Pizza Hut changes direction in China | WARC | The Feed
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Pizza Hut changes direction in China
Pizza Hut, owned by Yum Holdings in China, is transforming from a premium casual dining brand to become a mass market operation, a direction that is reflected in its pricing policy.
What’s happening
- Joey Wat, CEO of Yum Holdings, told an earnings call that the brand was “ready for accelerated growth”, having added 400 new stores in the past year and increased city coverage by 10% to over 750 cities.
- “We aim to broaden its addressable market with a strong value proposition for mass market appeal,” he said. “Our strategy emphasises widening price points, expanding into new categories and delivering emotional value to consumers.”
- More products are now being offered at an “entry price” of less than RMB50; sales of such pizzas grew double digit in Q1.
- Similarly, more products are being targeted at the growing number of one-person meal occasions.
- “We are driving the ticket average lower at Pizza Hut,” Wat declared. “But our focus remains the same: driving incremental sales and focusing [on] profit and margins.”
Why it matters
China’s economy may have grown faster than expected in Q1, but consumer confidence is low. “Consumers are more rational in their spending in the new normal,” Wat acknowledged, “but they do respond well to our exciting offerings and campaigns.” That points to brands needing to be agile and able to respond to new trends as well as being timely and targeted in their marketing.
Key quote
“Urbanisation and long-term consumption upgrades in Tier 2 cities and below present a particularly attractive opportunity for us. Housing and living costs are more affordable there. Tremendous consumption potential has yet to be unleashed” – Joey Wat, CEO at Yum Holdings.
Sourced from Seeking Alpha, Yahoo! News
[Image: Pizza Hut]
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