Pizza Hut’s Marketing Challenge in Africa
While Pizza Hut has successfully added more than 1,300 restaurants across China, its international expansion into Africa has been more difficult. The world’s largest pizza chain failed in sub-Saharan Africa seven years ago, after consumers were cool to its prices and dine-in model. This time around, Pizza Hut marketers are targeting takeout and delivery service. It will limit drop-off distances to a few miles, which means eventually it will have smaller stores in lots of neighborhoods. From its current eight stores in South Africa and Zambia, it aims to have 200 stores across the continent in three years.
While fast-food purchases in South Africa are growing, much of that nation’s fast-food industry is homegrown. In countries such as Ghana, Kenya, and Nigeria, there’s less competition than in South Africa. So while supply chains are less reliable, those newer markets offer foreign restaurant players good growth opportunities.
Almost half of Africa’s fast-food restaurants are focused on chicken with hamburgers being second. Pizza is a distant third, accounting for about 5 percent of total spending. A major reason for this is the more moderate cost and wider availability of poultry supplies. Some Pizza Hut toppings, such as air-dried pepperoni, have to be imported leading to higher prices for consumers. For example, the “Streetwise 5” meal from KFC, which includes a large order of fries and five pieces of chicken, costs $5.50 in South Africa, while a fully loaded large Pizza Hut pizza approaches $8. In Zambia, the same pizza costs about $10. To offer more affordable items, Pizza Hut has added fries to its menu in South Africa. Chicken wings and breadsticks are also options.
Source: Janice Kew and Christopher Spillane, “Pizza Hut returns to Africa” Bloomberg Businessweek, February 19, 2015
http://www.bloomberg.com/news/articles/2015-02-19/pizza-hut-returns-to-africa-with-new-strategy
1. How should Pizza Hut position their products to overcome the higher prices they are charging consumers?
2. Are there things that Pizza Hut could do to improve their supply chain in Africa and reduce costs?
