Situation Analysis
On June 15, 1958, Dan and Frank Carney, two college students from Wichita, Kansas, opened the first Pizza shanty eatery. It was a big success and by 1963 they opened 43 restaurants (including franchisees).In 1977 it was acquired by Pepsico, Inc and by 1981 Pizza Hut became the largest pizza restaurant chain in the world ( both in gross sales and number of restaurants).
Till 1984 Pizza Hut never considered dominos its competitor. In 1985 Dominos opened 954 untried outlets the highest one-year total ever recorded by a food service phoner. But in 1986 Dominos system wide sales accounted for 29% (Exhibit 1) of the whole pizza market. And they were still operating in the deli every ingredient only.
Pizza Hut has to focus on how to increase the gainfulness of delivery units and their expansion while safe guarding the sale hobby of Pizza Hut restaurants. The concept of pizza delivery was tumultuous catching up and market in this segment was expanding.
The handed-down system of eat-in restaurants was facing bottlenecks due to addition of delivery services. For fraternity the training of managers and employees for the delivery units was becoming a issue.
Secondly the company wanted to implement an expensive Customer Service content (CSC) linking various Pizza hut outlets for the delivery system. Under the outline they would provide the service to participating franchisees at the rate of $0.65 per call.
business Identification
Pizza Hut experienced the effects of Dominos expansion in its company-owned stores. These stores controlled most of the large, densely populated metropolitan markets. By late 1985 , Pizza Hut senior concern was convinced that Dominos dominance of the fast growing delivery segment was the major threat to pizza Huts continued leadership of the overall pizza market. By 1986, Dominos had begun to extend its expansion into the smaller towns by and large controlled by Pizza Hut franchisees.
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