Facing More Competition From Freezer Aisle, Pizza Hut Calls for Agency Review

AdAge.com reports: After more than two decades with BBDO, beleaguered Pizza Hut is shopping for a new creative agency. Chris Fuller, a spokesman for the chain, which is battling a massive same-store sales dip, said Pizza Hut is “seeking innovative, consumer-insight-led advertising.”

The fast-food marketer has hired Lee Ann Morgan & Partners to conduct the review and expects to finish by late December. Incumbent BBDO, which has managed to hold onto the account during three separate reviews during its tenure, will once again defend it. DraftFCB handles creative for parent Yum Brands’ other major chains, KFC, headquartered in Chicago; and Taco Bell, from Irvine, Calif. At the marketer, the review falls under the baton of Pizza Hut Chief Marketing Officer Brian Niccol, formerly a marketer at Procter & Gamble.

Same-store sales fell 8% in the most recent quarter, making Pizza Hut the biggest laggard of Yum Brands’ portfolio — and well behind competitor Domino’s, which posted a same-store sales decline of less than 1%. Upstart Papa John’s, meanwhile, posted same-store sales that were slightly positive.

Pizza Hut spent $239 million in measured media during 2008, a 20% increase over $199 million in 2007, according to TNS Media Intelligence. The fast feeder has recently added pasta and wings to its menu, and its business has heavily shifted toward dinner — a higher-ticket meal — which has caused it to struggle with value perception.

Pizza Hut declined to indicate which or how many agencies it plans to reach out to, but it’s clear the restaurant chain is on the lookout for a shop that’s not only creative, but also has the analytics chops to elevate the chain’s marketing efforts beyond catchy TV ads to target and connect with Pizza Hut customers in novel ways.

Recent Pizza Hut creative has worked to drive more business online, and the marketer has a goal of making $1 billion in online sales by 2012. To that end, Pizza Hut has offered online promotions, built a Facebook ordering platform, and most recently offered 20% off orders placed through its iPhone application, which is now featured in Apple’s latest round of ads.

The pizza-delivery category has struggled during the recession, particularly in the face of enormous growth in the freezer aisle. Last month Kraft reported that sales of DiGiorno frozen pizzas soared more than 20% in the second quarter. It was the product’s seventh consecutive quarterly sales gain.