Is 3rd Party Delivery the Answer to Pizza Hut’s Woes?

Pizza Hut reported a same-store sales decline of 6% in the last quarter and blames the problem on a shortage of delivery drivers.

  • After a 6% drop in same-store sales in the first quarter of 2022, Pizza Hut is looking for solutions that include expanding its use of third-party delivery aggregators.
  • Yum Brands CEO David Gibbs blamed the sales decline on a lack of delivery drivers within the Pizza Hut system.

Related: Papa Johns rolls while Domino’s stalls in 1st quarter of 2022

Pizza Hut saw its same-store sales decline by 6% in the first quarter of 2022, making the pizza chain the only major underperformer in parent company Yum Brands’ portfolio, which includes Taco Bell and KFC. Could third-party delivery companies like DoorDash and Uber Eats save the day?

The decline in same-store sales “was driven by staffing challenges, mainly from delivery driver shortages that have been felt across the country,” Yum Brands CEO David Gibbs said in an earnings call earlier this week, according to Restaurant Business.

Domino’s has experienced the same problem and reported a same-store sales drop of 3.6% in the most recent quarter. Meanwhile, Papa Johns, which already offers delivery through DoorDash at many locations around the country, recorded an increase of 1.9% in same-store sales for the same period.

Restaurant Business reports that Pizza Hut is expanding its own relationship with third-party delivery aggregators in response to its staffing issues. Another part of its strategy is a white-label delivery approach, which will be integrated into the chain’s POS system and allow for third-party companies to provide delivery when Pizza Hut doesn’t have enough drivers to meet demand. The brand is also testing its own delivery order management system, called Dragontail, at 100 locations and has been pleased with early results.

One major Pizza Hut franchisee that’s already using third-party delivery companies generated sales that outperformed the entire Pizza Hut system by “4 to 5 points,” chain executives said. “I think more and more [franchisees] are going to be choosing to move in that direction,” CFO Chris Turner said.