Pizza Hut has launched a new range of gourmet pizza in its New Zealand restaurants.

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The gourmet pizza market in New Zealand is growing, with market leader Pizza Hut adding a new luxury range to its menu. Pizza Hut’s gourmet addition will allow it to seize market share from its upscale competitors. Yet while aiming high, the pizza chain should avoid alienating its core market – the family – upon which its success is built.


Competition in the New Zealand pizza market has hotted up. Pizza Hut has launched a gourmet range to counter the increasing growth and popularity of its rival Hell Pizza. With the launch of its gourmet range, Pizza Hut enters a specialist market as yet dominated by Hell, an independent retailer which began operations in 1996, and One Red Dog, which was established in the early 1990s and has proved popular ever since.


Until late 2004, Pizza Hut felt no need to compete with these smaller independent specialists. However, with the number of Hell Pizza outlets growing from four at the beginning of 2003 to a considerable 30 at the beginning of this year, Pizza Hut has clearly woken up to the potential of ‘going gourmet’.


The implications for Pizza Hut New Zealand’s franchise holder, Restaurant Brands, are considerable. At its eighth annual meeting in June 2005, the franchise group announced a 33% increase in profit to NZ$10.722m (US$7.237m) and attributed part of this growth to Pizza Hut’s new menu and service initiatives. The addition of the new gourmet range can only build on this success.

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Pizza Hut’s foray into the gourmet market will clearly give its chief competitors, Hell Pizza and Domino’s, food for thought. Pizza Hut will begin to appeal to a much wider market with the gourmet range, attracting family and business clients alike. Yet Pizza Hut has always been known as an affordable meal so there may be limits as to how far it can expand in this direction.


With the addition of the gourmet range, the chain is not looking to change its strategic market direction, but to extend its consumer base. If the success of Hell is anything to go by, Pizza Hut stands a good chance of succeeding. However questions remain as to exactly how big a slice Pizza Hut will seize from competitors such as Hell: if Pizza Hut errs too much on the side of premium products, it could risk alienating its core family market.


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