Must-know: Yum! Brands’ Pizza Hut business

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Nov. 20 2020, Updated 2:33 p.m. ET

Pizza Hut overview

The first Pizza Hut opened in 1958. Like Kentucky Fried Chicken (or KFC), it’s also a fast food or quick service restaurant. About one-third of Yum! Brands’ (YUM) total restaurant units in this segment were Pizza Hut at the end of 2013. Of the Yum! Brands’ restaurants, ~7,800 were in the U.S. and ~5,470 restaurants were located internationally—this doesn’t include Taco Bell in India and China. Unlike KFC and Taco Bell, Pizza Hut has a limited drive-thru offering.

The menu

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Pizza Hut offers all sorts of pizza. It’s pizza crusts include hand-tossed, thin crust, and stuffed crust. It also serves pasta and chicken wings in many varieties. Customers can order bread sticks and cheese sticks with a variety of dipping sauces. Pizza Hut recently launched a pizza-sized cookie for dessert. Pizza Hut offers a variety of beverages.

The menu is similar to Domino’s Pizza (DPZ), DPZ offers the same variety of pizza, pasta, sides, dipping sauces, chicken wings, desserts, and beverages mentioned above. Papa John’s (PZZA) offers the above menu along with a similar pizza-sized cookie.

Pizza Hut’s performance

In our Yum! Brands quarterly overview series, we discussed that year-to-date (or YTD) 2014 Pizza Hut’s same-store sales declined 2% year-over-year (or YoY). Management also stated that these results fell short of their expectations.

In contrast, DPZ had a same-store sales growth of 10.3% globally. It had 5.1% same-store sales growth in the U.S. during the same period. PZZA had a strong same-store sales growth of 9.5% in the U.S. Needless to say, Pizza Hut also faces competition from local chains.

Pizza Hut is disappointing in the U.S. It’s part of the Consumer Discretionary Select Sector SPDR (XLY). Chipotle Mexican Grill (CMG) is also included in XLY. In the next part of the series, we’ll discuss Taco Bell.

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