaurant. Intensive training addresses all aspects of operating a

McDonald's restaurant. While McDonald’s does not offer financing, McDonald’s Owner/Operators have access to the company’s established lender relationships with some of the lowest lending rates in the industry.

Total Investment: $950,200-$1,800,000Initial Franchise Fee: $45,000Royalty Fee: 12.5%+Advertising Fee: N/ATerm of Agreement: 20 yearsRenewal Fee: $45K

Pros

Special Incentive Programs -Minority Fran Participant Recession Proof Market - McDonald's serves more than 27 million individuals daily

according to 2007 statistics.

World Class Training - McDonald's is recognized as a premier franchising company around the world. Training is required prior to becoming an owner/operator.

Cons

Cost - McDonald's does not provide financing or assistance other than the special incentives for minorities.

No Absenteeism - McDonald's franchises are open only to individuals who are involved with the day-to-day operations of the restaurants-no absenteeism allowed.

BURGER KINGIn 1954, James McLamore and David Edgerton opened their first BURGER KING restaurant. By

1977, Burger King had opened 2,000 restaurants on three continents. Today the Burger King system operates more than 11,300 restaurants in 50 states and 69 countries. Approximately 90 percent of Burger King Restaurants are owned and operated by independent franchisees. Burger King has more than 11,000 restaurants globally in more than 60 countries. This impressive growth relies on the success of their franchisees and that is why Burger King’s market plan focuses on “restaurant-level economics.”

Franchise HistoryWhen did the first Burger King open? 1954When did Burger King start Franchising? 1961

Year U.S.A. Canada International Corporate

2004 7050 228 3185 1182

2003 7252 233 3090 1150

2002 7552 244 2629 1038

2001 7756 214 2409 993

2000 7826 208 2495 867

Start-Up Cost & Franchise Fee

Franchise Fees is a flat $50,000 and the total investment could be as low as $300,000 making Burger King a much more affordable option than most in its class. Burger King’s franchisee training is geared to provide you with the skills to help build a successful business in this extremely competitive marketplace. Burger King offers over 70 days of initial training that covers a broad range of technical and managerial skills. Courses can be added later for you and your team to increase experience, business, and operations knowledge. General business knowledge and past food service experience is required.

Total Investment: $294,000-$2,800,000Initial Franchise Fee: $50,000Royalty Fee: 4.5%Advertising Fee: Term of Agreement: 20 yearsRenewal Fee: $50K

Pros

Franchise Fees - Lower than normal franchise fees. Burger King earns 4.5 percent royalties on sales as opposed to the more traditional 6%.

Affordable - This is the least expensive of the super chains and although it can still run into the high 6-figures, friendly Burger King makes you at least feel like you can afford it.

Special Incentive Programs - Minority Fran Participant and unsurpassed on-going support.

Cons

None - We couldn't find much wrong with this one. Although Burger King is not consumer's first fast-food choice, excellent market research and hand-holding by the company insures profitable sites before start-up.

Today, in the Franchise 5oo Rank, Pizza hut falls #7 in the list whereas, in 2008 it was #4. In the list of Fastest-Growing Franchises it is listed #65 as of 2009 and in 2008 it was #23. And in the America’s Top Global Franchises it is ranked #7 in the year 2009 and in the past year it was at #9.

Pizza Hut has built a strong reputation of its brand through giving quality products and has earned respect from its customers. Its innovation and quality has elevated them to higher standards during the past few years. But still the company is planning to encapsulate more market shares. In addition, Pizza Hut has diverse targets set for them and they have adopted different strategies to successfully achieve those targets set which will help them rank #1 in all categories in the near future.