Pizza Hut: Price to Value

It’s been fun watching promotions in the food industry over the past few years.

Subway kicked it off a price promotion with their $5 foot long promotion, which seemed to work for awhile.  It was a black swan that was happened upon by a Subway franchisee in Miami.  He put out a sign for $5 foot long sandwiches and earned more money.  Others followed suit and eventually the corporate headquarters picked it up.

But, price is rarely a source of a sustainable advantage.  It may work for awhile, but price promotions is something that is easily copied by competitors and eventually they too will find compelling offers.

The most important thing is the value proposition.

Early KFC began offering $5 meals.  Pizza Hut went to $10 for Any Pizza.  Both seemed to work for awhile.  The $10 Pizza got the mother of my Papa John’s-loyal nephew to try Pizza Hut and he liked it.

Then he came to our house and wanted pizza.  I started to call Papa John’s, but he said he’d rather have Pizza Hut.  It had been 10 years since I tried Pizza Hut because the last pizza I got from there was a grease ball.  I tried some of his Pizza and I liked it. It tasted good.

That’s value proposition.  In the beginning the $10 pizza got my nephew to come in, but it was the good quality pizza that kept him coming back.  Since then, I’ve ordered Pizza Hut several more times, likewise because of the quality of the pizza, not the price.

Pizza Hut advertising seems to reflect this.  Several months ago the advertising focused on the $10 Any pizza message.  A few weeks ago they changed their pricing to $8, $10 and $12.  Still simpler than before, but a little more variation to better align the price and the value.

This past Sunday I saw it come full circle.  Pizza Hut’s ad didn’t mention price.  It explained the value prop:  Good pizza and convenience, in ways people can understand like “this means I can spend more time with my daughter.”

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