Turnaround report: Pizza Hut’s new format, McDonald’s picturesque menu boards, Cosi’s sales quagmire

Next generation of Pizza Hut?

Pizza Hut must feel like the poor stepchild in Yum! Brands’ portfolio. Taco Bell, the family star, was given the capital to test a new fast-casual takeoff called U.S. Taco Co. KFC is experimenting with a riff called Super Chix, which is often likened to Chick-fil-A. But what would be Pizza Hut’s new growth or replacement vehicle?

It turns out that one is already being developed by franchisees. An operator in Texas hatched a recast of the brand as a sports bar, with a full bar, multiple flat-screen TVs and game tables for pool and shuffleboard. It’s already been duplicated 13 times in Texas, at two locations in Minnesota and is about to be cloned in Michigan.

The menus feature more sandwiches and appetizers, and a buffet is offered at lunch to speed service.

Simpler McD’s menus generate controversy overseas

Digital displays that swap out much of the print on McDonald’s menu boards with food beauty shots, a possible way of speeding customers’ selection process, has generated controversy following their adoption in some Australian stores. The programmable display boards rotate images of the food, sparing patrons the need to read through copy-heavy listings. But the nutritional information is also presented for just a seven-second flash, preventing customers from seeing, say, calorie counts for all burger choices at the same time.

McDonald’s hasn’t said the menu boards are destined for U.S. restaurants, but it’s in a self-imposed quiet period about its turnaround in all respects. But it had cited a simplification of in-restaurant and drive-thru menu boards as an objective, and innovations pioneered in Australia have a way of crossing the Pacific to McDonald’s home market. McCafe and the new fast-casual-like store set-ups, for instance, originated Down Under.

Chick-fil-A already uses a menu that relies on pictures to convey the choices available. The approach also allays language problems.

Cosi’s sales echo

Despite assurances that dramatic action has been taken to revive the concept, Cosi posted yet another decline in systemwide same-store sales for the second quarter. Comps were down 0.4 percent, the result of a 5.5 percent drop for franchised units.

The home office attributed that number to problems that were isolated to three franchised stores. Comps for company-run units rose 2.1 percent, the franchisor noted.

The results exclude the contribution of the Boston units that Cosi recently acquired by buying its franchisee there, Hearthstone Associates. Cosi CEO RJ Dourney, ran Hearthstone before taking the top job at Cosi and is now and rolling the store’s unique operational structure into the rest of the system.

"We continue to see sales momentum in the markets where we have fully deployed the Hearthstone operating model," Dourney said. "We are staying the course and being relentless in the roll out of our strategy system wide.”

It was almost exactly what he said in commenting on the prior reporting period.


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