Service Marketing-Pizza Hut
A subsidiary of PepsiCo, Inc. , the company oversees more than 11,000 pizza restaurants and delivery outlets in 90 countries worldwide. In October 1997, the company expected to become a subsidiary of Tricon Global Restaurants, Inc. , formed from the spin-off of PepsiCo’s restaurant holdings. Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. When a friend suggested opening a pizza parlor–then a rarity–they agreed that the idea could prove successful, and they borrowed $600 from their mother to start a business with partner John Bender.
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Renting a small building at 503 South Bluff in downtown Wichita and purchasing secondhand equipment to make pizzas, the Carneys and Bender opened the first Pizza Hut restaurant; on opening night, they gave pizza away to encourage community interest. A year later, in 1959, Pizza Hut was incorporated in Kansas, and Dick Hassur opened the first franchise unit in Topeka, Kansas. In the early 1960s Pizza Hut grew on the strength of aggressive marketing of the pizza restaurant idea. In 1962, the Carney brothers bought out the interest held by Bender, and Robert Chisholm joined the company as treasurer.
In 1966, when the number of Pizza Hut franchise units had grown to 145, a home office was established to coordinate the businesses from Wichita. Two years later, the first Pizza Hut franchise was opened in Canada. This was followed by the establishment of the International Pizza Hut Franchise Holders Association (IPHFHA). It aimed at acquiring 40 percent of the company’s franchise operations, or 120 stores, and adding them to the six outlets wholly owned by Pizza Hut. The acquisitions, however, brought turmoil to the chain.
Varied accounting systems used by the previous franchise owners had to be merged into one operating system, a process that took eight months to complete. In the meantime, sales flattened and profits tumbled. In early 1970 Frank Carney decided that the company practice of relying on statistics from its annual report to inform its business strategy was inadequate, and that a more developed, long-term business plan was necessary. The turning point occurred when Pizza Hut went public and began growing at an unprecedented pace. Pizza Hut’s corporate strategy, arrived at after much consultation and boardroom debate, emerged in 1972.
The corporate strategy’s first priority was increasing sales and profits for the chain. Continuing to build a strong financial base for the company to provide adequate financing for growth was the second priority. The strategy also called for adding new restaurants to the chain in emerging and growing markets. In 1970 Pizza Hut opened units in Munich, Germany, and Sydney, Australia. That same year, the chain’s 500th restaurant opened, in Nashville, Tennessee. Further acquisitions that year included an 80 percent stake in Ready Italy, a frozen crust maker, and a joint venture, Sunflower Food Processors, formed with Sunflower Beef, Inc.
The same year, the menus for all restaurants added sandwiches to the staple “Thin ‘n Crispy” pizza offering. In 1971 Pizza Hut became the world’s largest pizza chain, according to sales and number of restaurants–then just more than 1,000 in all. A year later the chain gained a listing on the New York Stock Exchange. Pizza Hut also achieved, for the first time, a one million dollar sales week in the U. S. market. At the end of 1972 Pizza Hut made its long-anticipated offer of 410,000 shares of common stock to the public.
The company expanded by purchasing three restaurant divisions: Taco Kid, Next Door, and the Flaming Steer. In addition, Pizza Hut acquired Franchise Services, Inc. , a restaurant supply company, and J & G Food Company, Inc. , a food and supplies distributor. The company also added a second distribution center in Peoria, Illinois. In 1973 Pizza Hut expanded further by opening outlets in Japan and Great Britain. Three years later the chain had more than 100 restaurants outside the United States and two thousand units in its franchise network. The company’s 2,000th restaurant was opened in Independence, Missouri.