Pizza Hut is the world's largest pizza chain with over 6,100 restaurants in the US and 5,500 internationally. It began in 1958 in Wichita, Kansas and is now a global brand. Porter's Five Forces analysis finds that while Pizza Hut faces high competition from other pizza chains, it has advantages in quality, service, and customer loyalty that weaken competitive rivalry. Supplier power is moderate as ingredients are not unique but orders are large. Buyer power is also moderate as individual orders are small but costs to switch brands are low. Threat of substitution from fast food is moderate but barriers to entry for new pizza chains are high due to Pizza Hut's brand recognition worldwide.

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Origin of the report
In the course of International Business, instructor Ms. Salma Akter instructed us to prepare a
report on industrial analysis of Pizza Hut. The main reason of preparing the paper is to gather
the knowledge how business goes on internationally. In order to implement the theoretical
ideas of international business the paper is given to prepare.
Objective of the report
The main objective of the report is to gathering and implementing international knowledge of
business into a practical firm. To provide the essence of international business we were
instructed to do the report.
All attempts have been taken to relate between our gathered knowledge in the class and a real
firm strategy.
Limitations of the report
We have prepared the report on the basis of information that we found in the articles and
websites. If the information of actual consumer behavior and competitors would be available
more, it would be easier to prepare the report.
And visiting branches located in different countries would be more helpful for us to prepare
and gather the information. But surrounding circumstances hinder us to do so.

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Company Profile
The journey of pizza hut began in 1958, when two college students and brothers from
Wichita, USA, Frank and Dan Carney, opened the first Pizza Hut restaurant at their
hometown on June 15, 1958. After borrowing $600 from their mother, they purchased some
second-hand equipment and rented a small building on a busy intersection in Wichita. The
result of their entrepreneurial efforts was the first Pizza Hut restaurant, and the foundation for
what would become the largest and most successful pizza restaurant company in the world.
Pizza Hut is not only the acknowledged leader of pizza industry worldwide, but it is also the
world’s largest pizza chain with more than 6,100 restaurants in the United States and over
5,500 restaurants in 97 countries and territories around the world, employing more than
300,000 people, serving 1.7 million pizzas every day to more than seven million customers.
Due to its previous ownership by PepsiCo, Pizza Hut, as with all Yum! Brands concepts have
a lifetime contract to sell Pepsi products. While Pizza Hut was owned by Pepsi, all three of
Pizza Hut's major competitors--Domino's Pizza, Papa John's Pizza, and Little Caesars--all
sold Coca-Cola products. However, since Pepsi's divestment of its restaurant business, both
Papa John's (in 2012) and Little Caesars (in 2007) later switched to Pepsi products
themselves.
Pizza Hut has sponsorship in many countries. In the early 1990s, as part of PepsiCo's
sponsorship of The NewsHour with Jim Lehrer (and its former moniker, The MacNeil/Lehrer
NewsHour), Pizza Hut was included in the acknowledgment alongside Taco Bell and KFC,
which PepsiCo owned at the time. In 2000, Pizza Hut was a part-time sponsor of Galaxy
Motorsports' #75 Ford in the then NASCAR Winston Cup Series, driven by Wally
Dallenbach Jr. Pizza Hut was the shirt sponsor of English football club Fulham F.C. for
the 2001–02 season. Terry Labonte drove selected events with Pizza Hut as the primary
sponsor of his #44 car in 2005. Pizza Hut purchased the naming rights to Major League

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Soccer club FC Dallas' stadium, Pizza Hut Park, prior to its opening in 2005. These were
allowed to expire in January 2012. In March 2007, Pizza Hut partnered with Verizon
Wireless to offer a free LG mobile phone with the purchase of a Cheesy Bites Pizza. Pizza
Hut is a sponsor of the Newcastle Vipers ice hockey team for the 2007/08 EIHL season in the
UK. Pizza Hut is a sponsor of Children's Joy Foundation In the Philippines. Pizza Hut Japan
sponsored the anime Code Geass: Lelouch of the Rebellion, with their mascot, Cheese-kun,
making cameos throughout the series.
Pizza Hut is a leading brand in the food business. It is a multi-national business. It provides
its product most probably all over the world. It uses different strategies for different
countries.

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PORTER’S FIVE FORCES OF PIZZA HUT

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Supplier Power:
 The number of suppliers of Pizza Hut is not too high because Pizza Hut tries to catch
only premium suppliers who can provide materials at a time. So in case of numbers
suppliers’ power seems low.
 Though the number of suppliers is not high but the size of suppliers’ is a factor. Since
Pizza Hut orders at a bulk amount so they wants a supplier who is able to provide the
maximum portion of the order. Here, in case of size the power of supplier is very
high.
 The ingredients or materials that Pizza Hut wants are not rare in the countries they
operate. So, uniqueness is not that much high for the suppliers. So, if necessary Pizza
Hut can change their supply source.
 Pizza Hut uses same ingredients in their products. To maintain the taste of the product
they must follow the same way of preparing orders. So, it is not possible for Pizza Hut
to substitute their raw materials or ingredients if necessary.
 If Pizza Hut changes their suppliers’ route or way of preparing products the cost
would be higher. Because to seek alternative way of suppliers, Pizza Hut has to work
hard to find the next best possible source of suppliers. Here there is a chance of failure
to find new best alternative. Again, using new ingredients would be a terrible
decision, because customers may dislike the new taste of product.
 The supplier power is the capability of the supplier to control the cost and supply of
the raw materials used in the market. Pizza Hut uses raw materials in creating their
products; in order to shift the power from the supplier to the company Pizza Hut can
alter it in a number of ways, such as replacing it with substitutes that are cheaper than
the prices of the suppliers, Pizza Hut should order in bulk so that the prices will be
cheaper, and if Pizza Hut thinks that the suppliers are over-charging then shift to
another supplier.
Buyer power:
 Numbers of buyers are too high and have little connection with each other. Lack of
unity among buyers may result Pizza Hut of being threatened.
 The power of the buyer can either be low or high. In low buyer powers the conditions
of the market allows the companies or entrepreneurs to enter easily because of the

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wide markets. On the other hand, a high buyer power the entry to the industry could
be hard. In the case of Pizza Hut, the buyers have low power because almost all the
people love Pizzas and there are only few players in the industry, therefore entering to
new markets in different parts of the world is easy for Pizza Hut.
 Size of each order is low. Individual consumers order for sudden consumption either
in the shop or from the house. Since the order size is low, so buyers have low power
to influence Pizza Hut and that does create an advantageous position for them.
 In case of making pizza, Pizza Hut has some unique competitive advantage. But in
case of other food products the competitors are not far behind of them. So, buyers can
easily switch to the competitors product if anything unsatisfactory happens at Pizza
Hut. Here, buyer power is high.
 Compare to the other competitors, Pizza Hut does not charge too much prices for their
product. So, price sensitivity is not high for buyers. Here, the buyer power is also
lower because they do not have enough reasons rather than fluctuation in satisfaction
to switch to the competitors’ product.
 Cost of switching is not high for consumers because it’s a food item, so they can
easily change their product and switch into new brand. Here, buyers’ possess
influence over Pizza Hut.
Competitive rivalry:
 Globally numbers of competitors are very high. Major competitors are
o Domino Pizza
o Pizza Ville – Canada
o Little Caesar's
o Pizza INN
o Papa john’s
o Chuck E. Cheese's
o California Pizza Kitchen
o Little Caesars Pizza
o Papa Murphy's
o Hungry Howie's Pizza
o Peter Piper Pizza

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So, here Pizza Hut has to work hard to sustain in the market.
 Quality of Pizza Hut varies significantly from its competitors. And only this reason is the
key to success of Pizza Hut. Here, in this point competitive rivalry is very poor for
competitors and Pizza Hut is getting benefit of it.
 Not only quality, in case of service delivery Pizza Hut holds the competitive advantage.
No question arises from the point of delivery for Pizza Hut throughout the world. So here
again competitors are not holding the power to influence Pizza Hut.
 Customer loyalty is much stronger for Pizza Hut than its competitors. Throughout the
world Pizza Hut holds the image of quality and delicious taste of pizza and pastas. Loyal
customer of this brand does not even think of try any product of other brand because of
their faith in Pizza Hut. Here again Pizza Hut influence the competitive rivalry position.
Threat of substitution:
 Fast foods are the major substitute of pizza and pastas. Other fast food products have the
ability to influence the buyer decisions. So, if fast food products perform well then Pizza
Hut has something to worry about their sales. So the risks are moderate.
 It exists when the demand for the product decreases because there is a substitute product
that performs better at a cheaper price. Although the Pizza Industry has low threats of
substitutes, still it poses threats such as instant pizzas, and sandwiches that have pizza
flavours.
 Cost of change is not very high for customers. They can easily change their choice and
switch to competitors brand. However the cost is higher for the new customers rather
than loyal one.

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Threat of new entry:
 New entrants in the pizza industry could be a threat in Pizza Hut because it can lessen the
market share of the company. Usually new entrants offer cheaper products than the
established; therefore more customers could be lured in buying their products which
eventually would shift from Pizza Hut to these new entrants. The new entrants in this
field usually offer cheaper prices of products; therefore Pizza Hut should create measures
to counter the approaches used by the new entrants.
 Time and cost for new entry for firms are very high. Pizza Hut is a multinational
company and has strongest competitive advantage. To compete, a new firm must
establish their shops in thousands of locations with full order facility, employment
opportunity, and higher variety of menus with stronger competitive advantage. But these
tasks are too difficult for any new firm to compete with a market leader.
 Since Pizza Hut is operating business in many countries for many years, they have
specialized knowledge regarding the menu, consumer behavior, supply chain, tastes of
customers and so on. As a new firm these tasks are nearly impossible to achieve
overnight. So barriers are high.
 Since a new firm could not operate at a wide range with full pace, so economies of scale
would not be achieved. To make business in many countries and to sustain, without
economies of scale it’s very difficult for any new firm.
 Without having innovative product and greater experience, it’s impossible for new firm
to compete with Pizza Hut or any other existing companies. So, barriers of entry normally
very high.

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SWOT ANALYSIS OF PIZZA HUT

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Strength:
• Part of the largest restaurant chain in the world
• Over 20,000 franchises around the world
• Brand leader in the UK
• Innovative range of pizzas under one roof
• Famous television advertising
• Food attracts people of various ranges from young to old.
• Sound financial situation and international turnover.
• 100% owned by yum!
• Pizza Hut sits on top of global full-service restaurant tree
Pizza Hut is an international franchise and restaurant chain having presence in many countries
and is originally based in Texas, USA. The company specializes in the American-style pizza that
till to date no other pizza restaurant has been able to compete. The company also offers many
other food items and side dishes like breadsticks, wings, garlic bread etc.
Pizza Hut is one of the largest restaurant chains in the world and is a sub brand of Yum! Brands,
Inc. The Pizza Hut owns and runs about 34,000 restaurants, provides home delivery services and
also has kiosks in more than hundred countries.
Pizza Hut with a large market share and a strong network has become a market leader in United
Kingdom.
The restaurants offer a large variety and types of pizzas under one roof and are known for its
innovative pizzas.
The marketing of the company is strength of the company. The have many media partners and
use television advertising that attracts people of various ages. The company has a huge market
share; more customers mean higher percentage in sales that leads to greater profits.

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Pizza Hut faces very low competition. The company has some strong competitors like dominos
pizza, but Pizza Hut has an advantage because of its strong network, restaurant outlets and
delivery service. The company has well differentiated its products and has a large loyal customer
base.
Weaknesses:
• Loyal customers are feeling that the satisfaction of the pizzas is declining.
• While Novak said Pizza Hut’s expansion into China is going exceedingly well,
there is battling problems in New Zealand and Australia.
• There are complex computer systems and internal conflicts from franchisees.
• There is a lack of organic pizzas, which will limit the target market
The loyal customers of Pizza hut feel that there is a decline in satisfaction and other pizza chains
and restaurants are offering much more.
There are some internal conflicts within the company as there processes are computerized and
centralized. This has led to high turnover as well as de-motivation of staff.
Opportunities:
• New Pizzas with different crust sizes and flavours.
• Pizza Hut expands Indian market menu and looks to old favourite to bolster sales in the US
• Pizza Hut targets upscale products and a downscale consumer base
The company can come up with innovative Pizzas, new flavors and recipes with different types
of crusts and sizes etc.
The company can open its restaurants in different countries that have potential customers for
example it can expand its network in India, Pakistan, Bangladesh etc.

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The company can even introduce new, healthy and fresh food items related to pizza for example
they can introduce fresh pizzas. The people are these days more concerned about their health and
pizza hut can meet this need by introducing fresh and healthy pizzas.
Threats:
• Rising competition undermines Pizza Hut as consumers go for greater convenience
• Rising cheese costs threaten margins
• Threat from Dominos pizza, also from Mc Donald’s who have tried to introduce a new meal
that is a Pizza called: McPizza.
The competition in the Pizza industry is increasing, as customers now prefer and look for
availability and affordability.
The rising prices of special ingredients like cheese, used in pizzas.
The company faces serious threats from other international restaurant chains like KFC,
McDonalds, Domino’s pizza etc. McDonalds even tried to introduce pizza in its product
portfolio called McPizza. Besides these competitors the local restaurants that provide pizzas
offer food item at more affordable prices as well as know the taste of the local people better.
Many of its competitors are trying to capture the market share of the Pizza hut by introducing
similar kind of pizzas and food items.

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CHALLENGES OF PIZZA HUT

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Challenges of Pizza hut:
 Now day customers are seeking availability and affordability. While making pizza and
cover the costs of ingredients Pizza Hut may charge price according to their strategy. But
customers by the way may prefer affordable product that may be a challenge for Pizza
Hut to set an affordable price.
 Price of ingredients like cheese is increasing rapidly. So, Pizza Hut must find cheap
sources of cheese or any alternative way to handle the price problems.
 Major competitor McDonald is going to introduce a new product Mcpizza in their
portfolio. As a well-known brand, McDonald may grab the market of pizza or either
creates a new threat of damaging sales of Pizza Hut. So Pizza Hut must be aware of the
strategy of other competitors.
 Local restaurants are providing at a lower cost than Pizza Hut. Since the cost of locals is
not too high so they can easily charge a lower price. But it is not a very comfortable
situation for Pizza Hut to serve customers at a lower price. So, to defend the sales, Pizza
Hut must have to do something to tackle the locals.

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 Competitors are easily copying the pizza that is produced by Pizza Hut. So, the
uniqueness is hampered some extent. Though competitors cannot provide the same taste
but in some extent it is a point of threat for Pizza Hut and they must think about it.
 Since Pizza Hut is an international brand so they more or less provide the same taste of
their product all around the world. But the point is, the tastes of people around the world
differ significantly. So the question is would it be better to keep the same taste for
different type of people or change the taste according to the geographic locations?
Pizza Hut must also think the consumer behavior of the customers. Whether they want
same taste or taste they prefer in the locality. According to the behavior of customer we
think Pizza Hut must make a wise decision to boost up their sales.

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Conclusion
Though being a leader in the market Pizza Hut has been facing so many problems right now.
From our point of view as a third party, analyzing from different views we have sought
challenges and SOWT of Pizza Hut.
We hope by utilizing the experience of many years and competitive advantage, Pizza Hut can
address the problems they might face in the future.
Our team also believes that, analyzing the consumer behavior of different countries, Pizza Hut
can make the difference from their competitors
Finally, we think by focusing on the issue that we have pointed Pizza Hut can go a long trip in
future and can hold the place of world market leader.

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References
 Star Magazine, The Daily Star, National Daily of Bangladesh
 www.google.com
 www.pizzahut.com
 www.wikipedia.com/pizzahut/