It's 40 years since the first Pizza Hut opened in the UK and, after what might be termed a midlife crisis, a £60m investment programme is setting it back on track. Chief executive Jens Hofma tells James Stagg how the chain will compete in a crowded market and why he's happiest serving tables
Give me the mission statement for Pizza Hut in its new incarnation…
In the past it has been about making Pizza Hut a place where people want to share a great meal and a great experience. The brand has experienced underinvestment for many years, but what we've started to do, from this year, is bring its mojo back and make sure it is a restaurant oozing with energy, excitement and fantastic food. We want it to be a place where people get together.
The brand has seen some changes in its fortune over its 40-year existence. Why do you think it has endured for so long?
It could be said that Pizza Hut's heydayâ¨was considered to be the 1980s and 1990s. â¨Why do you think it lost its way? The market overall has been incredibly competitive in the past 10 years. Casual dining in the UK went from being a sector that wasn't even talked about to being incredibly up and coming with many new entrants. That sets the bar higher for any restaurant concept that wants to compete, and that's why we're investing as much as we are.
While the brand struggled, many other â¨Italian chains emerged and the market isâ¨now extremely crowded. How can Pizza Hut stand out above the rest again? I think the Italian market is very crowded,â¨but we've got the benefit that we're not actually an Italian concept. Pizza Hut has always beenâ¨an American take on pizza. We're proud of these roots and we're not pretending to be an authentic Italian restaurant. The American influence can be seen in our decor and the way we've restructured our menu, with pizza â¨recipes that are different from the traditional Italian way.
You're now making a significant investment â¨in the business. What will it be spent on? We're going to invest between £40m and £60m in the next three years. The investment will range from £50,000 to £500,000 depending on the location, its potential and its size. We're not really using a cookie-cutter approach - we want to work out what makes sense.
I'm personally visiting every restaurant we're investing in and taking several hours to familiarise myself with the trade area, the â¨customer base, the competition and the traffic generators. All these variables will determine what we invest.
We will have remodelled about 60 sites â¨by the end of this year, but it will be 80 if we take into account what we have already done in 2013.
The Crawley site was one of the first to receive investment. Why was it chosen? We're sitting next to one of the leading cinemas in the country and are surrounded by all of our key competitors - Nando's, TGI Friday's, McDonald's and Bella Italia. We decided that a big investment was the optimal thing to do here. We need to be able to hold our own against the other successful brands on the market. It's good to get a read of what share of the market we can conquer when we're at our very best. That's what we wanted to test here.
What does Pizza Hut's owner Rutland Partners expect for its investment in terms of the performance of the business, and over how long? Rutland will take a perspective over three to five years. The advantage of working with an inspired private equity house is that they're able to take that kind of time horizon when thinking about their investment. It's long been my conviction with Pizza Hut that we needâ¨a major reinvestment into our restaurants. There needs to be a longer time horizon between investment and it taking off. They want to see progress, but we're not focused on the short term.
Are you planning any new openings or purely concentrating on the existing estate? It's not a key priority for us, as we have a large estate and some fantastic sites, so the primary focus is to make our existing sites as successful as possible. But we are putting feelers out for new sites, too. The UK retail and leisure market is moving so quickly that if you stand still you go backwards. We've taken landlords to our Crawley site and showed them the â¨new face of Pizza Hut and all of a sudden we are getting much more excitement.
You've moved fairly radically with the menu, introducing items such as ribs and chips. â¨Does that not dilute what Pizza Hut is about? The core is pizza, but we want to be more than that. I think it's great if people can have a complete meal experience and a bit of everything. Our sides, starters and desserts reflect our American origin and add to the experience.
There's quite a fashion for American foodâ¨at the moment, especially in fast-food terms. Does that help the business? I think people are re-appreciating American cuisine - as long as it's quality American â¨cuisine - and that's what we're focused on. For us, it's not a fashion, it's what we've always been. Now people are looking at American dining in a new and contemporary way.
The salad bar has always been a signature. â¨Will that remain in the new design? The salad bar is definitely a core part. All the icons we've always had will continue to be a key part of Pizza Hut. So our ice-cream factory, which is a big draw for younger guests, will continue to be prominent, and the saladâ¨bar, which comes free with any main course, has been completely overhauled and revamped. The buffet is still available for lunchtime guests, too.
You've mentioned that you will also improve training. Is there any element of service in particular that you're working on? We are always looking to improve our service, as it's such a key element of the dining experience. It's all about the relationship you strike up with the person you're serving.
We want our front-of-house staff to maximise the time they spend on guest interaction. Our service style has changed from being functional to being engaging, upbeat, natural and authentic. There are service principles that are part of who we are and that are not negotiable, but we also want people to be authentic to themselves and do things in their own way so that it feels natural.
What do you make of the discounting cultureâ¨in casual dining? Is it finally coming to an end? Everyone keeps saying they will move away from it, but few actually do. We took a lot of pain in 2013 when we moved away from aggressive discounting. We moved our average discount from 25% to 9%, so we've weaned ourselves off it substantially.
However, I think there will always be â¨a certain amount of discounting, which makes a lot of sense as we're a business with fixed capacity and variable demand. It makes sense that you become clever with your discounting to attract people when it's quiet.
Are you planning any quirky adverts to follow England's inevitable failure in the World Cup, as you have done in the past? I'm not sure the World Cup [in 2010] was necessarily fantastic for our business, and we're not planning any advertising. In fact, we've made ourselves less advertising-dependent than we've been in the past.
We still invest a lot, particularly in digital marketing. We have a database of about two million guests signed up to our website, and we're in constant communication with them. We struck up a partnership with [comedian] Paddy McGuinness, who is our brand â¨ambassador, and he injects a lot of fun into the brand. But the best way to get people to come back to your restaurant is to give them a great experience.
Do you think there will be a time when casual dining looks to the revenue management approach taken by airlines and some hotels where the cost varies depending on when â¨you book?
I don't think it will be as extreme as that. We want people to feel as though they're getting value for money whenever they dine. We certainly analyse our discounts now, although â¨I still see a lot of blunt discounting out in the market, so I'm not sure where everyone else stands. We want to do it in a way that's fair to our guests and makes economic sense for us.
You've shown your support for a VAT cut for hospitality. Do you think the campaign hasâ¨a chance of success?
I see this as a long-term struggle where there will be ups and downs. I don't understand why you don't pay any VAT in supermarkets, yetâ¨it's 20% for food served to you in restaurants. It creates an unfair competitive environment. Our sector is one of the major employers,â¨particularly of people straight out of school, and we're being taxed from every direction you can imagine.
There has been much talk about youngsters not in education, employment or training. Is it hard to find employees with the right attitude? It's not always easy. To be a great team member you have to have a certain amount of empathy and want to interact with people. However, our sector is a true meritocracy. You can start off at the bottom of the chain and end up as a senior director. I will always look for people who have all the brand experience.
I don't think we just generate employment - it's worthwhile employment. These are not dead-end roles; they're jobs that can leadâ¨you somewhere if you want to go for it. I'm â¨constantly talent-spotting for people who can move up to the next level.
Jens Hofma on working the floor
We've all seen TV programmes where chief executives go "back to the floor", but for Jens Hofma it's a regular part of understanding the business and creating the right culture.
"It's important for everyone working hard on the front line to feel appreciated and truly valued," he explains. "They're not at the bottom of the chain, but at the front
of the business."
To appreciate the business from front of house, Hofma regularly dons a team uniform and takes a section of five or six tables for a shift - or even a double - at least once a month. Even though staff know who he is, he says it only takes an hour or so of a busy service before barriers are broken down.
"Once you've done that and sat in the team room after a long shift, people don't really care who I am any more and you get to hear the truth," he says.
"It's not something I do for show. I don't make a big deal out of it, but it gives me extremely valuable information on the business.
"I try to do it once a month at least. I actually did four double shifts in a row here [Crawley]. It's exhilarating once you get involved in it. To be dealing with guests
and giving them a great time - that's what makes our profession so amazing."