Can Pizza Hut build ‘edgy’ sub-brand on entertainment promise?

Pizza Hut’s UK trial of a low-priced home delivery and collection service called PHD by Pizza Hut shows that the chain is serious about its goal of fighting off competition from delivery rival Domino’s Pizza.

But some observers have warned that PHD must offer a good quality product or risk damaging perceptions of its parent brand. There is also a danger that a full UK launch of PHD could take sales away from the main Pizza Hut chain.

Yum! Brands, Pizza Hut’s owner, is talking to agencies about developing a marketing strategy for PHD that can be used in different countries (MW December 11). The PHD brand was piloted in Oman earlier this year and the same concept is being tested under the name PHQ by Pizza Hut in Ireland and some locations in the UK.

Yum! describes PHD as “distinctive” and “edgy” and says it offers a simplified menu at “value” prices. Retail outlets are small and provide in-store customers with internet access, interactive screens and iPod docks while they wait. A “hot and fast” home delivery and online service, both PHD branded, are also available.

In some test markets the concept has been aimed at students and youths. This may be broadened in the UK, where it could compete directly against Domino’s family positioning and take a share of the pizza delivery and takeaway market, worth an estimated 748m in 2008, according to Mintel.

During the trials, the PHD brand has been promoted by a “running man” ad, created by Canada-based Jump Branding & Design. Branding features a logo using flames to represent the “hot and fast” message PHD is meant to convey to customers.

Jump strategic director Jason Hemsworth says: “PHD is youthful. The aim was to get pizza-lovers to purchase from PHD and ensure that if they are kept waiting, they can enjoy that time and then enjoy the pizza afterwards.”

Pizza Hut says it is “pleased” with how the trials are progressing but experts warn that rolling out the new concept could be risky. Richard Oldham, a director at brand agency The Value Engineers, says the chain risks “alienating its other customers” if the menu is seen to be of a lower quality to that already offered by Pizza Hut.

Product quality

Rivals claim that PHD’s emphasis on entertainment over taste may backfire. Simon Wallis, marketing director of delivery franchise Papa John’s – which uses the strapline Better Ingredients, Better Pizza – says: “The iPod docks and focus on speed rather than product quality show that Pizza Hut is targeting a completely separate market. We believe the move will have a positive effect on the UK delivery market for us.”

However, Chris Wood, chairman of Corporate Edge, says that Pizza Hut is acting at the right time, when consumer spend is lower and people are looking to save money. “The sub-brand allows Pizza Hut to target a different market, and compete against the booming frozen food market. It is the perfect vehicle for experimentation for such a well-known brand,” Wood says.

Others are more cautious. Fred Burt, a brand consultant at Siegel & Gale, warns that Pizza Hut needs to be careful to build the parent brand in the process and not ” bang more nails into the coffin lid”. He says: “They’ll have to work really hard to bring something new and distinctive through the experience. This can’t be a make-up-and-lipstick job on a delivery-only Pizza Hut.”

The home delivery trials follow Pizza Hut’s rebrand of some of its outlets as Pasta Hut earlier this year. These moves show the chain recognises innovation will be a vital factor in ensuring it gets a piece of the action in years to come.

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