Pizza Hut is making a comeback. Its NFL deal is one reason why
NEW YORK -- Pizza Hut had struggled to compete against Domino's and Papa John's for the past few years. But that's changing now that the company is about to start its second year as the official pizza sponsor for the National Football League.
While Pizza Hut's sales growth is still lower than fellow Yum! Brands (YUM) companies Taco Bell and KFC, the chain has started to gain some momentum. Same-store sales rose 2% for Pizza Hut last quarter and were up 10% overall compared to last year.
Scoring a sales and profit touchdown
Pizza Hut's deal with the NFL took effect after the NFL and Papa John's (PZZA) ended their relationship last year in the wake of former Papa John's CEO John Schnatter's criticism of players who protested the national anthem. That has helped boost Pizza Hut's sales.
"The first year with the NFL helped us increase brand awareness and reach a new audience we hadn't had previously," said Pizza Hut CEO Artie Starrs in an interview with Diversity News.
Starrs, who had been president of the company's US operations, was promoted in August to CEO of the entire chain. That puts him in charge of the company's global operations, which have nearly 20,000 restaurants in about 120 countries worldwide.
Pizza Hut plans to be even more active with the NFL this year. The company is working with endorsers such as top stars Todd Gurley and Aaron Donald of the Los Angeles Rams and JuJu Smith-Schuster of the Pittsburgh Steelers on a new ad campaign.
Pizza Hut also is launching an interactive game called "Hut Hut Win" that will give customers a chance to win NFL merchandise and free food. Contestants can also win tickets to Super Bowl LIV in Miami next February and the NFL Draft weekend in April in Paradise, Nevada near Las Vegas.
Starrs said it was encouraging to see much of the focus on the NFL last year return to what was happening on the field as opposed to the anthem protests, injuries to top players and lower TV ratings.
"We think this will be a big year. When there are great games and league parity, every fan feels like their team can win the Super Bowl. The NFL is an amazing brand to partner with," Starrs said.
Catching up to rivals in mobile ordering
But Pizza Hut's recent revival is not just about the NFL.
The company has also benefited from an increased focus on technology. Pizza Hut is testing a "cubby" system for takeout orders in a Los Angeles store. Think of it like an Amazon Locker for pizza, wings and garlic knots.
Pizza Hut is also stepping up its digital game with leading apps on Apple's (AAPL) iOS App Store and Google Play (GOOGL) for Android. It also has a delivery partnership with GrubHub. Pizza Hut parent Yum now owns a stake in GrubHub (GRUB) as well.
All of these initiatives are helping Pizza Hut catch up to Domino's (DPZ) in the mobile ordering game.
Domino's lets people order pizzas on Facebook's (FB) Messenger app as well as with emojis on Twitter (TWTR) and via text messages. It even tested an augmented reality ordering system on Snapchat (SNAP) last year.
Still, Starrs thinks that old-fashioned deliveries of pizza by drivers will be the way that most people will order pizza — even if they aren't calling a store to actually place an order.
"A big part of our mobile strategy is delivery. We are extremely passionate about that. If you can do delivery on time, that's great. If you can do delivery well, you can probably do carry out and other things too," Starrs said.
Although Pizza Hut is looking to do more to capitalize on technology trends, it may be slower to embrace the plant-based proteins from Beyond Meat (BYND) and Impossible Foods — even though many of their products are starting to pop up on restaurant menus.
Another big pizza chain, Little Caesars, is testing pies with meatless sausage from Impossible Foods.
Starrs said any new food items for Pizza Hut will need to be "authentic." He added that the company is "monitoring trends in food closely and said that plant-based toppings are "possible."
Any quirkier menu changes are more likely to be trialed in foreign markets as opposed to the United States. Starrs said seafood is a popular topping in Southeast Asia, for example. The chain also customizes pizzas for markets in Africa, Europe and Latin America.
But even without any plant-based products on the horizon just yet, Pizza Hut is still enjoying a solid comeback. Investors have noticed too. Thanks in part to the resurgence at Pizza Hut, Yum's stock is up 30% this year.
That's better than Papa John's, which is up 25% on hopes that new CEO Rob Lynch — formerly of Arby's — can turn things around at the struggling chain. And Domino's shares are down 4% as sales growth has cooled off.
"The second quarter, globally, was one of the best for Pizza Hut in a long time. Things are going well," Starrs said.