Yum Brands Inc yesterday forecast same-store sales growth of 2-3% for fiscal 2019 and said it would reduce Pizza Hut’s dine-in operations as it sharpens its focus on delivery.
The company said Pizza Hut’s international dine-in assets would be cut to about 25% in the next three to five years from 42% and that it would make similar cuts in the US.
“We are migrating out of many of our dine-in assets to delivery assets in the United States,” chief financial officer David Gibbs said in an interview.
The 60-year-old chain has been struggling with changing consumer tastes and stiff competition from other restaurant chains, mainly Domino’s Pizza Inc – which has relied on its delivery business to drive growth.
Pizza Hut’s same-store sales have shown little growth since 2015, with analysts estimating a drop this year too.
Artie Starrs, president of Pizza Hut’s US unit, said on the company’s investor day he was “extremely dissatisfied” with the pizza chain – blaming its dine-in assets, and lack of innovation and creative advertising for its poor performance.
As part of a turnaround, the pizza chain is banking on its Delco outlets, which focus on delivery and carry-out, and investments in new technologies.
Gibbs said Delco is a growth driver, with 90 percent of its new stores built around that model.
“(Delivery and carry-out) part of the business is growing well today, that gives us a lot of hope and excitement for the future.”
The Louisville, Kentucky-based company forecast full-year system sales growth in the mid-to-high single-digit range, adding that it was on track to deliver a profit of US$3.75 per share in 2019.