CHICAGO (AdAge.com) -- At a time when Domino's is defending its new recipe and Papa John's is an increasingly formidable third-place competitor, No. 1 pizza chain Pizza Hut is pinning its turnaround on sending a value message to consumers, tempting them with lower prices, new advertising and two-click ordering.
Touting $10 pizzas and 50-cent wings, the chain appears to have promoted itself out of a slump in which same-store sales fell as low as 13%: Parent company Yum Brands reported Pizza Hut sales were up 5% in the U.S. in first-quarter earnings earlier this month.
Also during the first quarter, Pizza Hut debuted its first advertising from Interpublic Group of Cos.' Martin Agency, focusing on young families, married couples and college students taking advantage of the $10-large-pizza promotion. Kurt Kane, VP-marketing, said the fresh perspective has been helpful in that it provides real-life applications of the chain's value offerings.
Pizza Hut, which has prioritized online ordering in recent years, last week debuted a simpler platform from digital agency IMC2. Last year the marketer was the first major fast-food chain to launch an iPhone application. At PizzaHut.com, consumers can now order a pizza in two clicks. Mr. Kane, who recently chatted with Ad Age about the new developments, said the chain expects to surpass $2 billion in online sales by the end of this year.
Ad Age: What's working so well for Pizza Hut right now?
Mr. Kane: We've gone directly after the No. 1 issue that consumers had with our brand, which was value, and we've really provided them with a great value-oriented solution so they feel like they're getting what they should for what they're paying.
Ad Age: How important is the new advertising in all of this?
Mr. Kane: We've got insight-led advertising now that is bringing to life how value from Pizza Hut fits in their everyday lives. It was really important for us to have a fresh start this year, both with our advertising and our overall messaging, and our agency partnership has been a big part of that. Our partnership with Martin -- they've done a really nice job with bringing strategic insight to the business. It really shows in the work how they're grounded in the reality of our customers' lives and how to connect with them.
Ad Age: Who are your consumers?
Mr. Kane: We've got two main consumer groups we're taking to: a family that may or may not have kids in the home and also young adults. Not just college students, but young adults are big consumers of our group of products, and we want to talk with them as well.
Ad Age: Are you seeing any signs of a rebound, or evidence that consumers are open to incremental purchases?
Mr. Kane: What we're seeing right now is consumers are still very conservative about the economy and the overall financial picture, so they're looking for value as much now as ever before. They've also begun to discover that getting great value is part of everyday life because companies have responded to the original economic challenge with value the consumers haven't seen in a long time ... [now] getting great value is part of their new reality.
Ad Age: Pizza Hut expects to reach $2 billion in online sales by the end of this year. Is that sooner than originally projected?
Mr. Kane: It's definitely surpassed expectations and grown faster than you could ever imagine. It's one of those things when people get into the rhythm of doing it, they do it all of the time, they have to be able to do it and our goal is that people know about the website and have a greater, similar or even better experience ordering online as they do on the phone. That's the foundation of the redesign: being able to give them their favorite online-ordering experience.