They line up despite the fact that the pizza at Pizza Hut is not the cheapest meal you can buy in Shanghai. It is not even cheap when compared with overseas pizza outlets.

Pizza Hut is quick to respond. "We will make our pizza more affordable in China as we grow," said David Novak, chairman and CEO of Pizza Hut's parent company, Yum! Brands, Inc.

Pizza Hut has only just opened its 100th restaurant in China, so its economies of scale here are still relatively tiny compared with the 10,000 Pizza Huts worldwide.

"The popularity of our products in the Chinese market has enlightened me a lot, and we've even decided to open more stores here," said Novak. "I love this market."

Novak made the comment as he officially launched a new "Pizza Hut Delivery" line in Shanghai. The line already has five outlets in China.

He explained that delivery service is normally tied to the restaurant, which means chefs make pizzas for both customers dining-in and out, while the waiters take on the duty of home delivery in addition to their regular restaurant services. However, problems arise during dining hours with customers complaining about slow delivery, and restaurant managers worrying about the lack of hands.

"The focus should be on the customers, the lifeline of our service," said Novak. "In order to solve this chronic headache, our staff engaged in many talks with customers to ensure their satisfaction." He added that Shanghai was chosen as their proving ground.

Service network

The Yum! Brands, Inc organization is currently made up of six subsidiaries organized around its five core brands, KFC, Pizza Hut, Taco Bell, A&W All-American Food Restaurants and Long John Silver's.

But currently, there are only two of these operating in the local market, namely KFC and Pizza Hut. "We are preparing to open a Taco Bell outlet some time this year. But there's no further plan for the other brands," said Novak.

As for doubts about whether local residents will be adapted to Taco Bell's strong Mexican flavour, Novak was unconcerned. "The taste would be quite acceptable because we have an active team composed of local staff carrying out market research," he said confidently.

In contrast with the stagnant sales observed in its international markets as well as in its fundamental base in the US market, sales volume in the Chinese market remains high. No one can miss the long queues observed during dining-hours outside local Pizza Hut restaurants, which are usually located on commercial streets.

Keys to success

Novak summarized the three most important points of Pizza Hut's success in China, which are consideration, reliability and service-orientation.

Trying to understand customer psychology and being very keen on market development enables them to grasp opportunities, even when these seem marginal to inexperienced observers. But Novak emphasized that kindness and hospitality were among the key points of his success in China.

"In order to pursue reliable high-quality, we are very strict with our standards and in ensuring the consistency of all our products," said Novak.

"In staff training as well, we require the fundamental workers such as the waiters and the waitress have long-term training before beginning work, which enables them to offer better service."

But competition is becoming fiercer with thousands of foreign brands gearing up for entry into the Chinese market, which also concerns Novak. "The Chinese market is our No. 1 global market outside the United States, and we are planning to set up a logistics firm and train more staff to make our products one of the best in China."

Novak didn't spurn questions about the food. "There's no denying the high-calorie content of food such as pizza with main ingredients as cheese, but there are a variety of other choices as well, like vegetables and fruit. Anyone can maintain a balanced diet through the intake of sensible food combined with appropriate sports."

(Shanghai Star March 3, 2003)