For better or worse, Pizza Hut's Hot Dog Bites Pizza is here. Yum! Brands' pizza chain began serving up pies with a crust consisting of two dozen pigs in a blanket on Thursday.
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It's not necessarily a surprising move. The major pizza outfits are perpetually trying to outdo one another. We no longer live in a world in which cheese or pepperoni is your only decision. Pizza Hut's tried to raise the bar with different pizza drizzles and flavored crusts. More to the point of this particular promotion, it has already offered frankfurter-stuffed crusts -- though not necessarily in this exact configuration -- in foreign markets.
So, yes, the Hot Dog Bites Pizza is here. But will it be a game changer for parent company Yum! Brands, or is this destined to be a novelty that pushed the realms of outrageousness too far? I had to check it out -- so you wouldn't have to.
I placed the order just as my local Pizza Hut opened for the day, and it wasn't a shock to learn I would be the first to order one from this particular location. Hey, somebody had to plant the flag.
It arrived in decent shape. The pizza itself was reasonably tasty. It's Pizza Hut fare. What more can one expect? In retrospect I should have gone with the traditional crust instead of the pretzel version. It didn't dawn on me until it was too late that a salty frankfurter embraced by salted pretzel bread would be, well, salty. It did come with a mustard cup for dipping, so that was a nice touch.
Rick Munarriz (@market) June 18, 2015
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So what does this mean for Yum!'s stock (as opposed to my digestive tract)? Pizza Hut has been the weakest link of Yum!'s quick-service trio that also includes Taco Bell and KFC. Year-over-year comps were flat in the latest reported quarter, while the two other concepts clocked in with positive comps. Pizza Hut also was the only chain of the three to post a year-over-year decline in operating profit margin and operating profit.
Outside of KFC's recent weakness in China as Yum! tries to overcome the unsavory food practices of a now-former supplier, Pizza Hut is the parent company's biggest trouble spot.
Pizza has become a cutthroat business, as Domino's Pizza and Papa John's ramp up marketing and discounting to stand out. Why else do you think Domino's just let folks tweet a pizza order solely by posting an emoji? Why do you think Papa John's is promoting Philly cheesesteak pizzas?
It's against this backdrop that the fast-casual pizza movement is taking off. Some of the fastest-growing chains in the quick-service restaurant universe offer gourmet pizzas that are pieced together in assembly line fashion and then can be baked up in a couple of minutes.
The Hot Dog Bites Pizza won't last forever. It's being billed as a limited-time promotion, timed to the upcoming Independence Day holiday weekend. It also doesn't hurt that July is National Hot Dog Month. It's a novelty, a "look at me" move that will generate media attention for Pizza Hut. One can argue that it's free publicity for all of the wrong reasons, but anything is better than staying stagnant if you're Pizza Hut with its recent uninspiring financial performance.
Pizza Hut wants to be a winner, but it will settle for a wiener this summer.
The article Hot Dog Pizza Won't Save Pizza Hut originally appeared on Fool.com.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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