The fact Pizza Hut Restaurants is hard to categorise in terms of its operating model has actually been a positive for the business in terms of its recent and ongoing evolution, according to Heart With Smart Group CEO Jens Hofma.
Speaking at MCA’s recent Restaurant Conference about operating the franchise, he said it was a concept that was very nimble.
“Is it casual dining, fast-casual, QSR? That slightly ambiguous position as to where exactly we sit in the industry sometimes has been seen as a disadvantage, and maybe not sufficiently clear positioning, but, in my view, it actually gives us a huge amount of flexibility to adapt the concept to consumer trends,” he said.
For example, 70% of its guests now place their orders and pay on their mobile phone when they visit one of the restaurants – “two years ago it was 100% table service”.
“That’s a transition we’ve been able to make, without too much upheaval.”
Hofma said the decision to become an operator of the Pizza Hut Restaurants franchise 10 years ago “probably wasn’t the most obvious franchise (to choose) at the time”.
“It was a business that had been in decline for a while, and probably written off by many as being somewhat irrelevant and stuck in the past… leapfrogged by more aggressive pizza concepts.
“But we as a management team felt this brand and this concept did have real legs, certainly outside the more precious circles in society. Not that many brands have been around for 50 years, as Pizza Hut has been in the UK,” he added.
Describing the brand as an “unashamedly American interpretation of pizza”, he said it was high energy and fun.
Commenting on growing attractiveness of franchising in the restaurant sector, Hofma said he could easily see why it makes sense for brand owners to grow in a capital light way by franchising but said the reasons why it made sense for a franchisee to take on a brand they don’t own or control and commit themselves to paying royalties of between four and six percent, where less often talked about.
A strong brand with a proven concept will be a much lower risk investment, “therefore as you open a new restaurant you should have a high degree of confidence as to what the economics are going to end up being”.
“Secondly you should be able to run your business at lower overheads if you get some of your function support from your franchisor, and thirdly, it breaks through what I think is an enduring problem in the restaurant industry which is the huge functional scope that you need to have as a restaurant owner and operator,” he explained. “When you are a franchisee that functional scope is somewhat narrower.”
For the group, which also operates the Itsu franchise in the UK, this means their main focus can be operating restaurant brands, at scale, consistently well day after day.
Hofma added that the experience of operating Itsu had proven the group’s operational skills, systems and platforms “were, in fact, very transferrable”, and it is now looking to add further brands to its franchise portfolio.
“The focus will be on making sure we run a really good Pizza Hut business – that is the mainstay of what we are doing – and to continue to grow our Itsu business, but I would love to have a third or fourth brand.”
