Pizza Hut's Thai franchisee rebrands to become Pizza Company

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Bangkok -- Minor Food Group has started dismantling signs and decorations in its 116 food outlets nationwide, effectively ending 21 years as local franchise operator for Pizza Hut.

On the back of a $2.4 million investment, the group renovates all existing locations and exchanges their logos to prepare them for their re-branding into its own pizza brand, The Pizza Company.The move is the result of an out-of-court settlement with the owner of the Pizza Hut brand, U.S.-based Tricon Global International, following a rift with Minor over the franchise in Thailand. The dispute erupted early last year when Tricon Global complained that Minor had violated the franchise agreement by introducing food ingredients into their product that did not comply with the standard menu set for all Pizza Hut outlets worldwide.

Minor justified the amendment by saying that the particular tastes of Thai consumers demanded it and the company had to heed the calls in order to secure its market share. The rebranded food outlets will be fully operational by March 17 and emphasize a more Italian-inspired type of pizzas and side dishes. The gap between closure of the outlets and their re-opening is estimated to result in a $4.8 million loss in sales for Minor.

"We are, however, confident about the future of The Pizza Company, and I project that it will eventually capture a 70% share of Thailand's pizza market after one year of operation," says Bill Heineke, Minor's CEO and a veteran of the country's fast food industry.

Meanwhile, Tricon will continue to serve the Thai market with its own Pizza Hut outlets and is expected to open some 50 new stores this year alone, according to Mr. Heinecke, who is certain that the market is still big enough for two players.

Nevertheless, industry analysts have voiced concerns that Minor might face serious marketing difficulties, at least during an introductory phase of its new brand, which might last anything from between one to two years.

"Thai consumers are simply just too familiar with the Pizza Hut brand, and Minor might run into a multitude of obstacles during the course of introducing their brand," says one observer on condition of anonymity.

After having discarded Pizza Hut, Minor still runs franchises for Burger King, Sizzler, Dairy Queen, Swensen's Ice Cream and, most recently, Australian fried chicken brand Chicken Treat.

Copyright February 2001, Crain Communications Inc.

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