Pizza Hut, Inc Delivery Segment Analysis

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  • Topic: Pizza Hut, Pizza delivery, Pizza
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Case Study

Pizza Hut, Inc
Delivery Segment Analysis


Presented to Professor Abhi Biswas

By Group 4

Amit Huria
Atif Sohel
Chi-Lun Tseng
Chao Liang
Ching-Feng Chen
Ilhan Ertan
Kuo-yen Fu
Nitin Vohra
Nittala Kumar
Sanjay Kukreti
Yualdo Yudoprawiro

MKT6301 Strategy Management Summer 2008

1.Introduction- 3 -
2.Nature of Demand- 3 -
3.Extent of Demand- 4 -
4.Nature of Competition- 5 -
5.Environmental Climate- 7 -
6.Stage of Product Life Cycle- 8 -
7.Cost Structure of Industrial- 9 -
8.Skills of the firm- 11 -
8.1Marketing skills:- 11 -
8.2Management skills:- 12 -
8.3Operations Skills:- 13 -
8.4R&D skills- 14 -
9.Financial Resources of the Firm- 14 -
10.Marketing Mix Structure- 14 -
11.SWOT analysis- 15 -
11.1Strengths- 15 -
11.2Weaknesses- 17 -
11.3Opportunities- 17 -
11.4Threat- 18 -
12.Evaluation of Alternatives- 19 -
12.1Alternative#1 - Delivery & Dine-in in the same store- 19 - 12.2Alternative#2 - Delivery & Dine-in – Separate stores- 21 - 13.Recommendations- 22 -
14.Plan Of Action:- 23 -
14.1Dine-in + delivery as one unit for small scale market- 23 - 14.2Franchise Focused:- 23 -
14.2.1Encourage Franchise to promote delivery segment:- 23 - 14.2.2Customized training for Delivery staff:- 24 -
14.3Customer Focused:- 24 -
14.3.1Introduction of ValuePak:- 24 -
14.3.2Introduction of Loyalty Program- 25 -
14.3.3New Product for the delivery option:- 25 -
14.3.4Customer Service Center (CSC) system:- 25 -
14.4Both Customer & Franchise Focused- 26 -
14.4.1Dine-in discounts for every delivery order- 26 - 15.Summary- 26 -


The first Pizza Hut store was established in 1958 by Dan and Frank Carney two college students from Wichita, Kansas. In 1981 Pizza Hut became the largest pizza restaurant chain in the world in both sales and number of restaurant which had a total of 5025 domestic units and annual sales of almost of $ 2 billion. It was the leader of the pizza industry. However, in May 1986, Steve Reinemund, the newly appointed president of Pizza Hut announced that he intended to purse vigorously the excited approach to increase their market share in Pizza delivery market .By way of implementing new strategic plan, Pizza Hut wanted to fast grow into the delivery segment and compete with domino’s “ delivery-only chain’s rapid expansion” Unfortunately, it received huge resistance from the sizable percentage of franchisee due to expensive computer system setup cost, disagreement with the company’s delivery concept, especially regarding upsizing, believing that the addition of delivery service to traditional eat-in restaurants would create unmanageable operational bottlenecks, and seriously overbuilt restaurant industry resulted from the intense local competition in the pizza eat-in and carry-out segments. In the following pages we will provide more details and ours alternative ways to solve the obstacles.

Nature of Demand

By the early 1980’s, convenience was crucial to many customers. Adults relied on pizza as a simple method for dinner in a busy life. Meanwhile, children began to see pizza as treat as well as a fun and exciting dinner. Two-career families often found cooking at home or eating in restaurants too time consuming, thereby increasing carryout and home delivery business. In both 1985 and 1986, consumer surveys undertaken by the National Restaurant Association identified pizza home delivery as the most important new fast food concept. Another study had shown that consumers generally viewed pizza as eat-at-home food. Many analysts believed that the rapid growth of the in-home video rental market, together with the increasing number of baby-boomers with small child, would further fuel the pizza delivery segment. The concept of pizza delivery was the solution that many families desired that answered the question...
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