Pizza Hut launches gourmet product

Pizza Hut is launching a gourmet range of pizzas this week, something it hopes will give it the edge over rival Domino's as the competition for the pizza dollar hots up.

But New Zealand's biggest chain of pizza stores denies it is attempting to counter the massive rise in popularity of Wellington-based Hell Pizza.

General manager of Pizza Hut, Russel Creedy, said the gourmet range is being introduced to try and pick up a wider range of customers. "It's not a Hell strategy at all, it's something we've developed over the last three years in limited promotions".

"Hell's a pretty niche market chasing after a certain profile (of customer), we don't want to be that specific."

Hell Pizza, which operates only in the gourmet pizza market, is known for its youth-oriented marketing. But founder Callum Davies said Hell had a diverse range of customers, from students to "little old ladies". "Most people recognise what we do is aimed at the lighter side."

"Pizza Hut are trying to be everything to everybody, taking on us at one end and Domino's at the other."

The success of the one-off gourmet pizza promotions, which normally cost a couple of dollars more than an ordinary pizza, was behind the decision to make it a permanent addition Mr Creedy said.

The gourmet range was first launched in Hamilton earlier this year, and Mr Creedy said it has had positive sales.

Mr Davies said Hell's sales in Hamilton had been unaffected since the launch.

Pizza Hut views its main threat as coming from Australian chain Domino's. Since Domino's arrived in New Zealand two years ago, it has been known for aggressively pricing policy to undercut Pizza Hut.

Both Hell and Domino's have about 40 stores nationwide, and are aiming for over 50 by the end of the year. In contrast Pizza Hut has 102 stores now, and Mr Creedy believes it will reach 110 by the end of the financial year next March.

Domino's New Zealand manager Peter Jones said national sales are moving ahead, especially in Domino's new markets of Auckland and Christchurch.

Mr Creedy said Wellington, which was the first market Domino's attacked in New Zealand, has settled down after a "fractured" couple of years. "It's become extremely profitable for us."

Pizza Hut is owned by Restaurant Brands, currently the subject of a $1.65 a share takeover bid by Australian private equity firm CVC. It's shares closed on Friday at $1.63.

In its annual result for the year to March, Restaurant Brands said overall sales grew 7.7 per cent to $87.6 million. However same-store sales dropped slightly for the year, but Mr Creedy said since March same-store sales have been positive. The same-store drop was due to opening new stores near to existing ones, and "cannibalising" its own market.

Domino's, which recently floated on the Australian Stock Exchange, had A$5.4 million ($5.9 million) of sales in the year to June 2004. It is estimating it will make A$7.7 million in the year to June 2005.

- nzpa