Pizza Hut hopes a new $5 pizza will bring back customers

By Jordan Valinsky, CNN

New York (CNN) — Pizza Hut has a value problem. It hopes a new $5 pizza will help.

On Wednesday, the chain is rolling out “Crafted Flatzz,” a thinner and crispier version of its Personal Pan Pizza, for $5. The single-serving pizzas, available for a limited time, are aimed at the budget-conscious lunch crowd.

The new menu item is part of Pizza Hut’s plans to turn sales around in the United States following seven consecutive quarters of declines. Executives blame the losses on customer confusion surrounding its deals.

That’s because eaters aren’t ditching pizza. Rather, cash-strapped customers are shifting to chains with better deals and new menu items.

Pizza Hut had a rough second quarter compared to its rivals, with a 5% drop in US sales. Domino’s Pizza and Papa Johns both posted positive results following their own respective rough sales patches.

Domino’s, rebounding from a drop in US sales in the first quarter, is finding success through new items and rewards. That includes the launch of the higher-priced Parmesan Stuffed Crust Pizza that juiced profits and a refreshed loyalty program filled with deals. The chain also began a partnership with DoorDash for delivery, boosting same-store US growth to 3.4%.

For Papa John’s, sales rose 1%, a reversal from several quarters of declines. The number of pizzas ordered jumped 6%, part of the chain’s long-term plan to shift away from sides and sandwiches (remember the Papadia?). A $6.99 “Papa Pairings” menu also increased the number of pie orders.

Papa John’s CEO Todd Penegor said on an August 12 earnings call that the chain’s performance is “demonstrating both the power of our deep focus on our core product as well as value.”

Then there’s Pizza Hut, which is owned by Yum! Brands. The parent company’s CEO, David Gibbs, was blunt on its August 5 earnings call about the chain’s struggles, saying it had an “insufficient value message amid a competitive value landscape.”

Pizza Hut has trailed behind its peers “because its value message hasn’t stood out like Domino’s and Papa John’s,” said R.J. Hottovy, head of analytical research for Placer.ai.

So the chain is ramping up promotions, like extending its $2 Personal Pan Pizzas on Tuesdays and Wing Wednesdays, and this latest addition of Crafted Flatzz.

Pizza Hut CEO Aaron Powell thinks targeting the lunch crowd could help, telling CNN that more than two-thirds of the chain’s pizza is purchased after 4 pm, so the earlier time period is an “area of significant opportunity” for the chain.

Specifically, it’s targeting individuals who want pizza but can’t eat a whole pie. After all, the chain has popularized the Personal Pan Pizza and sells Melts, a calzone-like concoction.

“People love pizza all day. It’s up to us to bring the new ways of allowing people to have formats of pizza they can eat at any hour,” Powell said. “This is a great example of something that is an outstanding value.”

The pizzas are available in five options, including chicken bacon ranch, three cheese, Nashville hot chicken, pepperoni and “The Ultimate,” which has several toppings such as pepperoni, Italian sausage, caramelized onions and cheese.

The “Crafted Flatzz” cost $5 until 5 pm local time and slightly more after that, depending on location. The aim of Flatzz is to drum up midday traffic, which hasn’t recovered to pre-pandemic levels, according to Hottovy.

“While competition is unlikely to wane, the launch of the $5 ‘Flatzz’ pizza could help improve Pizza Hut’s value perception and bring more customers into its stores during lunch hours,” he told CNN.

Powell declined to specifically discuss Pizza Hut’s problems further but acknowledged that people are “being very choosy with where they spend their money because there are challenges with confidence.”

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