This move makes sense for Pizza Hut, solely because Grubhub already operates the off-premise businesses of sister chains Taco Bell and KFC. So what if its industry pizza rivals with proprietary delivery make fun of it?
— Danni Santana
Pizza Hut proprietary delivery will soon be no more.
The pizza chain has begun piloting delivery with Grubhub, becoming the first company among its industry rivals to give the keys of its off-premise business to an external third-party. Both Papa John’s and Domino’s still run delivery and pickup operations in-house.
Last February, Yum Brands – Pizza Hut’s parent company – named Grubhub as its official delivery partner. With the agreement also came a $200 million investment by the restaurant group, which additionally owns Taco Bell and KFC.
At the time of the announcement, Yum Brands was vague on plans of a potential relationship between Pizza Hut and Grubhub. However, both companies left the possibility open, as they searched for the best ways to leverage a future partnership.
“Right now, this is mostly about Taco Bell’s and KFC’s relationship with Grubhub,” Yum Brands president and chief financial officer David Gibbs said on a February 2018 earnings call.
Grubhub will now add Pizza Hut to its brand portfolio, which has struggled in recent months to spread the message about its much-improved delivery channels and Delco express stores.
Pizza Hut’s same-store sales growth has also lagged compared to its Yum Brands peers. The chain reported fourth quarter comparable-sales growth of 1 percent last Thursday, compared to KFC’s 3 percent and Taco Bell’s 6 percent increases over the same period.
“We have been working with the Pizza Hut team and recently began piloting some Pizza Hut locations on our marketplace,” Grubhub CEO Matt Maloney said on the company’s fourth quarter earnings call with analysts last week. “We are planning on expanding to several hundred stores in the coming months.”
A spokesperson for Grubhub confirmed the news, and said that Pizza Hut’s rollout will differ from KFC’s and Taco Bell’s in that the pizza chain will opt to use its own drivers, rather than contractors hired by Grubhub for delivery. Grubhub will only process incoming orders for Pizza Hut.
Pizza Hut did not immediately return requests for comment. The chain’s U.S. President Artie Starrs has served as a member of Grubhub’s board as an independent director for more than a year.