Time for a pizza price war? Pizza Hut shifts gear

Last week, the American pizza multinational Pizza Hut announced the arrival of a new limited offer 39 RMB (5.42 USD) pizza via its official WeChat account. This price is almost half the typical price of a Pizza Hut pizza in China, which typically goes for around 70 RMB (9.72 USD) a pop, placing the brand at the higher end of the range.

This new product might not seem like a big deal, but it signals a new strategy to edge into the affordable pizza market as “rational” consumption becomes the new normal in China. Apart from Pizza Hut, China’s branded pizza market is currently populated by the likes of homegrown brands Champion Pizza and La César at the lower and upper ends respectively, as well as fellow American chain Domino’s in the mid-range.

Pizza Hut opened its first store in China in 1990 and had considerable success owing to its thorough market research and product localisation. Knowing that Chinese consumers might have trouble digesting cheese, Pizza Hut created localised variations of menu options with ingredients like tuna, soy sauce, roast duck, corn, and crayfish.

Despite being the most expensive option on offer, Pizza Hut holds the biggest market share at 32.5%. But as the allure of foreign-ness fades in the eyes of Chinese consumers and they hunt for the best “price to performance ratio”, Pizza Hut will have to grind to retain its position. As well as adjusting its pricing strategy, Pizza Hut plans to open 500 new stores a year, filling cities’ business districts with smaller satellite branches to better reach consumers on the go.

Foreign food brands have long held a certain prestige in China for sheer novelty alone, but this is worth less to Chinese consumers now than it used to be. In light of that, Pizza Hut is one of many brands that are moving into new strategic territory by making convenience and affordability their top priorities.


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