Pizza Hut Goes Old School for Its Next Pie Innovations

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This handout photo provided by Pizza Hut,  shows a hand-tossed pizza.  Pizza Hut announced Monday, Jan. 13, 2014, it plans to start offering pizza by the slice for the first time in two test locations this week, as the chain looks to keep pace with trendy competitors offering quick, made-to-order pies. (AP Photo/Pizza Hut)
AP
It's OK to say that Pizza Hut is full of hot air when it comes to its latest marketing move. It almost certainly won't mind.

Yum! Brands' (YUM) iconic Pizza Hut introduced a new crust for its hand-tossed pizzas on Thursday. Instead of stuffing crusts with various types of cheese or even pepperoni as it has done in the past, Pizza Hut is promoting the fact that its new hand-tossed pizzas now feature a more airy texture.

Pumping more air into the dough is supposed to give the pies less of a cookie-cutter appearance, an unusual choice among chains that sell themselves on their consistency. Every snowflake is unique, but every chain order is supposed to be uniform across the various locations. It's what customers expect.

However, just as the term "hand-tossed" conveys a personal touch, having a few more air pockets in the pizzas should generate some retro charm akin to an indie pizzeria. So Pizza Hut is proud of the "noticeable imperfections" of the new pies.

It's not that big of a gamble. The rest of Pizza Hut's menu options will remain the same. If this move doesn't "pan" out, it can be quickly replaced with the next evolutionary step of crust stuffing in the pizza giant's playbook.

Pizza Hut doesn't stand still, even if it's odd to find it stuffing its pies with air.

Pizza Hut is Bigger Than You Think

There are more than 14,000 Pizza Hut locations across 100 different countries, making the chain a major component of the Yum! Brands family that also includes Taco Bell and KFC. It could also use a boost. Comparable-store sales at domestic Pizza Hut locations slipped 1 percent in Yum! Brands' latest quarter.

These are competitive times, and for Pizza Hut, the challenge now is about more than beefing up its delivery business to compete with Papa John's (PZZA) and Domino's (DPZ), which seem to always have some ridiculous price promotion going on. (This is a business that has become cutthroat enough that Pizza Hut even feels the need to explicitly offer full refunds on the new air-blown pies if customers aren't satisfied.)

No, the potentially even bigger threat comes from the fast-casual pizza movement. Chipotle Mexican Grill (CMG) and Buffalo Wild Wings (BWLD) have recently invested in the niche, and Pizza Hut doesn't want to be left out in the cold.

Slicing a New Path

It's not just air-puffed hand-tossed pizzas on the menu. Pizza Hut turned heads on Tuesday by introducing two stores that will specialize in selling pizzas by the slice, like New York style pizzerias (or Sbarro), to be eaten there or on the go.

Pizza Hut has offered small personal pan pizzas for ages, but selling slices gives the company a way to cash in on the fast casual trend of customers who want to enjoy a quick meal without having to flag down a server to pay the check. The two new concept stores will still offer the Pizza Hut staples, but the real draw will be the pizza "bar" that quickly dispenses slices as they're ordered.

Competitive moves: We'll see if they make the dough rise.



Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings and Chipotle Mexican Grill. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, and Papa John's International. Try any of our newsletter services free for 30 days.

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