New Data Shows Troubling Trends for Pizza Hut
Changing consumer trends and increased competition are wreaking havoc in certain restaurant segments, and even though the pizza category remains hot, new consumer research shows Domino’s eating Pizza Hut’s lunch as the great pizza wars rage onward.
By analyzing credit and debit card information for millions of U.S. diners, 1010Data has a unique window on the country’s restaurant scene. Its latest report brings some unsurprising, but certainly unpleasant news for Pizza Hut. The one-time leading pizza chain has seen its market share decline by 6 points over the last four years while Domino’s has grown by 8 points over the same period.
According to the report, the pizza category has remained relatively flat with just 1% sales growth year over year. In this stagnant environment, Domino’s has doubled down on its massive R&D spend. In addition, it notes that Papa John’s surpassed Pizza Hut’s market share in early 2016, and has maintained the lead ever since.
Beyond market share, 1010Data asserts that Pizza Hut customers are spending less—an average of $4 less each month than customers at Domino’s or Papa John’s. Pizza Hut customers are also ordering less frequently than those of its competitors.
Most troubling for the brand, 1010Data says 38 percent of Pizza Hut customers who dined from November 2015 to October 2016 did not return in the following year. “Instead, from Nov 2016 - Oct 2016, 56% of them dined at Domino’s or Papa John’s,” the report said. “As a result, Pizza Hut lost 21% of its customers to their top competitors.”
Not good news at all for Pizza Hut, but perhaps their well publicized half-off new year sale will move the needle. When it comes to all this technology, including investments in customer convenience and loyalty, this case study shows the first-mover advantage paying off for Domino's.