Pizza Hut’s $5 Flavor Menu Raises Stakes in QSR Competition

For Pizza Hut, a new year has meant a new opportunity to redefine value for customers. This opportunity is evident in the new $5 Flavor Menu. “Our intent was to create the most flavor-filled and broadly appealing value menu ever in the food category, and we think we’ve done that with the $5 Flavor Menu,” said Jeff Fox, Pizza Hut chief brand and concept officer. Fox acknowledged that value meals “don’t really happen” in the pizza category. While many brands offer carry-out or online ordering specials, Pizza Hut has curated a menu of customer favorites. Customer can order any two of seven items for $5 each. So there’s the catch in a way—the customer will spend a minimum of $10. They can order a medium one-topping pizza with the gamut of ingredients, crusts, and sauces. They can then add a variety of appetizers and snacks, including Hershey’s Cookie, Hershey’s Brownie, WingStreet wings, Tuscani Pasta, and breadsticks.

What’s the Strategy?

Whenever a brand drops prices or introduces a new value menu, it’s in the context of a larger strategy. Imagine all the QSR players are sitting around a card table. McDonald’s raised everyone by rolling out its McPick 2 Menu. It replaces the underperforming Dollar Menu and allows customers to pay $2 for two of the following: a McChicken, a McDouble, small fries, or mozzarella sticks. The same day McPick 2 debuted, Pizza Hut launched its $5 flavor menu; they’re competing for the same customer. You may recall Wendy’s launching a 4 for $4 Meal in October. Customers may choose from a Jr. Bacon Cheeseburger, chicken nuggets, fries, and a drink. In a move that seems like a direct response to Wendy’s, Burger King has just launched a 5 for $4 Deal, including a bacon cheeseburger, crispy chicken nuggets, small fries, small drink, and a chocolate chip cookie. Meanwhile, Pizza Hut must compete in a separate but related battle among pizza companies. Thrillist points out that the $5 Flavor Menu directly competes with Domino’s successful $5.99 menu and Little Caesar’s $5 Hot-N-Ready menu. This option will of course put pressure on Papa John’s. So, that’s what the current landscape looks like, and now Pizza Hut’s deal makes a great deal of sense.

May the Best Quality and Customer Service Win!

The customer is the real winner in this game. As Business Insider explains, the reason for the rise of the bargain menu is twofold (and highly customer-centric):

1. Customers want to save money in the New Year and one way is by saving money with bargain meals at quick-service chains.
2. Fast-food companies aim to compete for the position of best value chain while turning a profit.

But getting more customers in the door with cheaper food is not a golden ticket to victory. Customers expect quality customer service and a clean, friendly environment when they visit you store. They expect consistency in how the pizza looks and tastes. Fast-food competitors may beat Pizza Hut on price, but Pizza Hut can have an advantage by regularly promoting fresh ingredients on its menu. And if Pizza Hut wants to compete in its own category, it can offer superior delivery service.

If Pizza Hut is willing to roll up its sleeves to make a value pie, is it willing to audit its network to better understand operations?

See Also: How to Perform a Pizza Franchise Inspection