Pizza Hut value chain analysis
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Pizza Hut is an international pizza chain with over 6,000 locations in the United States and over 5,600 locations in 94 other countries. It entered India in 1996. Pizza Hut believes in providing excellent pizza and service to create happy customers who return frequently. Its value chain involves primary activities like procuring ingredients, producing pizzas and pastas, and delivering orders on time. Support activities include human resource management to train employees, technology development to improve products, and procurement to source high quality ingredients from local and international suppliers.
Pizza Hut value chain analysis
- 1. UCVC Assignment -1 Value ChainofPizza Hut Submitted by: ShubhamSinghal 80303120053
- 2. ShubhamSinghal 80303120053 Pizza Hut Pizza Hut is one of the best wide spread international fast food joint. It offers different styles of pizza alongwith some side dishes like salads, pastas, buffalo wings/potato rings, breadsticks, and garlic breads.It is a subsidiary of Yum! Brands(a Fortune 300 company), the world's largest restaurant company.It is an American restaurant chain with more than 6,000 Pizza Hut restaurants in the United States, and more than 5,600 store locations in 94 other countries and territories around the world.It entered India in 1996, with its first branch in Bangalore and expanding all over thereafter, creating a large customer base for itself. Why Pizza Hut?: Pizza Hut believes in making a perfect pizza with their extra ordinary menu and providing hygienic, courteous and helpful service every single time and on time. So much so that all customers just loves it and feels like coming again and again. Thus customers come in for simply the best pizzas and also have a great dining time with the services offered by them along with some good music (ambience) and comfortable sitting arrangement. Thus, Pizza Hut believes in providing a memorable dining time to the customer, this makes the customer ‘happy’ and makes him come back again and again. Thus the basic marketing strategy of the Pizza Hut is being customer centric providing the best service. Like in India, it provides with customized menu as per the taste of the Indians, so that it can make the customer happy and also has a check that all outlets should provide a uniform taste and holistic experience. Value Chain: The value chain is a systematic approach to examine the development of competitive advantage. It was developed in 1985 by Michael Porter in Competitive Advantage. It is used as a tool to identify various ways to create Customer Value. The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation. Value chain model from Michael E. Porter’s Competitive Advantage: According to this model the activities are divided into two broad categories:
- 3. ShubhamSinghal 80303120053 • Primary Activities- Activities which relate directly to the actual creation, manufacture, distribution, and sale of a product or service to the firm’s customers. • Support Activities-Economic activities which assist the firm’s primary activities. Value Chain of Pizza Hut: Support Activities Infrastructure Funds collection Administrative tasks Human Resource Management Managing employees Training employees Appraisals and rewards Knowledge transfers Freedom of thoughts Conducting meetings Technology Development Feedback from customers Research work Improvising of their products Innovation Launch of new products Use of IT, databases Temperature controlled trucks Procurement Acquiring the resources Ingredients from local suppliers Special ingredients From Australia Primary Activities Inbound Logistics Purchasing raw materials like: Dough Cheese Sauce Fruits and vegetables Spaghetti Salt and pepper Operations Preparation of pizza base Customization of pizza Make pastas and salads On time delivery Outbound Logistics Transporting pizza bases Serving pizzas hot Marketing and Sales Segmentation Target Market Branding Redefining its menu Introduction of new products Pricing Distribution Advertising Promotional offers Service and Support Customer feels comfortable Online orders Home Delivery Explanation of Value Chainof Pizza Hut:
- 4. ShubhamSinghal 80303120053 Primary Activities: o Inbound Logistics: Purchasing the raw materials required which includes: Dough like: Thin ‘N Crispy® Dough XL Full House™Dough Pan Dough Hand-Tossed Style Dough Stuffed Crust Dough Cheese like: String Cheese Pizza Cheese Sauce like: White Pizza Sauce Regular Pizza Sauce Sweet Pizza Sauce Non vegetarianitems like: Buffalo Chicken Beef Pork Diced Chicken Pepperoni Italian Sausage Meat balls Fruits and Vegetables like: Mushroom Onion Tomatoes Jalapenos Banana peppers Paneer Chillies Sweet Corn Olives Apples Cherries Breads: Garlic Bread Breadsticks Spaghetti Desserts Wheat Spices Water Milk
- 5. ShubhamSinghal 80303120053 Sugar Salt Vegetable Oil …..etc. o Operations: Preparation of pizza base using the above mentioned sources as per the requirements and expectations i.e. the required amount of materials need to be added, thickness, softness, size of the pizza base as per the requirement, heating the same for the right time. All this so that the base becomes as per the expectations set for it. Centralised locations for the preparation of pizza bases to maintain the uniformity, from where these are transported to the various outlets. Customization of Pizzas, as per the order by the customer like what all toppings and flavours he wants. Examples: A orders for a chicken pizza, while B orders for a Vegetarian one with lots of toppings like mushroom, onion, on other hand C orders for just cheese pizza with no toppings at all. So different customers have different orders depending on their taste and preferences, location of the restaurant (like in India beef and other similar non vegetarian items are banned and people prefer Paneer items, on the other hand this thing completely differs abroad). Thereby making it an international brand with local taste. Make Pastas and Salads: as per the order of the customer from the raw materials as mentioned above. Doing all this in the specific time period (so as to deliver to the customer in the mentioned time period at the time of ordering) and also adhering to the company standards while maintaining the quality of the food item (pizzas and pastas). o Outbound Logistics: Transporting the pizza bases to the Pizza Hut outlets, where they are kept and used for customization as per the order. This helps maintaining the uniformity of bases, saving time and resources in the preparation of pizza at each outlet. Pizza and pastas etc. serving hot to the customers at the restaurant and at their doorstep. o Marketing and Sales: Segmentation and Target Market: it basically targets the people till the age 55 years, including working people, families with young children, students and travellers. Branding: Pizza hut is a brand of pizzas and pastas, which means that its products have an authenticity and a definite brand value and satisfaction to customer of its quality.
- 6. ShubhamSinghal 80303120053 Redefining its menu: Like in India, they have introduced products that suit the Indian taste like the Paneer and tandoori pizzas etc. This helps to increase the customer base and satisfy them. Also, not using the products which are not acceptable in India like beef, ham etc. Introduction of new products and backing them up with proper promotions, discounts and advertisements which excites the customers to give it a try atleast or just have a high ‘what’s new’ quotient. Pricing: as per the market demand and keeping the competitors also in mind. Distribution: Pizza Hut is opening a large number of outlets targeting a large customer base, so that more and more people can enjoy its offerings. Advertising through hoardings, newspapers, TV ads, promotion on internet, mobile apps, pamphlets etc. And also setting up stalls and catering in colleges, fests, events, marriages, parties etc. Promotional offers like buy one get one free, corporate/college and group discounts, meals for 2 and 4, choose your own topping and pizza etc. Consumer benefit: a belief about its exclusivity that Pizza hut offers a great and memorable dining experience, so much so that at many places people have to wait/book a table to get into the restaurants, thus increasing the charm in the people about it. Also advertising that the pizzas are ‘served hot’ with their own set of indicators to do that- This also helps create an interest and confidence of getting hot pizzas in the customer’s mind. o Service and Support: Provide/Serve the pizzas hot to the customers at the restaurants. Providing the customers good service by making them feel comfortable and fulfil their needs both before and after serving the pizza to them. Politely tell the customers of the new menu items, offers that they have so as to ease their process of making choices. Ordering online service: customers can look at the menu, decide and order online as per their location. They can also get contact and other information like the new entries, discounts and offers, which they can use as per their wish. Support Activities o Procurement: It basically deals with how to get the required resources. It has to maintain the quality, deliver the best pizzas, keep the customer satisfied, all this at affordable and competitive prices. Thus, to achieve this they maintained the supply chain and developed a chain for 95% of its ingredients of local suppliers. And to maintain its famous Pizza
- 7. ShubhamSinghal 80303120053 Hut’s taste, it imports the main ingredients like pepperoni, mozzarella cheese from Australia and Spain respectively. Their strategy to take some ingredients from the local market and get some imported helps them maintain the quality as well as low prices (as required especiallyby the Indian market). o Technology Development: Pizza hut believes in taking feedback from the customers and improvising themselves. So, all the customers that come to the Pizza hut restaurants and even the ones who order online give their valued feedback as to what they liked and how can they improve to serve better. Pizza hut does research work on how to improve on the existing products and innovate to introduce new ones. This is to provide the customer with the new products and increase the foot step, and also give a distinctive perspective to the brand so as to be in front of the line when it comes to offer the best pizzas and service. Usage of the modern technology is also done like: Maintaining of databases of customers so that they can be contacted at the time of festivals and for promotional offers. Reaching out to the corporates and colleges through emails and over the net communication, for setting up of stalls during the fests and events for increased sales, enlarging the customer base and targeting these customers as frequent customers by sending them offers through emails and SMSes giving them corporate and college discounts (which helps make Pizza Hut the top most option for the people when they want to have good food and have a memorable time). Usage of the computers and other advanced electronic items which help keep them a check on: Billing information The Inventory What all needs to be bring in as raw materials Sales Readily available Employees details Temperature controlled trucks for the transportation of the raw materials and prepared bases at a controlled temperature can be done. o Human Resource Management: Pizza Hut Focuses on hiring of the new employees. Provides them the required trainings so that they can perform as per the expectations set for them on the job. Strives to increase the knowledge and skills (including soft skills) of its employees.
- 8. ShubhamSinghal 80303120053 Gives annual appraisals as per the performance of the employees. This also helps the employees get the motivation and work hard to get the appraisals. Important information’s are diligently internally communicated to all the employees. Its employees work passionately in providing the customers a great time by doing a number of activities like smiling and greeting the customer, politely taking the orders and even guide them (if required), serving the food hot as and on time as per the specifications and customisations mentioned by the customers (like what all toppings should be there, use of onion or not in vegetarian pizzas, even to the extent that number of ice cubes in the drinks/beverages served), politely asking them to come again. This makes the customer feel really comfortable and happy and thus making them wanting to come again and again. The employees are able to handle some critical situations and take decisions accordingly- as per the demand of the situation, without even the help of their supervisors. This thus even provides them the freedom of decision making.