With Pizza Hut sales on the decline, executives are warning that things might not get much better in 2020.

Pizza News

Pizza Hut’s Big Turnaround Is ‘Falling Kind of Flat,’ Analyst Says

Pizza Hut sales will likely continue to lag in 2020, the company admits.

Pizza Hut’s U.S. same-store sales dropped three percent for the third quarter of 2019, and things don’t look much better for the chain next year, parent company Yum Brands announced this week.

As Reuters reports, Yum Brands’ earnings fell short of expectations this past quarter, and its shares went down by 10% on Wednesday, October 30. Adding to Yum’s woes: It bought a stake in third-party aggregator GrubHub last year, only to see that company’s fortunes take a dip in the face of growing competition from Uber Eats and DoorDash, Reuters notes.

Pizza Hut has “done a lot of marketing [and] launched a lot of value-priced items … it still doesn’t seem to be working,” Edward Jones analyst Brian Yarbrough told Reuters. “That was one of the big bull pieces to the story, the big Pizza Hut turnaround … it seems to be falling kind of flat.”

Jonathan Maze of Restaurant Business notes that part of Yum’s strategy is to get its franchisees to close older dine-in stores and open new ones that will focus on takeout and delivery. But that approach is likely to hurt Pizza Hut sales and traffic for a while.

In Yum’s third-quarter earnings call, according to Restaurant Business, incoming CEO David Gibbs said, “While we strongly believe that these are the right strategies to build the business for the longer term, these moves will introduce some uncertainty in the business performance over the short term.” He added that the company expects results “to continue to be choppy.”

Changing consumer preferences could also account for declining Pizza Hut sales, as younger customers show increasing interest in plant-based meat alternatives. Pizza Hut is presently testing its new Garden Specialty pizza topped with plant-based sausages from Incogmeato. Reflecting consumers’ mounting concerns about sustainability in the restaurant industry, Pizza Hut is packaging the new pie in an eco-friendly round pizza box that’s industrially compostable.