Can the team trying to pull off Pizza Hut's comeback deliver?
If any duo can fix the ailing Pizza Hut, it just might be George Felix and David Graves.
Each bring years of experience at Procter & Gamble, and already helped turn around one tired American fast-food chain. They play off each other’s strengths and admit their new brand’s weaknesses.
“We haven’t been very consistent with how we go to market,” Felix says. “We should be able to answer: Why would a pizza lover love this?”
Diners aren’t exactly loving Pizza Hut these days. The long-time top pizza chain lost that status to Domino’s in 2017. After a turnaround effort failed, parent company Yum Brands turned to the team behind one of its success stories for help.
Felix, Pizza Hut’s new chief marketing officer, and Graves, its new chief brand officer, hail from KFC. A few years ago no one would have called KFC a savvy marketer with ads as crispy as its chicken. But under their stewardship, Colonel Sanders was reinvigorated in ads starring celebrities and promoting new items such as Nashville Hot chicken. Sales at longstanding KFC locations increased for 13 consecutive quarters through the third quarter of 2017. U.S. quarterly same-store sales have since declined only twice.
Felix and Graves believe they can pull from a similar playbook, using the 62-year-old brand’s heritage as an asset. “I think there is a lot of similarity to where KFC was six years ago,” says Felix.
Felix and Graves are at Pizza Hut thanks to Kevin Hochman, the KFC U.S. chief marketing officer turned KFC U.S. president who is now also interim president of Pizza Hut U.S. At P&G, Hochman and Felix worked on revitalizing Old Spice. In 2015, Hochman called Felix as he was setting up shop at KFC. Graves, after a dozen years at P&G on brands including Herbal Essences, Pantene and Pampers, got a similar call and joined the guys a year later.
In 2018, Felix left Louisville-based KFC U.S. to become director of marketing at KFC Global, which, like Pizza Hut, is based in Plano, Texas. Now, he and Graves are reunited. “It’s going to be hard, but we will be our own toughest critics,” says Graves.
Pizza Hut’s U.S. same-store sales fell in three of the last four years, including a 1 percent decline in 2019. After Pizza Hut’s U.S. same-store sales rose 2 percent in 2018, various efforts to keep that momentum failed to take hold.
Plans to deliver beer along with pizza from at least 1,000 locations by the summer of 2019 didn’t juice sales. With only 700 restaurants delivering beer across 15 states, according to Pizza Hut, the program fell short of the goal.
And NPC International, the biggest U.S. franchisee, is reportedly considering a bankruptcy filing.
Here’s the challenge: Pizza Hut doesn’t have a consistent message; it hasn’t fully capitalized on its budding relationship with the National Football League; and it’s bogged down with plenty of sit-down restaurants when delivery and carryout are the main drivers of the pizza business. Pizza Hut declined to say how many of its restaurants offer dine-in service.
“Nothing they’ve done, at least in my mind, has stood out as a message that is compelling enough to break through the clutter,” says David Henkes, senior principal at restaurant research firm Technomic.
Pizza Hut has bounced back before, with products such as pan pizza in 1980 and stuffed crust pizza in 1995. Work is underway on new items. “We want to be the first choice of America,” says Graves.
Pizza Hut churned through eight CMOs in the two decades before Felix joined. Graves is only the company’s third chief brand officer, but it’s a position that didn’t exist until 2015. When it comes to creative agencies, BBDO managed to hold onto the account for 22 years. Pizza Hut has worked with five more creative shops since BBDO lost the gig in 2009.
“That’s part of why the brand hasn’t been very consistent,” Felix says.
The current creative incumbent, GSD&M, won the account in 2018. Spark is the media agency.
For now, no agency changes are being made. But when a new CMO comes in, that person often turns to the creative talents that were a good match at a prior job. At KFC, Hochman brought in Wieden+Kennedy, which had worked on Old Spice and went on to lead the “Re-Colonelization” of KFC.
Is Wieden poised to add Pizza Hut to its client roster, which already includes KFC and McDonald’s? Not just yet. There’s an energy with GSD&M and there’s value in the continuity, says Felix.
Meanwhile, rivals are chugging along. Domino’s is known for ease of ordering, Little Caesars is promoting delivery for the first time, including in a recent Super Bowl commercial, and even Papa John’s is regaining some footing under new CEO Rob Lynch. Plus, there are thousands of local pizza chains and individual shops to compete against.
“There’s a lot of loyalty to those local places, so I think the pizza chains have to do something extraordinary to get consumers to order from them,” says Henkes.
About 40 percent of the U.S. pizza industry’s $43 billion in 2018 sales came from local operators, with the other 60 percent handled by chains, Henkes noted. Pizza Hut’s slice was nearly 13 percent.
And it isn’t just competing against other pizza purveyors. Among diners who chose Pizza Hut, the top restaurants in their consideration were, in order, Domino’s, McDonald’s, Papa John’s, Little Caesars, and Burger King, according to data from Technomic.
Pizza Hut was started in Wichita, Kansas, in 1958. As the story goes, two landladies, inspired by a story they’d seen in a November 1957 issue of The Saturday Evening Post, suggested to Dan Carney that he open a pizzeria. Dan and his brother Frank opened the restaurant with the help of John Bender. On opening day, May 31, 1958, a large pie was $1.50, according to “The Pizza Hut Story,” a 176-page book published by the International Pizza Hut Franchise Holders Association in 2008.
Soon, pizza was catching on across America. In 1959, Little Caesars opened its first restaurant in Michigan, followed a year later by Domino’s. All three rapidly expanded.
By the 1960s, Pizza Hut had a mustachioed mascot, Pizza Pete. Pizza Hut’s first TV spot featured the slogan “Putt Putt to the Pizza Hut,” featuring a man driving a miniature car to pick up his order.
It’s easy to forget what a cultural touchstone Pizza Hut has been. Ed McMahon promoted it on “The Tonight Show.” Rich Little appeared in a campaign. So did Aretha Franklin. In 1995, the unlikely duos of then-divorced Donald and Ivana Trump, plus David Robinson and Dennis Rodman, promoted stuffed crust pizza. In 1997, Mikhail Gorbachev hawked a pie called the Edge. In 2006, Jessica Simpson sang “These Bites Were Made for Poppin’” to sell the Cheesy Bites pizza, in a campaign that also starred Miss Piggy.
“Pizza Hut should be a happy, fun-loving brand,” says Felix.
Felix is a fan of some of his predecessors’ plans, including the retro red roof logo and the “No One Outpizzas the Hut” tagline from Droga5 in 2016.
“I personally think there’s a lot to that and don’t think we’ve lived up to it,” says Felix.
Now, the team is eager to define the brand’s north star. Felix and Graves spent time earlier this year in Wichita, visiting the company museum, and speaking with franchisees about everything from profitability to the “fairy dust” seasoning they used to use.
Felix handles brand positioning and strategy, advertising, brand communications, public relations, media and social impact such as the “Book It” program—which rewards kids for meeting reading goals with coupons for free personal pizzas. Graves is responsible for culinary, food safety, brand and consumer insights, and planning the cadence of deals.
Graves reflects fondly on the days when Pizza Hut pizza was considered “superior, abundant and great-tasting.” The chain already overhauled its pan pizza and stuffed crust, and he’s pleased with those. Now his team is working on other projects. The limited-time mozzarella poppers pizza introduced in February, which pushed 16 mini mozzarella sticks into the crust, was already in the pipeline.
Asked to name their favorite Pizza Hut foods, Graves listed the pan pizza and stuffed crust. “I’d forgotten how good it was,” says Graves. Felix chose the pan supreme and the chicken wings, which he says are an unsung menu hero.
To Graves, the goal is to have “pizzas you can only get at Pizza Hut” that resonate with consumers.
Graves, who recalls his grandmother taking him to redeem his “Book It” coupons, sees heritage in the details from Tiffany lamps to the red plastic cups used in the dining rooms.