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Pizza H

In: Business and Management

Submitted By illanaelkaim
Words 1120
Pages 5
Pizza hut * In the 80s the consumer behavior was changing: convenient was increasingly important increase home delivery business * Pizza was seeing as a good to be consumed at home
Those 2 factors pushed pizza hut to potentially enter home delivery market

Obstacles * Corporate culture * However, Pizza huts core business was not built around the delivery system. All of its marketing operational efficiency and product were were focused on the eat in carryout family experience. * The idea of delivery was also not welcomed at all levels of the company. Franchisees were reluctant due to increasing cost and upsizing the pizzas for delivery. Many didn’t see a need in their respective markets to offer delivery services. Since 1985 when PH imposed on the franchisees to develop the delivery units, it created an internal conflict and huge disagreement throughout the company (p.8) * There are 2 different objectives for the franchisees and the company. Pizza hut was very interested in increasing its market share while the individual franchisees were more interested in keeping up their profitability (p.7) * Franchisees implemented in small towns weren’t interested in delivery comparate to the ones in more densely populated markets. * Costs * The ongoing investment for delivery is as expensive as a traditional restaurant. According to exhibit 4 the profit margin for company owned delivery unit was 8.8% whereas 13.1% for traditional restaurants. * PH allowed company owned restaurants to have enough resources for advertising and operations of 2 business units (in order to separate more easily the delivery unit) while franchisees struggled to keep up good coordination between delivery and eat-in. * Internal competition * There is a fear that delivery units will cannibalize the traditional eat in units and therefore reduce...

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