Pizza Hut on innovation: Vegemite stuffed crusts, interactive boxes and online ordering
You could say that the whole history of Pizza Hut has been achieved through innovation, beginning in 1958 when two brothers borrowed $600 from their mother to forge the world’s largest international franchise and restaurant chain in the pizza sector. Samuel Tait recently met with Fatima Syed, head of marketing and innovation for the Pizza Hut brand at its parent company, Yum! Restaurants International. Syed has has delivered an innovative product pipeline through partnerships with Doritos and Four’N Twenty. In this interview she discusses her views on and approach to innovation.
Samuel Tait: What are the best parts of being head of marketing and innovation at Pizza Hut?
Fatima Syed: I’ve been with Pizza Hut for four and a half years. My background is in marketing – the category – but always within the world of food and beverage. I think I was outside FMCG for 18 months and I didn’t like it at all. I really enjoy food and beverage marketing, because it’s really fast-paced.
You can develop innovation a lot faster than when I was working in household care. When I started at Yum!, speed of innovation was at a whole other level. I thought FMCG was fast.
We’re 100% franchised. Each of our stores is owned by a franchisee, and each of our stores is essentially a retail unit, which gives us a lot more visibility and a lot more flexibility than working with supermarket chains. What I enjoy the most is that not a single day is the same.
Technically, the stores are part of the brand so you have flexibility to work with the franchisees to extend that brand message. You see data a lot more quickly. You get feedback from the franchisees really quickly as they’re interacting with customers every day. That direct feedback – the direct interaction – that you need to respond to from a sales perspective allows you to be more adaptable and flexible. We can actually make changes within specific promotions straightaway if we need to. The speed and the flexibility are probably what I like the most.
ST: How do you define innovation at Yum!?
FS: For Pizza Hut, innovation is not a process. Innovation is about translating an idea into a product or a service that is of value to a customer. That’s one part of it. The second part is having an idea that you can commercialise. There’s really no point in having a fantastic idea if you can’t commercialise it.
We don’t actually have a formal process because for us, innovation is a part of our DNA. A lot of the time, innovation tends to skew towards product innovation because we are a food brand, but we also look at innovation from a technology and packaging perspective.
ST: If innovation is a core part of the culture at Yum!, would you say that innovation is the business?
FS: Yes. We are very specific about the fact that innovation for us is about driving sales.
What we don’t want to do is create innovation that cannibalises our core sales, rather giving us incremental sales. When it comes to innovation, you have to be innovating constantly because it keeps the consumer interested in the brand, and keeps the brand relevant.
That is just the way QSR works. It’s making sure that we’ve got both of those things working as well as they can. We want to make sure that our core foundation is solid so that what people come to us for, they get the best of and then, how do we layer innovation on top to bring in new users, or bring back lapsed users, or retain our loyal users.
ST: Is innovation different between working for a local company and a global company?
FS: I’ve been really fortunate in that all the companies I’ve worked for, while they’ve all been global companies including Yum!, they’re all extremely locally-oriented. Every company that I’ve worked with, every brand that I’ve worked for, I have had the ability to develop local campaigns and local products.
A lot of local offices within global companies have lost that accountability and the ability to control their marketing. With Pizza Hut, product development and marketing have always sat together as one function. When I stepped into the role two and a half years ago, I inherited both departments. They sit together because they are linked. We intentionally have them together because we believe one feeds the other.
If marketing and R and D are not working together, you generally won’t be developing products that are based on the consumer.
ST: What are the biggest challenges facing Pizza Hut at the moment?
FS: The pizza segment is becoming increasingly commoditised. Cost of entry is low which means chain brands are not only competing with each other but with gourmet pizza chains such as Crust as well as pizzerias and supermarkets.
ST: Could you provide an example of how innovation is helping address these challenges?
FS: Stuffed crust is one of our core crust offerings for pizzas and consumers relate that to being unique to Pizza Hut. We find even when our competitors talk about stuffing their crust with cheese, we see our sales go up because we get that halo effect.
Earlier in the year, we developed a Vegemite stuffed crust. The insight behind this is that as Australians we inherently ‘get’ Vegemite and most Aussie kids grew up eating Vegemite, it’s a part of our culture. We linked it to Australia Day because it was a uniquely Australian time of year, but also we know that cheese and Vegemite go really well together. We know a lot of people have that for breakfast, so we knew the flavour combination worked.
It’s great to have an idea, but it needs to taste good as well. We knew that putting it into the crust tastes great, and we knew that it was based on an insight that you have to be an Australian to really ‘get’ it. It was a purely digital campaign. We didn’t put any money into traditional advertising. We created a video where vox-popped people in and around Sydney to try it and to tell us what they thought about the taste.
Sure enough, it was only Australians that thought it was fantastic. Everyone else thought it was the worst thing they’d ever tasted. The PR we got from it was phenomenal. I’ve never seen anything like it. We found our content was being shared across a host of channels and media loved it. It peaked on Australia Day. That is probably the best example I can give you of how we are using innovation to address a business challenge.
ST: Are you using innovation to create branded experiences outside the actual pizza product?
FS: There’s a couple of things that go with this. The first is packaging. Packaging is a great way to promote the brand through a format that we all know. Our core target market is families, they’re the heart, the driver of what we do. We’re looking at how we actually use our pizza boxes to connect with our target market.
We know that families are really struggling to find the time to connect with each other. We believe that the box can allow us to target that insight. It can be in the way that we structure the box so that we’re providing an easy meal solution to families that offers something for everyone because we know that when it comes to organising dinner, nobody agrees. Everyone wants something different.
We have the ability to innovate our packaging design whilst providing a lot of variety. We can also do making the packaging a lot more interactive, having it turn into board games and puzzles for younger kids as an example. That for us is a big opportunity.
The second one is the digital space. How do you innovate technology that again taps into this insight on the family connection – we believe gaming is a real opportunity for the Pizza Hut brand. Over 40% of our sales come through our online platforms, with 60% of that through a mobile device. We know that this is a great opportunity for us to drive interaction. We know people order and then while they’re waiting for their pizza, we think about what are they doing? There’s an opportunity for us to keep them engaged with the brand. These are the two areas outside of the pizza product where we’re focusing on innovation.
ST: How does Yum! link strategy, leadership, and innovation?
FS: From a strategic perspective, the leadership team actually aligns to the strategy, which often leads to innovation. Each department head then very clearly articulates their commitment to that strategy, and what their role will be in delivering that strategy.
They then feed that commitment into their teams. The result is a very collaborative team environment, because everyone’s really clear on their role in the innovation puzzle.
When it comes to innovation, it will only work if everyone buys in, because if it’s just a marketing or an R-and-D-led initiative, it’s not going to work.
We have what we call an NPD team that is made up of operations, marketing, R and D, finance, I.T, and supply chain. They are all involved in the process; everyone has an accountability, and we find that when you share accountability it drives results.
ST: What is the value of collaboration in relation to successful innovation programs?
FS: We’re a people-centred organisation and so collaboration is really important. Taking people on the journey and making them part of the process is important to our business. We place a lot of value in people’s opinions. We find that we get innovation ideas from everyone. Everyone feels really comfortable to share. Everyone’s clear that it doesn’t mean that they’re all going to be executed, but they certainly feel very comfortable sharing.
We see that not just internally, but also with our franchisees.
Our people really step up in terms of their areas of expertise. We find that our supply chain specialists will encourage suppliers to share trends and ideas with us. We find that the operations team will bring experience from the franchisee into the process to help us understand what’s going to work, and what’s not going to work.
ST: What three companies do you most admire in regards to their approach to innovation?
FS: For me, Unilever, Toyota and Apple are three companies I most admire.
Unilever was one of the first companies that truly brought consumer insights into its product development. Lynx is a perfect example because they tapped into teenage boys’ insecurities and suddenly celebrated that in the media.
Toyota, over the years, has developed this reputation of being reliable. I think its image became stale over time because while it’s great to be reliable, reliable can be boring. They added exciting to reliable and if I look at what they’ve done with the 86, and with the Rav4 they have brought fun and excitement back into the category, which is what cars are, right?
The thing I love about Apple is that they’ve taken products that aren’t necessarily new to the world, but they’re reinventing them. They’ve taken a phone, which everyone needs, but they’ve just reinvented the phone so it does a lot more for you. Even the iPad – if I’m not wrong I think the iPad was actually developed for children with disabilities because it made it easier to use. For me it’s that kind of stuff that is really powerful. It’s not necessarily stuff that’s brand new, but it is reinvention, which is what I love.