Pizza Hut has resumed operation of 85 per cent of its restaurants from completely shutting down during the initial days of the COVID lockdown.
Ever since they resumed operation, quick serve restaurants (QSRs) have been trying to impress customers with their COVID era hygiene protocols. The pandemic and the ensuing lockdowns have ravaged businesses that specifically need consumers to step out.
It has been a double whammy for restaurants because of consumers’ apprehensions over ordering ‘outside’ food due to safety concerns. Putting things into perspective, the National Restaurant Association of India (NRAI) suggests that around 30 per cent of restaurants and bars have shut down permanently, and things could get even worse.
Adding to its list of COVID era initiatives, QSR brand Pizza Hut has recently appointed ‘Trust Champions’ at its restaurants in India. These individuals are responsible for ensuring safety and hygiene measures in the kitchen and dining areas.
Over the last few months, the pizza chain saw a departure from its usual communication of value, freshness and new products. It has been replaced by ‘hygiene’. It is among those brands which had to completely halt operations, with sales dipping to zero for a brief stretch.
Pizza Hut operates 431 restaurants in India (180 in Tier-II cities) and has resumed operations in around 80 per cent of its stores. What has helped the brand is its global presence, existing hygiene standards and prowess in delivering food.
A year back (August 2019), deliveries formed 35 per cent of the brand’s business. The share stands at over 63 per cent today. While sales via the Pizza Hut app has grown at 50-60 per cent versus the pre-COVID period, the m-site (mobile website) sales have also grown significantly at 30 per cent.
The brand is adding a new cohort of first-time customers, who are getting used to ordering food online. Pizza Hut is also recalibrating its expansion plans for the next year, with more focus on delivery and expansion in Tier-I cities.
We interviewed Neha, marketing director, Pizza Hut India, about the brand‘s COVID journey.
What was your immediate reaction when the (COVID-induced) lockdown was announced back in March?
We spent the first couple of weeks taking stock of back-end operations - where the raw materials and other goods were stuck, etc. We quickly learnt about 'contactless' initiatives from our global counterparts, who were affected before India. We were able to pivot to contactless delivery by April, and that made a lot of difference. Again, we were already adhering to all of the quality practices. It was a lot easier for us to explain this to our customers.
Pizza Hut is all about daily sales between a certain time in the morning to a certain time in the evening. The uncertainty around the schedule of lockdowns/unlocks added to the problem. It was an operational nightmare to be up and running in a time like this.
"The younger audience, which make up the larger chunk for a brand like us, is all definitely out and about now."
But are the trust-building initiatives bearing results, since restaurants, in general, aren’t doing well?
People are returning to our restaurants but it is because of trust and our quality.
The other aspect is, it is mostly the youngsters, young adults and young couples, who are coming back. The family audience is going to take time. Our observation has been that people with elderly parents, or young children, are hesitating. The younger audience, which make up the larger chunk for a brand like us, is all definitely out and about now.
"We are currently clocking even higher takeaway numbers than last year."
Are they dining in, or is it mostly takeaways?
After delivery, the next channel that picked up was takeaways. Restaurants located in the high streets, where people go to spend time, are seeing a lot of dine-in orders. The ones located in residential areas are seeing a lot of takeaways, as people step out into their neighbourhoods for chores, like getting groceries, etc.
We had a hypothesis that takeaways might fall as dine-in increases. We thought consumers were choosing takeaway as they can't dine-in. Interestingly, that's not the case. We are currently clocking even higher takeaway numbers than last year.
We have also introduced on-the-go takeaway, wherein the staff delivers the food straight to the customers' vehicle parked outside, so that they don’t need to enter the store.
"The 3-4 members group is the dominant one. We are seeing very little of the two-member order size in home deliveries."
A lot of restaurants have shut down. In turn, are you seeing a spike in new users, and has it affected the average order size?
It is unfortunate. We are getting many new users, but that's because we attract consumers for our value and brand name. The source of business, at the moment, is our own consumer base, which in itself is quite large. It is a matter of bringing them back.
The average cheque size is up, and that is because there are more people living together. A lot of people have travelled back to be together with their families. The 3-4 members group is the dominant one. We are seeing very little of the two-member order size in home deliveries.
We have also launched ‘My Box’ in select cities for solo consumption, as people will be conscious of sharing.
"The consumption of vegetarian offerings has traditionally been far more than non-vegetarian."
How has the palette changed? Are certain offerings doing better than others?
The consumption of vegetarian offerings has traditionally been far more than non-vegetarian. Unlike a wrap, or a burger, pizza is a shared food. Even if you are a non-vegetarian, and somebody in the friends/family group is vegetarian, all decide to have vegetarian pizzas. Also, children love our veg margherita pizza.
Initially, there was a bit of a fluctuation in the non-veg consumption, but nothing too significant. It went back to our pre-COVID mix of veg and non-veg pretty quickly. We have a lot of Indian flavours. They have done well in the past and seem to be doing better today.
"The lockdown has led to bringing home delivery to the lives of small town consumers as a habit."
Pizza Hut is present in cities and smaller towns. Are both the markets behaving differently? Also, small town consumers have dined in traditionally, has it changed?
We have seen recovery coming from both. Our key markets, Delhi NCR, Pune, Bengaluru and Mumbai, have outperformed others. We saw a shift towards delivery in the smaller towns, but it is market and circumstance-driven. They, in a way, had no choice. But this has led to bringing home delivery to their lives as a habit. It will be interesting to see if the habit goes back to stepping out of their homes, or a mix of the two, as we move ahead.
"Ordering during the snack period (3pm-7pm) has picked up because of the lockdown timing."
The rules of lockdown are varied across markets. How has it impacted ordering habits?
The lockdown timings have made a difference in the ordering times. In some states, we are required to shut down by 9 p.m. and we have to take our last orders by 8-8.15 p.m. That's pretty early for an Indian.
Dinner continues to be our biggest share, but the entire snack period (post-lunch, 3-7 p.m.) has picked up because of the timing. People know that stores won't be open so they were ordering early. We've also seen instances of families (who are now together) using evenings to spend time together. Pizzas are a great complement to that.
In markets like Chennai, which has weekend lockdowns, people start planning shoulder dates, i.e., Friday and Monday as a weekend. The peaks on Friday and Monday are making up for the weekend loss.
We were curious to see how celebration days like Independence Day/Rakshabandhan that see high comsumption in restaurants, fared in the COVID scenario. They continue to cause spikes, even for our delivery business. Independence Day, this year, clocked a higher number than last year. These days still hold the same significance (a bit more, even) with people at home.
We are working on products and value deals that are designed for group occasions. We are also expecting delivery to pick up even more during the festive season.
How long do you see the 'hygiene' narrative of your advertising to continue?
The relevance of trust was big and so we've been talking about contactless deliveries/dining experiences, etc. We also realised that there was a frugality mindset coming into the picture. Consumers don't want to spend during uncertainty. We have also been talking about value because it would make it easy for the consumer. We have to assure the consumer that buying into the brand is a right call.
If we can go back to the original communication, it depends on the equity and foundation of trust. People come and see our safety protocols, and are very appreciative. Once we have built the foundation, then maybe we can go with a different relevant topic (say, a value offering, new innovation, etc.) to draw consumers in.
We have something exciting around the Pan Pizza coming up in a month or so.
"The biggest change in our advertising has been going completely digital."
That's the message, but how have you tweaked your choice of mediums?
The biggest change has been going completely digital. What has really shone on the digital front is the engagement. Social engagement has become even more critical. You have to deeply listen what consumers are saying. They can immediately give you a thumbs up, or down, about an initiative.
Towards the beginning, we launched something called #QualityTimeOfQuarantine, where we changed the narrative. We felt that the consumers also want happy conversations beyond assurances of hygiene and safety. Subsequently, we made our frontline workers the face of the brand. We got a big thumbs up for that. We have also had some experiments with radio. We have also tried i-radio, or the Internet radio.
With digital, you have to be on round the clock. We have kept our agency partners really busy in the last few months.
"Unlike in other categories like, say, FMCG, where there is a factory and logistics, etc., ours is a lot about people."
Consumer-facing employees play a key role in the brand's image. They might be having a hard time too. How did you handle that part?
Unlike in other categories like, say, FMCG, where there is a factory and logistics, etc., ours is a lot about people. Every store is an individual unit with an individual set of people. They have to be happy so that they can, in turn, make the consumers happy. We imparted all our best learnings that we accumulated across global markets.
The first post (covid related) on digital featured a team member from Mumbai. While it was liked by consumers, our team members loved it. They felt pride, and that their job was a lot more than just delivering pizzas. We also got a lot of support from out partners like PepsiCo, whose celebration of our staff helped on both the consumer and employee front.
"I have the opportunity to tell a story in a way that nobody has done in the past."
And lastly, what would be the Pizza Hut marketer's COVID nightmare?
There are two ends of the spectrum that kept me awake. One was people thinking that we are being tone-deaf and unaware of the world around us. The other was being seen as opportunistic. This at times, can be really tricky. None of us has experienced this, so it is as much a risk as it is a challenge. I have the opportunity to tell a story in a way that nobody has done in the past. We could also end up doing something that would eventually end up being a bad idea.