When I was a kid I remember being taken to Pizza Hut. It had the restaurant with the funny shaped roof and the red gingham tablecloths. It was a treat - a large pizza was about $30 and in the 1980s that was a lot of money. I remember loving it. You got spinning tops and little red pencils to play the games on the paper place mat. There were happy waitresses gliding around and a low light ambience that made it feel like stepping into another world. And the pizza was pretty much the most delicious thing I ever got to eat.
Now, when you google 'Pizza Hut' here in New Zealand, the first thing that comes up is an ad that says 'PizzaHut.co.nz - The Home of $5 Pizzas'. That's right, for just £2.50 you can buy a large Hawaiian Pizza Hut pizza. And not on special - that's the regular price, every night of the week.
Today there are no iconic roofs, no spinning tops, no happy waitresses and no gingham tablecloths. There aren't even tables. Every Pizza Hut in New Zealand is pickup or delivery only. They're tiny, cheaply fitted holes in the wall, sparsely staffed with bored-looking people making shitty $5 pizzas.
In 1987, Pizza Hut made a mouth-watering product and wrapped it in a totally unique and memorable brand experience. They charged handsomely for that product and experience, and made what I'm sure must have been a healthy profit margin. Then, over the years, while just about everything else increased in price, they managed to strip more than 80% of the value out of their product. They dismantled what was a unique brand and turned it into something indistinguishable from every other bland fast-food template. Every time a competitor appeared, they dropped their price and used cheaper ingredients to make it viable to retain a 'value-driven customer'.
So how are customers responding to the amazing value of a $5 pizza? Over the past eight years, Pizza Hut NZ has closed 56 of its 107 stores.
Meanwhile, across town, Hell Pizza sells its large Hawaiian for $16 - more than three times what Pizza Hut asks. As the name suggests, Hell Pizza isn't all gingham tablecloths either. It's a different kind of experience. Its core range is named after the seven deadly sins. Each store is painted completely black inside and out and has 666 somewhere in its phone number. And if you're game, you can play 'Pizza Roulette' which is where they dab a little of the world's hottest chilli on one slice of your pizza without telling you which.
Everyone in New Zealand agrees that Hell's pizza is much better than Pizza Hut's. From the outset it was a quality offering – more and fresher ingredients. Better bases that eschewed absurdities such as sausage stuffing in favour of gluten-free options. Their recipes show real effort: how does 'Wild Fiordland Red Deer in a Rosemary Marinade, Port Wine Jus and Ricotta Base, garnished with Morello Cherries and Mint' sound?
Thing is, Hell Pizza isn't a niche offering for affluent foodies. At $16, a large pizza comes in at less than two Big Mac combos. And by numbers, Hell is a bigger mass-market offering than Pizza Hut. Hell has 64 stores and growing. Pizza Hut has 51 and falling.
A couple of years ago, I spoke to the founder of Hell Pizza. Callum Davies opened his first Hell store in Wellington in 1996. Over nearly two decades, he's grown the brand into New Zealand's premier mass-market pizza joint, as well as expanding to Australia, Ireland, Canada, Korea, India and even your own high streets there in London.
I asked him how he'd done it. I was curious to know the secret behind Hell's success.
Callum Davies is no intellectual. He's a straightforward business person who's all common sense and hard work. And he gave me the best answer. He said, "Um, well, pretty much we just made sure the pizza was really great and the brand was really different."
Think about that for a moment. It sounds so obvious, doesn't it? But we never do it. To ensure fiscal prudence we make the product just good enough to pass muster, and to avoid risk we ensure the brand conforms to as many of the category conventions as possible. We do the opposite of what Callum Davies did. And we end up winning the race to the bottom. When the secret to success is so simple. You make the product better than everyone else's and the brand completely different to everyone else's. And you charge more for it. That's it. That's all there is to it. That is the strategy. It's the only one that works and it works like a charm. You grow, you grow sustainably and you contribute something of value to the world.
And you don't end up like Pizza Hut.
