The Management Of Pizza Hut Incorporates Commerce Essay

This report on analysis of management of Pizza Hut would not have been possible without the kind support and help of the management. We take this opportunity to express a deep sense of our gratitude to all of them for their cordial support, valuable information and guidance, which helped us in completing this task through various stages.

We also take this opportunity to express our profound gratitude and deep regards to our Instructor and Mentor Ms. Shagufta Rafif for her exemplary guidance, monitoring and constant encouragement throughout the course of this report. 

Table of Contents

SCOPE OF THE REPORT

This report on the management of Pizza Hut incorporates and analyzes different aspects of planning, organizing, influencing and controlling. Where necessary, the distinctive areas have been examined with the support of different management tools, models and techniques.

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The report also evaluates growing trends in the restaurant business with special focus on the challenges Pizza Hut is faced with. It also assesses the strengths of the business and how it has been able to survive in this recessionary era, where many restaurant businesses are making heavy losses.

A special focus has also been given on the goals setting, goals congruence and the management approaches to address the growing market competition.

Staff retention, professionalization and their well being has also been critically evaluated in this report with bringing to light the areas, where the staff input, ownership and empowerment have been accepted and given due weightage.

Products sustainability with special promotions and usage of other medium for marketing has also found space in this report to highlight potentials threats and hidden opportunities available to Pizza Hut management in this sector. Underpinning the supply chain and contribution to the society as a whole by the management of Pizza Hut has also been focused.

MISSION STATEMENT

Though making pizzas and selling them is our business, however we always feel proud to make a perfect pizza. We also emphasis in provide caring and useful services to our customers so that when they go out, they always wish to come back.

Our staff members are also proud of having us as their employers. They would prefer to work with us rather than joining any other organization. The reasons being simple, we look for their well being, provide them with opportunities for their development and they are rewarded in great manner making them feel honored and privileged.

While taking care of all above things, we are also mindful of the value we add to our shareholders, who place their confidence in our competencies of making profits.

VISION OF PIZZA HUT

We never believe in mediocrity. We believe that in this highly competitive market, only those survive which produce everything that is best. Best not only in terms of product, but best in terms of quality of services provided, the best in terms of the environment and ambience of the restaurants, the best in terms of business, the best in terms of network and franchise and above all the best for all those who tend to visit our restaurants.

Pizza Hut logo.svg

EXECUTIVE SUMMARY

Ever since the industrialization began, many businesses have seen ups and downs. There has been history of many products making their way to the consumers’ home through markets and fading overtime with the invention of new technology or becoming extinct for other reasons.

The food industry and restaurant business also saw this upheaval in the last century. However, in last few decades, this business has seen a tremendous rise with many world famous brand restaurants mushrooming the big and small cities of the world.

During that era of prosperity, Pizza Hut was established by PepsiCo in 1977, an American chain. The company owned it till 1997, when it was sold to Yum! Brands, Inc., which also owns the restaurant chains of KFC and Taco Bell. As per latest report, there are 6,000 Pizza Hut restaurants in the United States, whereas, 5,150 restaurants are in other countries of the world. In Karachi, the company has 21 restaurants, whereas, there are another 20 restaurants in other cities of Pakistan, bringing the total numbers to 41.

Pizza Hut, as its name suggests is popular for selling Pizza of different flavors (Chicken Tikka flavor is Pakistan’s most demanded product), however , alongside pizza, it also sells Pastas, Salad, Chicken Wings, Breadsticks, Garlic Bread and Beverages.

There are different formats adopted for the restaurants’ designs. We can find a restaurant where all varieties are available with options of dine in, take away or home delivery. However, in our own city, we can find some outlets just offering take away options. In these outlets, we may not find all the varieties due to limited space and staff.

As mentioned above, the Pizza Hut owning company also has KFC and Taco Bell, so in some parts of the world (not in Pakistan), these sibling restaurants are co-located. We can find Pizza Hut restaurants in middle class even in lower class localities. They can be found in college campuses, food courts of shopping malls and some big stores like Target and Walmart.

Yum! Brands has been frontrunner in fulfilling its social responsibilities. It has invested in many educational, social and health sectors, thus playing its part in reducing poverty, malnutrition and illiteracy in the world. It has also established Yum Foundation, through which many donor funded programs are undertaken. The group is not oblivious of its responsibilities of providing pollution free environment and has given it due importance and emphasis by devoting financial resources. In Pakistan, the franchiser of Pizza Hut invests in education sector of the country. In previous year floods, the franchiser not only provided donation to the affected people but allowed to use its outlets for donation collection. Many times, the Edhi Foundation has also used Pizza Hut restaurants for collecting donation.

The board of Directors of Yum! Brands has an unambiguous policy of designing their restaurants in such a manner that they not only ensure environment sustainability but proving to be a source of income generation of other small traders of the area and vicinity.

In restaurant business, the customers are always king and every effort is made at Pizza Hut to satisfy the customer requirements and the complaints are addressed on the spot. Apart from customer satisfaction, Pizza Hut is also a proud employer of thousands of employees in Pakistan and across the globe. It has always invested in developing professional skills of their staff and has given honor and dignity to them, which is perhaps not available in small restaurant businesses. We can see the way employees of small restaurants are treated and the remuneration they receive in exchange of their services. The employees of Pizza Hut feel proud becoming part of an International chain, which has inculcated teamwork and responsibility in them to strive for better services and thus in end getting satisfied customers, willing to come again and again.

Pizza Hut has contributed greatly in shape of taxes to the government. It has provided jobs to thousands of employees and suppliers, who provide food related materials to these restaurants on a daily basis. The presence of these restaurants in different parts of the city and country ensures that small suppliers like chicken merchants, vegetable sellers have become partner in the business, which creates more jobs and opportunities for these businesses. It contributes to the supply chain in a greater way with sustainability of the systems at forefront.

Pizza Hut has maintained high ethical standards and has never compromised on quality materials being used in its various products and quality services being provided to the customers. It is also mindful of its responsibilities to the shareholders and follows good corporate governance policies which endure lasting impacts on the society in which it operates.

PLANNING

Planning is the process of determining how the system will achieve its objectives. It is the systematic development of action, program aimed at reaching agreed business objectives by the process of analyzing, evaluating and selecting among the opportunities which are foreseen. While making plans the management of PIZZA HUT has been cognizant of their missions, goals, strategies, policies etc. as elaborated below.

PIZZA HUT OBJECTIVES IN PLANNING

Making perfect pizza

Provision of courteous and helpful services to the customers

Offering opportunities to growth, advancement and rewarding careers in a fun safe working environment.

Working for profit maximization.

Providing the shareholders with value growth

The major objective of Pizza Hut is to achieve customer satisfaction which can be made possible by achieving the objectives of the company. If the company is successful in achieving its objectives, they will themselves make their customers pleased and satisfied.

As the key product of Pizza Hut is “pizza,” the first and foremost objective of Pizza Hut is to make a perfect pizza and manage to achieve customer satisfaction. Pizza Hut has always strived hard to provide people with such meals that they find irresistible and which are allowed in their religions and cultures. Time to time new deals are being offered to the customers to achieve customer satisfaction Demographics are always kept in mind before experimenting with a new kind of pizza, as it is the people who have to like the product and help the company in increasing their sales.

The second objective of Pizza Hut is to provide courteous and valuable services to its customers. Pizza Hut ensures that their staff is trained enough to know how to treat their customers. They are trained to be friendly and well mannered. If a customer complaint is received, the staff is always told to ‘believe’ in whatever the customer says and then solve the problem accordingly. Doing this makes the customer delighted by the services that are provided to them, wanting them to come to Pizza Hut the next time as well. If one customer is satisfied that one will bring hundred customers along with him and if one is dissatisfied that one will take away hundred customers. Briefing sessions are also held each day in which the staff members are given briefing about what they did well in the whole day and what are the things that they need to improve. The objectives and the strategies to reach those objectives are also told to them each day, to make them work accordingly.

Third objective of Pizza Hut is to provide its staff member opportunities for progress and development together with a secure working environment. In-house training sessions are also organized for the staff members. The staff also sees their career path and growth within the organization and they also put all their energies in making organization possible to achieve its targets. Since goals achieved by the organization will finally result in growth of the staff as well. Although, we can see slumps in many industries but food industry is probably the only industry which has seen growth in recession period and is flourishing. This is all because of the dedication and sincerity of the staffs, who are encouraged and kept motivated. A safe and healthy working environment is also provided to them to make sure that they are happy enough to ensure the company’s progress, as if the employees are happy with what is provided to them they will always work hard to achieve the objectives of the company. In order to make them happy, they are given incentives such as bonuses, meals, cash rewards etc as well.

The fourth objective of Pizza Hut is profit maximization and giving their stakeholders (government, owners, customers, supplier, employees etc) significant growth. The Company does all the things mentioned above in order to maximize their profit and make their market standing better. Attaining all these objectives and making the customers satisfied will make the company earn profits.

The fifth and final objective is to provide value growth to its shareholders. If a company is making profit, the ultimate gainers are its shareholders alongside the community in which it operates and similar is true for Pizza Hut. Many of its restaurants across the city and country are making a sizeable profit, which is adding value growth to its shareholders, who have reposed confidence in the corporate governance of Pizza Hut.

MANAGEMENT BY OBJECTIVE (MBO) IN PIZZA HUT

Management by Objectives refers to the mutual agreement of managers and subordinates over company’s objectives. In a given time, it is expected the objectives to be achieved and those who have contributed greatly in the attainment of these objectives, should be rewarded. In Pizza Hut weekly meetings of the managers are held on a regular basis and sub ordinates are also invited in the meeting to give their input and feedback of the outcomes of previous meetings. The plans and other modus operandi are discussed for implementation and they are monitored on a daily basis. The suggestions and observations of the staff, mainly the Front of House staff, are highly appreciated. The staff is encouraged to put forward their suggestions for the improvement of services being provided and the food being served. Moreover if the staff members perform well in achieving the objectives, they are rewarded with recognition, cash rewards, bonuses etc. Pizza Hut gives them recognition by announcing ’employee of the week.’ The picture of that employee is sent to the area and regional offices which helps in making a good image of the employee in front of the senior staff.

As the decisions regarding the goals of the company are made by both managers and subordinates by stating ideas which are later listed and evaluated, thus, we can say that the strategy that Pizza Hut uses for making decisions is ‘Brainstorming.’

Internal Environmental Scanning

Pizza Hut has grown into a stature of big restaurant chain in a very short period of time. Proper planning, monitoring, ensuring availability of adequate resources, timely corrective measures and quality food & services have contributed greatly to its rise in already very competitive market.

Strength

The Pizza Hut brand is widely known all over the world and has its outlets in many countries. The market standing of Pizza Hut is very high. Whenever a person thinks of eating pizza, Pizza Hut is the first name that comes into one’s mind.

The greatest strength of Pizza Hut comes from inside. The highly skilled labor is professionally trained with emphasis on quality services. Detailed job descriptions of the staff, career growth ladder, top down goals attainment policy of the management and governance are a few of the contributing factors in the success story of Pizza Hut.

Needless to mention the main focus has always been customer satisfaction. The management always strives to do whatever is possible so that when the customers go out they not only are satisfied with the food, environment, services etc but they become Pizza Hut’s ambassadors and recommend others to their products.

In-house training sessions are organized for the staff members. They are kept informed about different achievements through news bulletin. High performers are rewarded every month and their names and designations are considered for special increments and promotions. There are many ways of rewarding front of house (FOH) staff members like giving them cash rewards, free meals or deploying them on hot tables where customers prefer to sit more likely.

Pizza Hut has played its due role with respect to CSR. Ensuring pollution free environment, contributing to the communities and societies in the projects of education, health and taking part in alleviating poverty in the areas, where they operate, are some of the achievements, Pizza Hut is proud of.

Being an international brand they also have strong financial resources as the materials used by Pizza Hut in making pizza are not local, as used by other pizza making companies. As Pizza Hut is a multinational company and the materials that it uses comes from outside Pakistan and is fresh and healthy for its customers.

Pizza Hut also offers free home delivery together with online delivery for its customers who wish to consume pizzas at their own place. Due to this the people who don’t want to go out for dine-in can have pizzas from Pizza Hut, rather than opting for some other restaurant, within 30 minutes free of the costs of home delivery.

Although Pizza Hut is famous for pizzas, however, it also offers desserts, beverages, salads, pastas etc. for its customers. Other than that it has a variety of flavors in pizzas as well. Some flavors that it puts forward are seasonal like Double Masti, whereas some continue throughout the year.

Weakness

No company can be perfect or remain perfect vis-à-vis its goals and objectives. As the goals evolve so do the companies as the time passes by. Pizza Hut has also experienced slums in its business due to following weaker policies. In Pakistan, where local restaurants have also entered into the pizza selling business with much cheaper prices and with more varieties, Pizza Hut has stuck to its prices robustly and offers very limited promotional deals to its customers. As a result, in many areas after making huge losses, it had to close its outlets only to move to more posh areas.

Although, there are varieties of other items available for sale in Pizza Hut restaurants, however, the hot selling item is pizzas and salads. Despite best efforts and reward policy to its staff, the management has not been able to increase the sales of pastas, desserts and beverages.

External Environmental Scanning

Opportunities

Unlike local restaurant businesses, due to its global presence, Pizza Hut has always got edge over other local and international restaurants chains. It has got thousands of restaurants around the world, serving millions of customers every day with same variety of food. This hallmark of Pizza Hut, no matter which locality, city or country it is located, the quality of food and the ambience of the restaurant is always fascinating and captivating. The aroma which comes out of the serving food has no match with other pizza selling restaurants. This uniqueness of Pizza Hut has always found it most demanding restaurant when it comes to eating pizzas.

Threats

Like all businesses, Pizza Hut is threatened with the arrival of other competitors. The competitors not only offer products cheaper in prices but the quality of the products has also been up to the mark. Another area which poses challenges to Pizza Hut is law & order situation of the city particularly and the country generally. The sectarian violence has affected the revenue of Pizza Hut greatly and its restaurants, which are located in middle class localities and are the worst sufferers.

Pizza Hut also focuses on PEST (Political, Economic, Social, and Technological) to check the demographics based on which they can decide which product should be given more emphasis and which deal should be discontinued.

PEST (POLITICAL, ECONOMICAL, SOCIAL, TECHNOLOGICAL)

POLITICAL ENVIRONMENT

The worsening law & order situation in the city particularly and the country generally has greatly affected all businesses and Pizza Hut is no exception. Sectarian clashes, bomb blasts and strikes have all played their role in declining revenue for Pizza Hut. Many restaurants of Pizza Hut, which are in sensitive localities have registered poor financial results mainly due to less number of customers visiting them, late night deals are rendered of no use and even due to lack of transport, the staff members cannot reach their restaurants. Due to poor law & order situation, the customers prefer to have home delivery, however, the city situation again becomes hindrance and delivery staff find it difficult to reach the customers’ homes.

ECONOMICAL ENVIRONMENT

If a country is developed than its economy will be good and the per capita income of the people will be high. As a result people will spend more money on food items and other products. In our study we came to know that since the products of Pizza Hut are comparatively expensive, people of average income occasionally visit their restaurants. Further, due to ever growing popularity of pizza among the Pakistani people, more international and local chains of restaurants have opened these services like Pizza Point, Pizza Next, Pizza One, Largesse etc. and are available on very cheaper prices. Although quality of the ingredients used by other competitors is debatable however because of low prices, they have given tough competition to Pizza Hut. The management of Pizza Hut is aware of this and has taken measures to counter them by offering deals and midnight packages. They also sell pizza coupons offering economical deals with “buy one get one free” options.

SOCIAL ENVIRONMENT

The management of Pizza Hut is also mindful of social environment of our country. Every person has his own value, religion, belief which is always dear to him. While offering services to its valued customers, Pizza Hut has always taken note of it and has desisted from offering such services which may offend or hurt the feelings of their customers whether they be religious, cultural or any other. Demography of the population in which the restaurants operate is also very important, like in Pakistan, chicken tikka flavor is very popular since people like to dine out for barbeque and if that flavor is available in pizza or burgers, people love to give them a try. Pizza Hut has managed itself very well in this respect and has assimilated itself quickly in the Pakistani culture. Before opening a restaurant, a thorough survey is undertaken to identify the demography of the population living in the area, income bracket in which it falls, eating habits and how frequently they go out for dining and which dishes they usually prefer for dine-outs. Based on the results and final conclusion, a decision is taken for opening of restaurant or otherwise.

TECHNOLOGICAL ENVIRONMENT

Like the effectiveness of technology in other areas, it has a great impact on the Pizza Hut running. It has state of the art equipment like baking ovens, IT devices etc. It is ensured that an order placed at any restaurant does not take more than 20 minutes to be served for dine-in and 30 minutes for home delivery. In some selected areas, an online service for ordering pizza has also started and yielding good results for the management.

Business Portfolio Analysis

Star (Pizza & Salad)

Question Mark (Drinks)

Cash Cow (Sides & Desserts)

Dogs (Pasta)

High

Market

Growth

Low

High Relative Market Share Low

Star:

Star is the position where the market growth and the market share of a product are high. In case of Pizza Hut, pizza and salad are at this position. They both have a good market standing and their demand has highly increased within no time. Pizza Hut offers pizzas of different flavors preferred by a lot of people, whereas salads are also popular among people and are consumed in the time when they are waiting for their main courses to be served.

Cash Cows:

Cash Cow is the ideal position where the market share of a product is high but its market growth is low. Sides and desserts of Pizza Hut have a high share but are not preferred by a lot of people. They are not popular among masses, however, as they have a good market share; growth is possible by making a few changes and modifying the products according to the needs of the customers

Question Mark:

Question Mark is the position where the market growth of a product is high but its market share is low. Beverages offered in Pizza Hut most appropriately fit in this position as they are preferred by people when offered to them as part of a deal but otherwise they are not the ideal choice of the customers who come to Pizza Hut. The sales of these items can be increased by increasing their market share.

Dog:

Dog is the position where both the market share and market growth of a product are low. Pastas offered by Pizza Hut very much fit into this position as Pizza Hut does not offer large variety of pastas, nor does it invest large capital to improve its product. In order to make the sales of pastas high, Pizza Hut should divert some of its revenue generated from pizzas and salads towards pastas and present larger varieties of it, thereby increasing its market share which will result in its growth as well.

INCREASING THE SALES OF A PRODUCT

Pizza Hut encourages its workers to increase the sales of those products which are not doing good business by giving them duty at the hot tables as a reward. These are the tables where the customers are most likely to sit. It even gives cash reward to the staff who works hard in increasing the sales of such product. The staff members are given salary bonuses as well for accomplishing this task.

Product cycle

Every product goes through at least five phases of its evolution. First phase is called introduction phase, where the product is produced and marketed for consumption. This introduction phase is always important. If the product gets approval of the consumers, it goes through second phase of growth. Which means since the demand is increasing the supply will increase which will result in growth of the product. In third phase the very same product reaches at maturity level. Every producer wants to see his product reaching this level, as at this level the profit maximization is very high and product becomes a star for the manufacturer. After this level the product goes through saturation phase. At this stage most of the consumers would have used this product and hence it reaches at a saturation level. It also implies that further demand for the product is not possible due to various reasons. No manufacturer or producer will want its product to reach at this phase. In order to defend the product reaching this stage, they bring in innovations in the product and if this is not possible then they introduce another product, which again start the cycle as mentioned above. After saturation phase, the product’s decline starts and it is considered as dogs according to business portfolio analysis.

Introduction Growth Maturity Saturation Decline

Introduction

One of recently introduced products P’Zone can be put at introduction stage. The demand for the product at this time is very low, however, the management of Pizza Hut is very optimistic about the product gaining popularity in the coming days.

Growth

Recently, Pizza Hut management has also focused on increasing the sale of its sides & desserts. They have also made it part of their promotional deals like garlic bread is now available with many deals. They are expecting that this will increase the sales of sides and desserts in a big way and thus their profitability margin.

Maturity

Pizzas of different varieties and salads are their most selling items and can easily be plotted at maturity phase. The management of Pizza Hut is continuously striving to keep this product at this stage for all the time, because this is the most revenue generating item and if this fails, the company will fail itself.

Saturation

Drinks can be plotted at saturation stage, since a very few customers buy drinks. Drinks are part of many deals and one does not feel need to buy extra drinks while dinning in.

Decline

Sale of pasta can be described as reaching decline stage. Rarely a customer comes who demands for pasta. Although many efforts at Pizza Hut are made to increase the sale of pasta, however, it seems that this product has reached its decline stage and may not stage a comeback. The management will need to introduce another product similar to pasta to attract customers.

ORGANIZING

Followed by planning, the organizing is the second most important function of management system. It is a function in which the combinations of human, physical and financial resources all bring to gather the desired results. They all are equally important and absence of anyone can put adverse effects on the results. According to Chester Bernand, “Organizing is a function by which the concern is able to define the role of positions, the jobs related and the co-ordination between authority and responsibility”.

Organizing function is performed by following steps:

Identification of activities

Departmentally organizing the activities

Classifying the authority

Coordinating authority and responsibility relationships

Importance

Organizing plays an important and central role in management system. In organizing process, it is the manager who uses his skills to utilize the organizational resources efficiently.

Primary mechanism managers use to activate plans

Maintains relationship between all organizational resources.

Division of work

Growth and diversification

Sense of security

Establish formal lines of authority

The things are executed by different managers. All these managers ensure that whatever work is being done in the company is to achieve the company’s objectives.

Organizing at Pizza Hut

As Pizza Hut is a multi-national company, it has to focus more on organizing. At Pizza Hut, management organizes all its resources in order to implement the course of action it determines in the planning process. Through the process of getting organized, the management determines the internal organizational structure; establishes and maintains relationships and allocates necessary resources.

Organizational Structure

Pizza Hut has built an integrated executive-level structure and process to assess, guide and oversee Pizza Hut’s worldwide activities. The company is engaged in a number of internal and external stakeholders along the way and will continue to engage additional stakeholders as the company moves forward in the journey.

Pizza Hut will continue to refine their structure as needed, as well as the ways in which Pizza Hut measures progress against the objectives, to enhance their capabilities and effectiveness.

According to the Organization Chart of the company, there is Restaurant Support Centre under which comes departments like HR, Marketing, Finance and Property and Field Operations, which runs the restaurants.

Departmentalization

Role of Human Resource

The Human Resource department deals with the management within the organization. There are number of responsibilities that the HR department has to deal with. At first, the HR department of Pizza Hut is responsible for hiring members of staff which will involve attracting more employees, assigning them their positions and ensuring that the employees will perform the task. HR department of Pizza Hut is also responsible for organizing the people in entire company and also sets the day to day goals for the organization.

Role of Marketing Department

The role of Marketing Department of Pizza H