Pizza Hut, which recently lost the global pizza sales crown to Domino's, is on the hunt for a new U.S. creative agency after ending a two-year relationship with Droga5, contributing to the agency's recent woes.
The agency search comes as Pizza Hut takes over from Papa John's as NFL sponsor. The multi-year was announced in late February after Papa John's ended its rocky relationship with the league, marked by accusations from founder John Schnatter that the NFL's declining ratings hurt sales. Pizza Hut's sponsorship begins with the NFL Draft in Texas in late April.
Earlier in February, Domino's touted its newly earned spot as the leading pizza chain both in the U.S. and worldwide. Domino's reported that global retail sales exceeded $12.2 billion in 2017. Pizza Hut, owned by Yum Brands, reported sales of $12.03 billion. That same month Greg Creed, CEO of Yum Brands, called Pizza Hut's results "not acceptable."
The slide to No. 2 is as much a symbolic blow to Pizza Hut as a financial one, considering that its Droga5-created tagline boasts, "No one out pizzas the Hut." A Pizza Hut spokesman confirmed that the brand would keep the tagline. He did not immediately respond to a question about why the chain is launching the agency review now.
In a statement, the marketer said, "Pizza Hut and Droga5 have mutually agreed to part ways. We are proud of the work produced together. The companies will continue to work together through June 2018." The agency issued a nearly identical statement, adding that it is "proud of the work produced together."
Pizza Hut hired Droga5 in May of 2016 after working with Deutsch since the summer of 2014. Droga5's most recent work for the brand include ads around a limited supply of custom "Pie Top" shoes that allow wearers to order pizza with a push of a button. Most of them were sent to influencers and media to create buzz, but the shoes are also featured in a TV spot running now.
The loss comes a month after Droga5 laid off about 5 percent of staff in New York across all departments, which is approximately 40 people.
And according to people with knowledge of the matter, two Droga5 clients, Tencent and Mattress Firm, have significantly reduced their scope of work with the agency since the beginning of the year. Droga began working with both companies in the middle of last year.
Droga5 also parted ways with Chief Creative Officer Ted Royer after putting him on leave and hiring an outside firm to handle an internal investigation in the shop's HR processes in early February. In late January, the agency held meetings to discuss HR matters.
Contributing: Lindsay Stein