WEAKNESSES

Intense competition
The company guarantees hot pizzas everywhere for your enjoyment. Pizza Hut aims to make
people happy aside from serving food. The ingredients used for making these pizzas are fresh
and of good quality. Pizza hut is known for its competitive pricing, as known for its quality and
high standards and it has priced its products high in comparison to its competitors. In
partnerships with Pepsico, Pizza Hut provides product bundling, for combo meals.
Yellow Cab and Sbarro are Pizza Hut competitors. Pizza Hut's pricing approach in the
marketing mix is also dependent on the amount of the pizza ordered, i.e. Small, Medium, and
the crust were all picked. Pizza Hut has employed a premium pricing strategy in order to portray
excellent quality in its goods. In the face of intense competition, it lowers its rates in order to
capture the market while maintaining high standards and service quality.

Rising costs of labor, ingredients and other operational expenses

The pizza industry has been growing steadily all around the world over the past five years, with
restaurant and delivery sales garnering increasing amounts of market share every year. Pizza
Hut is one of the most popular and renowned pizza restaurants and has a large global
presence. It is important to understand what expenses are included in the cost of running any
given Pizza Hut Franchise, including existing locations as well as any new establishments that
may be opened. Knowing what those costs are can prevent any financial surprises and help
ensure success in running the Pizza Hut Franchise.
The costs of running a Pizza Hut vary based on the size and type of operation, but typically
include rent, utilities, inventory, equipment, labor, and the mandatory franchise fee. In addition,
business owners must budget for promotion, technology, and insurance. These expenses can
quickly mount up, but they are necessary for a successful business. Increasing labor, ingredient
costs, and other operational costs might put a strain on Pizza Hut's profit margins. Inability to
adequately manage these costs or pass them on to customers through price hikes could have a
severe impact on the company's financial success.

Dependence on franchisees
The total investment amount to establish a Pizza Hut franchise ranges from $367,000 to
$2,063,500, depending on the type of operation of the restaurant. This excludes the real
property but includes the $47,500 to $69,000 in fees that must be paid to the franchisor. The
franchisees should pay an initial franchise fee of $25,000 for each System Restaurant.
The franchisees are expected to use the designated computer system, which costs
approximately $15,000 to $30,000 to set up. Once the store's operations begin, franchisees are
expected to pay the company a royalty fee of 6% on gross sales and a marketing fee of 4.75%
in exchange for the marketing services provided by the franchisor. Pizza Hut's expansion has
been greatly facilitated by the franchising model, but this also places the brand at the risk of the
success of its franchisees. Service, quality, or customer experience variations between
franchise sites may be detrimental to the brand's reputation.
Overall, Pizza Hut may offer its owners a wonderful return on investment, provided that the
startup and ongoing operational costs are carefully budgeted for. Success on a much greater
scale is feasible if the necessary preparations are performed and the running costs are
determined.

Health and dietary concerns

One of the biggest chains of Italian restaurants with franchisees around the world is Pizza Hut.
The main problems include rising costs, brand switching, competition, healthy diet trends, and
restrictions. Based on the aforementioned information, Pizza Hut should broaden its reach and
provide nutritious cuisine to address these challenges. Because the farmers who cultivated the
ingredients cared about quality, all of its goods are the best in town.
Pizza Hut's typical menu items may be seen as less alluring due to rising health consciousness
among consumers and a demand for healthier eating options. To keep up with changing
consumer preferences and nutritional trends, the business must constantly develop and adjust
its menu.

Store formats and locations

Some of Pizza Hut's classic dine-in locations may lose relevance or appeal to customers if
consumer preferences and eating patterns change. In order to stay on top of changing
consumer expectations and industry trends, the brand must constantly review and modify the
forms and locations of its stores.
Pizza Hut argues that despite preserving brand loyalty, the company is losing money because it
doesn't prioritize its availability in remote areas; instead, it should focus on the B-grade towns
that have pizza delivery services. If not the fast-food chain, but at least Pizza Hut Delivery,
which is the home delivery franchise of Pizza Hut, should be present in such locations to
increase customer trust and provide them an advantage over other competitors globally.

Economic conditions
Pizza sales in 2020 came in at $46.24 billion, slightly below 2019’s total of $46.34 billion,
according to Statista data, reflecting a lack of major pandemic disruption for this off-premise-
focused segment. These results are notable as Pizza Hut has struggled in recent years, mostly
due to a large, dated Red Roof dine-in footprint. The company started its shift toward
delivery/carryout units a few years ago when Yum committed $130 million toward the brand’s
turnaround. However, the pace of that transition didn’t keep up with consumers’ preference for
delivery/carryout pizza, and Pizza Hut fell behind rival Domino’s in market share.
Pizza Hut is a restaurant company that may be impacted by general economic conditions, such
as recessions or poor economic growth, which may result in fewer people dining out.
Maintaining profitability while adjusting to shifting economic conditions can be difficult.

REFERENCES:
https://thestrategystory.com/blog/pizza-hut-swot-analysis/
https://finmodelslab.com/blogs/blog/pizza-hut-franchise-operating-costs
https://www.vettedbiz.com/pizza-hut-franchise/
https://iide.co/case-studies/swot-analysis-of-pizza-hut/
https://www.restaurantdive.com/news/pizza-huts-momentum-continues-in-q4-with-8-
same-store-sales-growth/594587/#:~:text=Pizza%20sales%20in%202020%20came,off
%2Dpremise%2Dfocused%20segment.