Pizza Hut free to take on Domino’s after court ruling

pizza hut revolutionPizza Hut will press ahead with its marketing price war against Domino’s after franchisees lost an attempt to prevent the company from lowering prices.

A group of 80 franchisees had argued that reducing prices would cost them $10m and put many of them out of business. But the argument was rejected by the Federal Court, leaving Pizza Hut parent Yum! free to continue its marketing push.

“We were pleased with Federal Court ruling and are looking forward to a more competitive and exciting pizza market here in Australia,” Pizza Hut general manager Graeme Houston told Mumbrella.

It is unclear whether the franchisees will appeal the ruling although the case is listed to return to court later this month. Many are believed to be angry over Pizza Hut resorting to a protracted price war and what they regard as a dumbing down of the brand.

Pizza Hut launched its M&C Saatchi-led TV crusade last week in a bid to combat the price message being driven by its key rival.

Domino’s had kicked off the battle by extending its cheap $4.95 deals on Monday and Tuesday to the rest of the week, claiming “there’s very few options to compare to it”. A TV ad, created by Elevencom, was produced to support the move.

But the launch was quickly followed by Pizza Hut which is looking to reclaim lost ground in Australia. It too is now offering $4.95 pizzas “all day every day” while reducing its range of pizzas from six to two – Classic and Favourites.

“Pizza Hut and our franchisees are together ushering in a new era for this market and putting a high-quality, high-value competitive model in place that has proven successful in the US and New Zealand markets,” Houston said.

“Growing our customer base is our focus and by offering a simplified menu with all pizzas under $10 with no compromise on quality, we believe we have a winning formula.”

Domino’s chief executive and managing director Don Meij dismissed suggestions the price war would damage its brand, arguing the business was known for value.

“This is nothing new. We have been doing this for years,” he said.

Steve Jones


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