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QSR major Pizza Hut hit the 800-store milestone in early 2023 . In an interaction with BusinessLine, Merrill Pereyra, Managing Director, Pizza Hut India Subcontinent said that India is among the top two markets in terms of development of new restaurants of the brand globally. He added that the company has ramped up the pace of expansion in the past two years to tap into opportunities in not only the top cities but also tier-2 and tier-3 towns. The brand has two franchise partners in India– Devyani International and Sapphire Foods. Excerpts.
How was last year for Pizza Hut India and where does the country stand in the global scheme of things for the brand ?
Pizza Hut India achieved robust system sales growth of 47 per cent in 2022, the highest amongst all the Pizza Hut subsidiaries, globally. In the March quarter, Pizza Hut India Subcontinent clocked 16 per cent system sales growth. In terms of size we are still quite small. But as a market we are among the top two developers of new Pizza Hut restaurants in the last two years. China being number one.
If one compares the past two years, with the previous 20 years, our pace of expansion has been ramped significantly. So what we achieved in 20 years, we doubled it in the past two years. We hit the 800 restaurants-mark earlier this year.
What are the future expansion plans? By when do you expect to hit the 1000 restaurants mark in India ?
We believe that there’s plenty of opportunity for us to grow. If you look at Asia (excluding China), we have one restaurant per 300,000 people but in India we have one Pizza Hut restaurant per 3 million people. So it just shows the huge opportunity for us to grow the business in India, and to grow it strategically. Looking at the pace of expansion in the last two years, we are hopeful Pizza Hut will hit the 1000 restaurants-mark by next year.
Consumer habits are changing, they are now more exposed to global brands. There is a growing middle class with higher disposable incomes. So all these factors are helping global brands to expand in India.We will continue to be on a growth journey, making our products accessible to a much wider and younger audience by expanding into new markets, ensuring great value and convenience, launching disruptive products, and implementing distinctive marketing initiatives.
Will a large chunk of this expansion happen in tier-2 and tier-3 markets ?
It will be a blend of both—big cities and smaller cities and towns.
We have made a significant commitment to expanding our presence in the tier-2 and tier-3 markets. Emerging markets now account for about 50 per cent of the brand’s business. With an aim to further harness the potential that exists in these markets, 50 per cent of our total stores have been strategically opened in these regions.
How has the delivery business evolved for Pizza Hut ? Do you see dine-in gaining ground ?
Post-Covid consumers have formed new habits with a lot more people ordering online. Currently, 50 per cent of the brand’s business comes from delivery and the balance comes from dine-in and takeaway.
But dine-in has been slowly increasing year-on-year. I believe Indian consumers will continue to seek quality dine-in experiences. We have done many things to offer a good dine-in experience such as introducing QR code based ordering. We introduced Fast-Casual Delco (FCD) store format in India in 2016. The FCD format offers dine-in, delivery and takeaway services under one roof. Now more than 300 restaurants out of the 800 restaurants are in the Fast Delco Casual (FCD) format.
What do you make of inflationary pressures and how are you handling such pressures ?
India is a very value-driven market and we focus on a strong innovation pipeline to ensure we remain accessible to consumers. For instance: We launched our Flavour Fun range, offering 12 new pizzas in five different sauce flavours, starting at ₹79. So there can be softness in the market but we ensure we offer many options to consumers. When we have the value pyramid, it allows consumers to still come to our restaurants to buy products at the entry level , even if their budgets are stretched. That has been our focus for the last several years and that’s been key for us in managing the ups and downs in the economy.
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