How Enrico Put The Spice Back In Pizza HutStephanie Anderson Forest
For a taste of what Roger A. Enrico's glitzy brand of marketing can do to reignite a business, look no further than Pizza Hut. In 1994, with the pizza market flat and a host of rival restaurants slashing prices, operating profits at the world's largest pizza chain plunged 21%. That slide dragged PepsiCo Inc.'s restaurant division to its first decline in operating profits in 15 years. "It was certainly a wake-up call for us," says Allan S. Huston, chief executive officer of Pizza Hut Inc. "We'd lost our way a little bit."
Enrico took the toque at the restaurant division, which also includes Taco Bell Corp. and KFC, in November, 1994, after stints at Pepsi's beverage and snack-food units. He spotted a promising new product in the works--a pizza with a ring of mozzarella baked into the outer edges of the crust--and decided to roll it out with a massive, flashy marketing campaign. Stuffed Crust Pizza became a $1 billion business in its first year.
COPYCAT PRODUCTS. It should come as no surprise that Enrico spiced up Pizza Hut's advertising. After all, he's the man who signed up Michael Jackson and Madonna to plug Pepsi-Cola. He poured more than $100 million into launching Stuffed Crust and another product, the Tripledecker--and after years of stodgy, forgettable ads, the new campaigns are deft and catchy. "He came in and said, `You have this wonderful product--now you need world-class advertising to get people talking about it," says a Pizza Hut spokesman. Commercials for Stuffed Crust featured odd celebrity pairings such as Donald Trump and his ex-wife, Ivana, eating their pizza backwards, crust first.
The payoff came quickly. Stuffed Crust helped Pizza Hut increase its market share from 25.6% to 27%, according to Chicago-based food-industry consultant Technomic Inc. Last year, Pizza Hut's worldwide operating income was up 40%, to $414 million, on a 16% sales increase, to $5.2 billion. Sales at outlets open at least a year were up 4% in 1995, compared with a 6% drop in 1994. Analyst Michael J. Branca of NatWest Securities Corp. estimates that the company's operating income will rise 11% this year, to $460 million, on sales of $5.5 billion. Pizza Hut represents 17% of PepsiCo's total sales and 13% of its operating profit.
Pizza Hut, says Huston, will roll out at least one major product as well as two to three line extensions each year. In January, it upped the caloric ante with another new offering, the Tripledecker, which packs a layer of cheese between two crusts.
Huston cannot afford to lean on his pizza paddle. Although Pizza Hut's competitors are all much smaller, they're busy rushing out copycat products. And after years of expanding Pizza Hut's take-out and delivery service, the chain must now work to rebuild its higher-margin dine-in business. But with Enrico now guiding the parent company, Pizza Hut is likely to sizzle for some time to come.