The news from YUM! is that Pizza Hut may be sliced. The other two big brands in the YUM! portfolio – KFC and Taco Bell – are managing. Sadly, Pizza Hut is not hot.
There are several reasons why Pizza Hut is experiencing difficulties operating in today’s restaurant environment. Late last year, QSR magazine wrote an in-depth story about Pizza Hut and its tribulations. The article cited the various Pizza Hut evolutions: from a dine-in space to a take-out and delivery model; suffering and indebted franchisees; along with these comments:
“… pizza brands fight for share with aggregators for a digital, convenience-focused occasion, more so than other segment when you consider how the pool has thickened over the years; and … pizza is often cited as the only sector where independents hold more share than the largest chain. According to Statista, in 2022, there were 44,644 independent pizza restaurants in the U.S., roughly 4,800 more than the previous year. Meanwhile, the number of U.S.-based pizza chain units counted 35,531.”
Pizza Hut has struggled in its share wars with Papa John’s and Domino’s. This fight for market share forced Pizza Hut to focus on an attribute: price. While price-as-a-cost dominated the Pizza Hut message, Papa John’s and Domino’s continued to communicate benefits. Papa John’s, along with price, continues to support its “better ingredients, better pizza” while Domino’s is adding a tongue-in-cheek reminder that you can share a pizza but not a burger, reminding buyers that a Domino’s pizza and a burger are priced similarly at $6.99. Domino’s also has price-focused ads but always the ads are “great brand at a great price” not “great price for this brand.” These communications are allowing customers to assess the value of the brand.
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There is one other reason for Pizza Hut’s misery that is not discussed. What exactly is the Pizza Hut relevant, differentiated brand experience?
Years ago, Pizza Hut went through a brand deep-dive to articulate the Pizza Hut brand promise, brand essence and guiding principles. There was a Pizza Hut Brand Book and a Pizza Hut Plan to Breakthrough. Our two-person team led the Pizza Hut project along with the Pizza Hut brand team. At a huge convention in Las Vegas, we unveiled the Pizza Hut brand work – along with KFC brand work, that we conducted simultaneously.
The brand deep-dive aimed to answer these questions:
- What is the Pizza Hut brand direction?
- What is the Pizza Hut brand’s purpose?
- What is the Pizza Hut brand’s core essence?
- What are Pizza Hut’s guiding principles?
- What is Pizza Hut’s brand promise?
- How will Pizza Hut bring the Pizza Hut brand to life for customers?
The answers to these questions described Pizza Hut’s overall relevant and differentiated brand experience. But, since then, and it has been a while, It appears that the Pizza Hut brand promise has been lost. When the brand promise is lost, the brand experience is lost. Why? Because a brand is a promise of a relevant, differentiated experience.
A brand promise summarizes the special bond between the customer and the brand. A brand expresses the promise that “if you buy this brand, you will receive this distinctive brand experience.” By consistently living up to a brand promise, brand owners can ensure that their brands will be relevant, distinctive, powerful and great.
The same experience problem is true for Applebee’s. Applebee’s parent company, Dine Brands indicated last week that consumers are becoming more cautious when it comes to eating outside of the home. This statement “cautious consumers” seems to be a mantra for those restaurants with sagging sales, even for McDonald’s. But, for Applebee’s, the loss of neighborhood as the essential part of the brand’s experience has allowed Applebee’s to focus on good price for these apps, meals and deals. Neighborhood is a galvanizing idea that Applebee’s owned until neighborhood was relegated to just a tagline throwaway. Like Pizza Hut, Applebee’s started with a promise of a convivial eating experience with family and friends. For Applebee’s that conviviality was expressed by being the neighborhood place to be while for Pizza Hut, the conviviality was an expression of the engaging exuberance of the dining experience.
It is a lot easier to focus on price than to communicate the brand’s experience. If a brand has not articulated its desired customer experience, than speaking of features is all there is left to describe.
However, brands must be very careful because the customers who select a price point rather than a brand – commodity customers – are less likely to become loyalists. Loyalists are less price sensitive, more willing to pay for the brand, frequent the brand and generate more revenue. Price-focused customers are deal loyal not real loyal. The business press also seems to prefer lauding price points rather than brand experience. After all, Wall Street perceives price as leading to shareholder rewards.
A brand is a promise of a relevant and differentiated experience. Price, as a cost, is a factor. But, price is not the brand experience. For many brands, affordability is a key element contributing to brand success. Price always has a strategic role to play. But, how a brand talks about price is important. Great marketing leadership knows the difference between pricing that demotes the brand and pricing that promotes the brand.
Once a client told me that the experience in their hotel brand was the offering of 3 bottles of free water. Free water is not the brand’s experience. The free water is a feature of the brand. Now, what are the benefits of the free water that help define the relevant, differentiated brand experience?
Recently, The Wall Street Journal ran a story on Starbucks and the rise of challenger brand Dutch Bros. The online version of the story had the title: Is this the future of coffee? So misguided: the future is about the coffee experience provided by these two different coffee-store brands.
Coffee is what is sold in these establishments. Focusing on the coffee is wrong-headed. The issue is not the coffee. The issue is the coffee experience. For Starbucks, its rejuvenation is all about the coffee experience: an in-store coffee experience. For Dutch Bros, the story is about drive-thru. Sure, Dutch Bros. exudes a charisma for coveted Gen Z and Millennial customers. But let’s face it, you can buy cold sweet drinks at Starbucks as well. Further, Dutch Bros. is seeing the benefit of Starbucks-type features. Dutch Bros. is adding mobile ordering, food offerings just like Starbucks. Also, Dutch Bros. is adding lines, long lines, lines that were the bane of Starbucks when Starbucks’ previous management focused on mobility rather than the in-store-vibe. The coffee shop battle is about the brand experience, even though the business press says experience does not matter.
If you need any additional examples of the power of brand experience, check out Chili’s. The renaissance of Chili’s is all about the brand experience first. The focus is on a great brand experience with great, sometimes fun, foods at great prices.
BMW built a brand on an exhilarating driving experience. Volvo built a brand on a safety experience. This does not mean that every communication of a brand experience is viable or valuable. Lincoln is using the idea of a serene, calming experience like a good mattress or your favorite sofa. For decades, Ford Motor Company had a lot of difficulty defining the Lincoln brand experience. It remains to be seen whether a living room experience is what drivers prefer when driving.
As a marketer, your job is to compete. Compete differently with The Blake Project.
Ford used to bundle Lincoln and Mercury brands together, remember Mercury. Mercury was another brand which had difficulty defining its experience. At one point, the only difference between a Ford and a Mercury was Mercury’s unique grille.
Here are some brand experience do’s and don’ts.
- Make sure that your actions reinforce the brand. Actions bring the brand to life for customers.
- Focus on increasing frequency and penetration. Attract customers but at the same time ensure that current customers continue to frequent the brand.
- Reinforce the core. Reinforce the brand’s core and the brand’s core customers.
- Base price decisions on the customer’s perceived value rather than cost. Fully understand and correctly judge the implications of price manipulations.
- Remind customers that the brand has a wide range of prices. Ensure that customers perceive brand offers as fair value.
- Communications of all types must promote the brand. Promote means to elevate. Every communication must enhance the brand, raising the brand to a higher level of appeal to and affinity with the customer.
- Don’t promise genericization. Offering generic category benefits leads to a commodity product. When a brand stands for everything general (great taste, low price,) the brand stands for nothing special.
- Don’t reject your heritage, your provenance. The brand’s business was built on something good. A brand can leverage its past for the present and the future.
- Don’t focus communications solely on price. Selling the deal cheapens the brand. Sure, selling the deal can generate short-term profitable growth. But, the aim is enduring profitable growth.
Brands that believe their only experience is low price or food that tastes good court genericization. Pizza Hut is headed to commodity corner with its current communications. Rice used to be a commodity. Now, Lundberg’s is saying, “Not so fast.” Our rice is relevantly differentiated; plus we are a sustainable grower.
Customers do not know or care about the brand’s strategy. Customers only know what you promise as an experience and how well you deliver that promised experience.
Contributed to Branding Strategy Insider by: Joan Kiddon, Partner, The Blake Project, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I
At The Blake Project, we help clients worldwide, in all stages of development, define and articulate what makes them competitive and valuable at pivotal moments of change. Please email us to learn how we can help you compete differently.
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth, and Brand Education
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