Through the informal delco (FCD) model, Pizza Hut plans to enter the second and third tier markets, expanding further into the first tier cities along withThrough the informal delco (FCD) model, Pizza Hut plans to enter the second and third tier markets, expanding further into the first tier cities along with

Food delivery has been much in demand during the pandemic. According to a Research and Markets report, the online food delivery market in India is expected to reach $21.41 billion by 2026, up from $4.66 billion in 2020. This has prompted Pizza Hut, which has always focused on the dining experience, to take off. Increase delivery capabilities and expand delco express store formats (delivery + fulfillment). The pizza chain claims to have exceeded its pre-Covid sales in July 2021.

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Pizza Hut currently operates 500 stores in India. Having experienced a boom in delivery orders during the pandemic, QSR Chain has accelerated its efforts to become a delivery first brand. “At the time before the pandemic, our sales through deliveries were about 35%; to date, 60% of our total sales come from deliveries,” says Merrill Pereira, Managing Director, Pizza Hut India in the Indian Subcontinent.

Through the informal delco (FCD) model, Pizza Hut plans to enter the second and third tier markets, expanding further into the first tier cities side by side. The brand had 72 stores across India operating in the FCD format prior to the pandemic; That number has now grown to 1,122. Globally, the brand has focused on delivery, particularly in regions such as the United Kingdom, Canada, Japan, New Zealand, South Africa and the Middle East.

Although the pizza chain started offering contactless delivery services last year, it now offers a real-time order tracker and location area optimization to enable customers to order from their nearest Pizza Hut outlet. “Last year, our takeaway business even surpassed 2019 numbers, and that has prompted us to launch takeaways on the go as well,” adds Pereira. Last year, the company launched value deals like BOGO or Hut Treat Meal (for group orders), as well as introducing a “My Box” for individual consumption as “people were wary of sharing food.”

In order to position itself as a delivery-first brand, Pizza Hut has launched a campaign called Dil Khol Ke Deliving, and plans to use digital media prominently. “Music, cricket, news, and gaming have emerged as performance genres for us,” notes Pereira.

Aside from its own website and mobile app, Pizza Hut is on restaurant aggregation platforms. To sweeten its offering, in August of this year, the brand associated with HUL and added ice cream and desserts from Kwality Wall to its menu. With this addition, the company expects the average order value to increase by 10%.

strategic shift

During the pandemic, pizza as a food item was a hit. “Pizza is a very easy-to-delivery item. Domino’s already has about 70% of its sales coming from delivery. Also, Covid-19 restrictions won’t go away completely, so it’s best if Pizza Hut moves forward with coordinating delivery and fulfillment,” says Anchor Bessin, Partner First and President (Consumer, Food and Retail), Technopack Consultants.

However, Pizza Hut has long positioned itself as a casual, affordable dining restaurant. Hence, one of the big challenges for the brand is effectively conveying this transformation to its customers – it is now a delivery brand as accessible and easy to deliver as its US-origin competitor, Domino’s. “It’s a huge step for Pizza Hut to position itself as a delivery-first brand; it’s fundamentally changing its business strategy,” says Rajat Tolly, Partner, Kearney.

Analysts say this could necessitate a more prominent digital presence. The company will now have to think about which SKU formula works best, how to improve restaurant ratings, manage reviews and check the delivery experience, including packaging, delivery time, etc. “Pizza Hut must bear in mind that it will now be very competitive in an online world where restaurant reviews, promotions and discounts are important to the price-conscious consumer,” adds Tolly.

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