Market Research Pizza Hut

Student ID: Organisations & Environment Assessment 2 – Case Study – Pizza Hut Ian Edwards Word Count: 1865 Contents Page Introduction to Pizza HutP. 2 Political FactorsP. 2 Economic FactorsP.

3 Social/ Cultural FactorsP. 4 Technological FactorsP. 5 ConclusionP. 6 BibliographyP. 8 Case study: Pest Analysis – Fast –food sector: Pizza Hut Using Pest analysis, this report attempts to identify strengths and weaknesses associated with a company in the fast food industry.

Pizza hut is a fast food retailer originating from Wichita, Kansas, USA.The founders, Frank and Dan Carney opened the first store in 1958 with the ambition of offering great local pizza to the community. With a small 25 seating restaurant and aspiring entrepreneurs at the helm, Pizza hut was born. Fifteen years down the line and Pizza Hut goes international, opening stores in Japan, England and Canada. The first store in England was opened in Islington in 1973 and was to be the first of many. Four years later PepsiCo, a soft drink manufacturer, bought Pizza hut with the intention of expanding the business and creating a leader in the fast food industry.

By 1990 there were 200 stores in the UK and a further 100 would be open before the end of 1993. By 2005 Pizza hut had over 500 stores and employed over 20,000 people in the UK. (Pizza Hut, 2009) Pizza Hut, after another major takeover, is now owned by YUM, an American based food organisation responsible for other well-known fast food chains such as KFC and Taco Bell. Mission statement “We take pride in making a perfect pizza and providing courteous and helpful service on time all the time. Every customer says, "I'll be back! We are the employer of choice offering team members opportunities for growth, advancement, and rewarding careers in a fun, safe working environment. We are accountable for profitability in everything we do, providing our shareholders with value growth.

” (Pizza Hut Hawaii, 2008) Political Being an international brand, Pizza Hut has a global diversity programme through the owning organisation YUM. The aim is to offer equal opportunities regardless of race, sex or age. Therefore conforming to their motto, “Everyone, at every level, can truly make a difference. (David Novak, 2009) YUM boast impressive figures on employment of ethnic minorities and women within their restaurant chains.

According to their website, “About 30 percent of our associates are Caucasian and the remaining 70 percent are Hispanic, African American and/or Asian. Minorities and women made up 64 percent of our external management hires and 41 percent of internal management hires (promotions) in 2007. ” (YUM! Global Diversity, 2009) Hygiene and food cleanliness is also a major part of YUM and Pizza Huts trading ethics.From information collected on the website it is apparent that YUM and its brands are dedicated to exceeding the standards required by legislation for cleanliness and hygiene in the workplace. Through active communication with suppliers YUM ensure their products are “Safe and of superior quality”, as well as boasting the most rigorous product approval process for their suppliers to conform to. (YUM Nutrition, 2009) Economic In the current economic downturn eating out has become a luxury and is easily bypassed as a means of saving money.

The high unemployment rate has caused consumption to decrease and an alteration in consumer spending habits. However, Pizza Hut is a low cost, fast food restaurant. This makes the product more income inelastic than other, more exclusive restaurants and may help it fare better during this difficult time. Evidence of this can be found in statistics from the recession in the 1990’s when Pizza Huts sales increased by 61%. (Amanda Stock, 2008) Despite these dated results, Pizza Hut has seen a downturn in this recession to a point where it is slowing progress and expansion for the other YUM brands.However the Pizza Hut brand is continuing to focus on a margin management and low sales volume to compete for sales in a competitive market.

(NBR, 2009) Pizza Hut also relies on a wide range of toppings and ingredients as compliments to its pizzas, and to deliver its dining experience. With sterling weakened and inflation rising, the cost of importing ingredients from Europe or beyond will increase, and here in the UK staple goods such as milk, eggs and bread, which are ingredients in pizza dough or incorporated in other recipes, have also increased in price.There is also a risk with agricultural goods, which form the basic ingredients in dough and are the basis of the majority of toppings, because they rely on good crop worldwide. A bad crop in corn for example, would lead the forces of supply and demand to increase the price of the raw produce, which is processed into flour, thus further increasing the company’s costs. Fuel prices are also continuously increasing affecting delivery charges for materials and ingredients. Being a delivery service as well as a restaurant adds the extra fuel costs incurred from delivering pizzas.

However In such a competitive market it would be difficult to impose drastic additional charges, for delivery or elsewhere, due to the risk of loosing the potential business to competitors. All the mentioned cost increases will be processed and eventually passed down onto the customer, whether it be through higher prices or reduced quality of the product. Social / Cultural As well as local and national legislation, external factors affect certain branches due to their geographic orientation.In the Southall franchise of Pizza Hut, a heavily Islamic populated area of London, Halal meat is offered in place of the regular meat found in other stores, there by conforming to local needs, requirements and acknowledging local cultures and religion. Fast food chains have also been branded as the cause for obesity in children and adults alike throughout the UK and America.

The accusation comes as the result of a 15-year research program carried out in the USA. The results stated that regulars who visited fast food twice a week for 15 years were an average of 4. 5kg heavier than those who visited less frequently.And their bodies were twice as insulin resistant, thus putting them at higher risk for diabetes. (The Guardian, 2009) Being a company specialising in food production and sales, Pizza Hut must adhere to rules and regulations regarding the health and safety of its employees and customers alike. With this in mind, Pizza Hut has been criticised, along with other fast food chains, for high salt content in its food.

The recommended daily allowance (RDA) of 6g of salt for an adult and 5g for 7-10 year olds has been completely discarded whilst some of the worst rated meals contained 9. g in one serving. (BBC, 2009) In an attempt to tackle this, Pizza Hut now offers a new lower calorie menu option, including the Fit 'N Delicious lower fat pizzas, and also claim to use 100% meat with no additives or fillers. (YUM, 2009) This move now offers food products which contain less harmful fats and a lower salt count. In tackling obesity, YUM have also introduced an online fitness regime for their customers, advising them on how to be healthier and fitter. In association with eFIT4ME, the service is available worldwide through brand websites and is setup by experts in well-being.

YUM- eFIT4ME, 2009) On top of this, a ‘3 on 3’ basketball tournament has been set up in China. Twenty-five thousand teams entered nationally, promoting exercise and healthy diet to customers and the local communities alike. Endorsements from celebrities in the profession, such as renowned basketball coach Rick Pitino, have provoked awareness and given inspiration to youths who are the highest concern for obesity. (YUM Press releases, 2009) Technological Technology can best be described as: “the application of knowledge to production” (Wetherly & Otter, 2008. P.

65)Pizza hut launched their online delivery service in the UK in March 2007 after a successful trial in America. The immediate success was evident in the celebration of the one-millionth online order just ten weeks after its launch. (Charlie McCathie, 2007) The online launch is a sign of Pizza Huts acknowledgement of the practicality and convenience of the Internet, and how it is progressing and becoming commonplace in everyday households. Figures provided by the BBC suggest that over 16.

5 million UK households (two thirds) have access to the Internet thus making online ordering a viable progression. 2006) The launch could not have come at a better time. With the recession taking a tight grip on consumer’s pockets, households are opting to eat at home rather than pay more expensive restaurant prices. Coupled with tactical sales strategies and coupons, Pizza Hut is portrayed as an affordable treat to order in. With computer- customer interaction there is reduced scope for human error in ordering and the ability to process multiple orders simultaneously whilst incurring no cost for the customer.

The YUM website is also a valuable source of information for shareholders who can instantly read annual reports and progressions throughout the financial year. The progression on from Internet ordering is already underway in America where it is now possible to SMS or ‘text’ order your pizzas, on the go, from your mobile phone. There are high hopes for this service, which is in the trial stages in America, after the phenomenal success of the online service. There are also rumours of an application on the new Apple IPhone, specifically designed for Pizza Hut ordering and store location if delivery is not possible.Conclusion In conclusion, there are a number of factors that arise concern for Pizza Hut and factors that give a positive outlook. The technological advancements undertaken by Pizza Hut are a positive sign that the brand is moving forwards and catering for consumer wants and expectations.

However, the improvements in the service of offering fast food at the touch of a button could cause conflict with its other primary objectives, which are based on promoting activity and well-being. With obesity on the rise in the UK do we really need another opportunity to become a ‘couch potato’?The global diversity programme is a credit to YUM and the brands they operate. Especially in times of economic crisis, which we are enduring, the added security of a multi national company and the ethos that ‘everybody makes a difference’ provides security for employees, which will radiate through their attitudes and dedication to their jobs. Although hygiene and food cleanliness are of a good standard there is still concern for the health implications of fast food, especially in its fat and salt content.To show dedication to improvement, all YUM brands, including Pizza Hut, have become the first fast food chain in the US to voluntarily supply nutritional information alongside its menu for each dish. (YUM Nutrition, 2009) However simply stating facts may not be of any relevance to the young who I am sure will bypass the information.

Education is the next step. Educating children to the effects of obesity and using clear and relevant examples will be more beneficial to the cause.With the rising costs of fuel and food it has become difficult to offer low prices for the consumer, however not just Pizza Hut has been affected. The recession is worldwide and competition is fiercer than ever.

With companies looking for other ways to cut costs through efficiency, and the use of clever pricing strategies and sales marketing for the products, in the long run all benefit the customer. Bibliography 1. Amanda Stock. (2008). Recession Marketing. Available: http://www.

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