Pizza Hut targeting fixes toward unit-level mgmt

Nation's Restaurant News, Nov 18, 1996 by Louise Kramer

DALLAS - Pizza Hut is getting a little KFC. Taking a page from sister PepsiCo restaurant concept KFC, where the slogan "the restaurant general manager is No. 1" has become a profit-boosting corporate mantra, Pizza Hut has unveiled a restructuring initiative to focus on improving its own unit-level management.

The moves, which include cutting 190 jobs and creating 90 new positions in management ranks, come about three months after David Novak, president and chief executive of KFC, was appointed to the additional role of president and chief executive of Pizza Hut.

While KFC has emerged as a bright spot in PepsiCo's restaurant portfolio this year, Pizza Hut, just a year ago a star thanks to its popular Stuffed Crust Pizza, in the most recent quarter saw same-store sales drop 10 percent over the prior-year period. In announcing the changes, Pizza Hut said it would shift its 10 regional divisions into one national division. The regional divisions have been functioning more or less as autonomous business units, said Rob Doughty, a spokesman for the chain.

Unit-level staffing and training will be taken out of stores and put into the hands of regional operations staff, who will now be called coaches.

"A restaurant manager is a pretty intense job, so what we've done is remove some of the responsibilities," Doughty said. The changes, he added, stem from a survey of restaurant managers the chain conducted recently to determine what help they needed to do their jobs. "We want them doing one thing, and that's making sure our customers are satisfied." As with KFC, Pizza Hut's corporate offices here will now be called the "Restaurant Support Center" rather than corporate headquarters.

The changes are primarily aimed at Pizza Hut's 4,900 corporate restaurants in the United States. Franchisees own and operate some 3,500 U.S. restaurants.

Wayne Jones, executive director and chief executive of Pizza Hut's Franchise Holders Association, which represents all U.S. franchisees, said the impact of the moves on franchisees, if any, stands to be positive. "We thought the corporate G & A was bloated anyway," he said, adding that he hoped some of the redeployed staff would be allocated to the chain's franchise services department.

The staff cuts will mean the loss of about 30 jobs in Dallas, about 70 in the chain's offices in Wichita, Kan., and about 90 in the field organization. Of the 140,000 individuals employed by Pizza Hut, some 2,000 are in positions above the level of restaurant general manager, Doughty said.

Mitchell Pinheiro, who is a securities analyst with Janney Montgomery Scott in Philadelphia and tracks PepsiCo, said the reorganization appears to be in keeping with recent moves the Purchase, N.Y.-based conglomerate has made to add efficiencies to its restaurant operations. "It's something they should be doing," he said.

Although the chain revealed the reorganization plan Nov. 4, the specific positions to be cut had not yet been finalized. An announcement of the actual cuts was expected Nov. 12. The cuts will be effective Jan. 12, following 60 days' notice, Doughty said.

In the meantime, he added, Novak is busy hammering together a business plan for Pizza Hut, which he is expected to present early next month to PepsiCo's chief executive, Roger Enrico.