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Pizza Hut turns 50 in tough time for the industry

In this 1959 photo provided by Yum Brands, Pizza Hut founders Dan, left, and Frank Carney are shown. The Carneys opened the first Pizza Hut restaurant in Wichita in 1958.

In this 1959 photo provided by Yum Brands, Pizza Hut founders Dan, left, and Frank Carney are shown. The Carneys opened the first Pizza Hut restaurant in Wichita in 1958.

June 15, 2008

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— Dan and Frank Carney borrowed $600 from their mother 50 years ago and opened a small pizzeria in Kansas using second-hand equipment in what was once a bar.

The dream was to make enough pizzas to pay for college and earn a little money on the side for the family.

That humble enterprise with a humble name - Pizza Hut - is now the world's largest pizza chain, with $10 billion in annual sales and more than 11,000 stores worldwide.

"We were able to build something from nothing," Dan Carney said, recalling the hardscrabble early days and that first pizzeria in Wichita, Kan., which opened 50 years ago May 31.

The chain known for its red-roofed restaurants is now updating its look, with plasma TVs, sports bars and local sports memorabilia. It's also rolling out tubs of baked pasta and piles of fried chicken wings to go with its famous pizzas.

It is a tough time for pizza makers, who are strapped by rising cheese and flour costs and consumers who have been pinched by a sluggish economy.

Last year, Pizza Hut Inc. closed more U.S. restaurants than it opened, which it attributes to such factors as leases ending and restaurants being sold.

Analysts say Pizza Hut was due for an overhaul, and the new menu may help it through a rough time for the industry.

Restaurant analyst Larry Miller with RBC Capital Markets said "the iconic red roof store is dated."

"From a bigger picture, longer-term view, this is a brand that's starting to differentiate itself from the competition in some really unique ways," he said.

Pizza Hut went public in 1970 and was then acquired by PepsiCo Inc. in 1977. Frank Carney left the company three years later in a clash with the new owners.

Pizza Hut's corporate parent changed again in 1997 when PepsiCo spun off what is now Yum Brands Inc., a Louisville-based company that also owns Taco Bell, KFC, Long John Silver's and A&W All-American Food Restaurants.

"I'm proud every time I see Pizza Hut doing well because that's part of me," Frank Carney said.

Now 70, he is a competitor with a stake in 73 Papa John's pizza stores in Wichita, Houston and Hawaii.

"Good competition keeps everybody on their toes - them and us," Carney said.

Pizza Hut began an aggressive advertising campaign this spring to publicize the new menu.

It says the effort paid off in the first month, when it sold 2 million pans of pasta, doubling its expectation, said Scott Bergren, Pizza Hut's president.

The company sells chicken wings in an agreement with WingStreet.

"We have changed our sales mix substantially," Bergren said.

Bergren declined to say what kind of profit margins the company was seeing for pasta and chicken wings compared with pizza, saying, "these are all profitable products."

Ingredient costs like wheat, cheese and chicken have soared in the past year.

Bill Walsh, a Pizza Hut franchisee with a stake in 93 stores in a dozen states, said the menu has bolstered sales at his restaurants.

While restaurants have incurred higher costs and extra equipment expenses, "by the time you get those additional sales, we're happy to accept that higher food cost."

Pizza Hut is quick to emphasize that it will stay true to its name.

"Our core, and Lord knows we sell more of it than anybody in the United States, it's always going to be pizza," Bergren said.

While the chain's most heated growth is now overseas, Bergen said there is room to expand at home.

"We think there are another 1,000 towns in the United States where we can actually build a Pizza Hut," he said. "So we're not done growing in the United States at all."

Dan Carney, 76, has left the pizza business but still keeps an eye on the company he founded 50 years ago in a rented bar with his brother.

"I'd love to see it go another 50 years," Dan Carney said. "As long as they stay dynamic with new ideas flowing in and out, they have a great chance to do that."

Comments

BigPrune 5 years, 10 months ago

"The photo looks to be from 1969, not 1959."Definitely 1969ish. Dan also looks like Tony Danza.

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Tom Shewmon 5 years, 10 months ago

I would think Pizza Hut may be veiwed as a villian in and around Lawrence way. No?

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bondmen 5 years, 10 months ago

Pizza Hut is proof creating capital through new ideas is not a zero sum game. That is, new wealth can be created which does not come as a result of someones loss. Because of this freedom, America is a great country, one reason why the most productive people from around the world wish to live here.

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svengalli 5 years, 10 months ago

YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal. Prior to PayPal, Hurley studied design at Indiana University of Pennsylvania. Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign.The domain name "YouTube.com" was activated on February 15, 2005, and the website was developed over the subsequent months. The creators offered the public a preview of the site in May 2005, six months before YouTube made its official debut.YouTube's current headquarters in San BrunoLike many technology startups, YouTube was started as an angel-funded enterprise from a makeshift office in a garage. In November 2005, venture firm Sequoia Capital invested an initial $3.5 million; additionally, Roelof Botha, partner of the firm and former CFO of PayPal, joined the YouTube board of directors. In April 2006, Sequoia put an additional $8 million into the company, which had experienced huge popular growth within its first few months.During the summer of 2006, YouTube was one of the fastest growing websites on the Web, and was ranked the 5th most popular website on Alexa, far out pacing even MySpace's rate of growth. According to a July 16, 2006 survey, 100 million video clips are viewed daily on YouTube, with an additional 65,000 new videos uploaded every 24 hours. The website averages nearly 20 million visitors per month, according to Nielsen/NetRatings,where around 44% are female, 56% male, and the 12- to 17-year-old age group is dominant.YouTube's pre-eminence in the online video market is substantial. According to the website Hitwise .com, YouTube commands up to 64% of the UK online video market.

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Multidisciplinary 5 years, 10 months ago

Oh the days.1 large thin crust one topping, $6.00Anyone remember the Romano dressing on the salad bar?

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BigPrune 5 years, 10 months ago

Pizza Hut was really good when I was a kid. Why did they change their recipes to bland?

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