Pizza Hut Delivery, a franchise and subsidiary of US giant Yum Brands, has announced its intention to open a minimum of 100 new stores in the UK by 2014.
The bold expansion plan will be backed by an investment pot of 20 million and the 'aggressive' move looks set to create as many as 2,000 new jobs.
Pizza Hut Delivery is operated via the franchise model, alongside a number of corporate-owned stores and the brand has said that both their existing network of franchisees and prospective new franchisees will be offered packages of financial support to enable them to open new stores. This package is said to be worth up to £65,000 and to offer plenty of incentives and support to those prepared to open a new store by the end of November 2013. These investors are expected to get excellent training and support from the Pizza Hut franchise-development team, who are well known for investing heavily in their franchisee network.
The expansion announcement has come shortly after new stores were opened in the Greater Manchester suburbs of Cheadle Hulme and Chorlton. Both of these new outlets are being run by Nadim Iftikahr Choudry, who already runs five successful franchised outlets through his NAS Mana company. It looks as though business is healthy for the Pizza Hut Delivery brand.
The successful franchise currently has around 300 stores in the UK, which are a blended mix of company-owned units and franchised stores. The brand's spokesman, Mark Fox, explained that the corporate team at Pizza Hut Delivery were committed to delivering the major investment in their UK business before 2014 and were excited about creating 'significant' opportunities for both their existing franchisee network and new investors. He added that the company's investment would increase spend on marketing, drive up the number of outlets and also increase the visibility of the Pizza Hut Delivery brand, creating additional opportunities for their franchisees to capitalise on the activity and grow their own businesses profitably and quickly.
Pizza Hut Delivery has already stated a long-term aim to have 700 stores in the UK and take a larger share of the highly competitive takeaway market. The delivery business is run separately to the restaurant business in the UK (which was bought last month by the investment firm Rutland Partners). The initial focus will involve launching 100 additional stores by 2014 and creating 2,000 jobs in the process. The growth won't stop there, as the brand has already announced its intention to eventually match the market presence of its rival, Domino's Pizza, which currently has 700 stores in its network and is also pursuing its own expansion strategy.
The aggressive growth plan has been designed to take advantage of the rise in popularity of takeaways. This is a common feature of a recession, when individuals tend to cut back on eating out in restaurants. This changing model has meant that the Pizza Hut group is in a position to change its shape and has in fact needed to in order to remain competitive. Pizza Hut has admitted that it's 'eat-in' pizza restaurants have experienced problems with poor sales during the recession. This was reflected in the last set of corporate figures, which showed 2011 sales falling to 330m from 2010's figure of 346m. Losses jumped accordingly to £24.1m from £20.6m in the same period. This performance and the changing fortunes of the group have meant that the delivery and eat-in business have been forced to diverge to allow the business to re-position and restructure its operation.
The recent sale of Pizza Hut's restaurant assets to Rutland Partners caused some commotion in the fast-food industry and the sale was reportedly made on a token basis, with the turnaround specialists now planning to invest around 60 million in 'sprucing up' and re-inventing the struggling chain.
The focus now remains strongly on the Pizza Hut Delivery brand and the opportunities for would-be and current franchisees within the network look very appealing. It remains to be seen whether Rutland Partners manage to turn the separated restaurant business around against a rising tide of competing brands. For now, interested investors are advised to contact the franchise-development team and find out more.