Did Pizza Hut Stop Trying, or Did We Change?

Pizza Hut was once China's idea of upscale Western dining. How did it end up where it is today?

"If the all-you-can-eat salad bar came back, would you go back to Pizza Hut?"

Wind the clock back ten years. The salad bar at Pizza Hut was always ringed with young people, piling yellow peaches, corn and every other fruit and vegetable they could into a bowl that was not very big, as if it were a contest. When a tall, steady "salad tower" finally rose, it left the other diners, and sometimes even the servers, gaping.

Forums such as Tianya Club and Renren were full of how-to guides and bragging posts about Pizza Hut "salad architecture." Today, the same craze would probably be a trending Zhihu thread: "What's it like to build a nine-layer salad tower at Pizza Hut?"

In 2009, Yum China, Pizza Hut's parent company, announced that it was scrapping the all-you-can-eat salad. On blogs and forums, many people voiced anger, disappointment and confusion. Quite a few rushed out before the salad bar officially ended that September to try, one last time, something that was less a dish than a game.

Pizza Hut's official explanation was that "the salad bar no longer met customers' needs well." But Zhu Yutong, a marketing expert at the time, told United Daily News that the decision would certainly cost Pizza Hut some of its young customers. Pizza Hut said nothing more in response to the backlash.

That "willfulness" is easy to understand. Pizza Hut, which entered China in 1990, was riding the crest of dining fashion and probably enjoying its best years. In its third-quarter 2007 earnings report, Yum described the competition facing Pizza Hut China as "No Significant Competition." In 2008, the year of the U.S. financial crisis, Pizza Hut China's same-store sales grew 17%. In 2009 its store count reached 558, up 10% from a year earlier.

A decade on, though, scrapping the salad bar looks more like a turning point. Coincidence or not, Pizza Hut's same-store sales fell 1% in 2009, even though growth resumed afterward. The company probably never realized what the move had set in motion.

"I really miss the Pizza Hut that had the fruit salad bar, the big bowls and big plates, and all the deals," Shen Jiake wrote on Weibo last June. What struck him was how many people of his generation, born in the 1980s, were still reminiscing online after all these years. He now eats at Pizza Hut once or twice a month, for one reason: "There's one right at the gate of my housing complex. When I go out and can't decide what to eat, I go there."

Sun Jiayuan, 17, feels Pizza Hut has been part of her growing up. Her family first took her there when she was nine, and what she remembers is that "it was the first time I ate with a knife and fork, and it felt so new." Now, she says, Pizza Hut is no different from KFC.

In every quarter that Yum China reported last year, Pizza Hut's same-store sales fell; for the full year they were down 5%. In December came news that Yum would push hard this year to expand Taco Bell, its Mexican-style fast-food brand, overseas. Unlike KFC and Pizza Hut, Taco Bell had done little in international markets. Yum now plans to grow its 280 overseas stores to 1,000 by 2020. It said it had held back because fried chicken and pizza were far better known around the world than Mexican food, "but now people outside the United States are becoming more and more familiar with Mexican food."

China is on the list. If Yum sticks to its earlier announcement, a Taco Bell will open in China this year. That has led to speculation that Yum China may pin more of its hopes on Taco Bell, and that Pizza Hut, showing no sign of recovery, may no longer get much of the company's attention or effort.

What happened to Pizza Hut China over these ten years? Did Pizza Hut stop trying, or did we change?

Deng Fei still remembers Pizza Hut ads all over Dongzhimen in Beijing. Her walk to meet her mother after school took her past one of the restaurants, and to her the "red roof" logo looked stylish, even fancy. The Supreme pizza was something classmates talked about with longing. "We really didn't know anything about Western food back then, and we'd never had a proper pizza. Eating there with classmates, or going to Pizza Hut on a date, was a pretty trendy thing to do." Whether the food was actually good, Deng Fei is no longer sure. What stayed with her was the feeling of eating something new and fashionable.

Yuan Siyuan felt the same. "Only close friends would invite you along on their birthday," she told us, "because going to Pizza Hut back then meant a proper feast." A student named Shen, now 19, remembers a first visit with mom: four people, a bill of nearly 300 yuan, and "it made us feel like big shots."

Most of these memories date from around 2005. There were often queues outside Pizza Hut then, and it stood for fashionable, respectable, upscale Western dining. It spread across China's first- and second-tier cities as the "pizza expert" and "authority on Western food," and young people flocked to it. Around the same time, it became a favorite place for children's birthday parties. In 2003 Pizza Hut adopted "Joy Restaurant" as its brand label, and in 2006 it took on the slogan "Western casual dining expert." Both choices grew out of these habits.

For most people, Pizza Hut was a place you had to make up your mind to spend money at, a restaurant for treating yourself. Eating there also signaled a certain spending power. Something that happened to Shen Jiake shows how people saw it then: he had just bought a new phone and went to Pizza Hut with friends. As soon as they walked out the door, the phone was stolen. "That thief knew exactly where to wait," he recalls.

On Tianya, the title of one of the most popular threads sums up how some people felt about Pizza Hut at the time: Pretension Aside, Does Anyone Actually Like Eating at Pizza Hut? Started in 2008, the thread drew more than 2,500 replies, as people argued over whether Pizza Hut diners came for the food or for the feeling of upscale Western dining.

Ten years ago, the answer was surely the latter. People born in the 1980s went to Pizza Hut mainly because it stood for a fashionable, relaxed way of life.

That includes the salad bar so many people miss. What mattered most about it was that it gave young people something to do and a bit of fun, which few restaurant brands manage. Judging by the anger and argument when it was scrapped, it was one of the reasons many people went to Pizza Hut at all.

If that seems hard to believe, it is because you are looking back from today, when both goods and consumer savvy are plentiful. According to the National Bureau of Statistics, China's urban per capita disposable income was 10,493 yuan in 2005. By 2015 it was 31,195 yuan.

Ten years ago, today's big four fast-fashion brands were nowhere to be seen; Jeanswest and Baleno were the trendy labels. Drinking Nestlé or Yaha instant coffee was enough to make you feel sophisticated. The hottest phones mostly came from Nokia. Remember how cool "Hello Moto" once sounded? Or the orange wave Jay Chou set off with "My turf, my rules," the slogan for China Mobile's M-Zone?

Does the phrase "consumption upgrade" feel more concrete now? Society, the market and consumers were all slowly changing.

For Pizza Hut, scrapping the salad bar in 2009 now looks like a turning point. Around that year it closed 17 stores in Shanghai. Of course, the salad bar was not the only reason for its decline.

Pizza Hut did begin to adjust. Around the world it kept rolling out showy marketing stunts: a menu that supposedly used eye-tracking to judge, from how long your gaze lingered, which dishes you might like; pizza boxes that turned into projectors; even a gimmicky line of "fashion."

In November 2014, Pizza Hut launched what it called "the biggest change in the brand's history", though it has not yet reached China. It flattened its logo, redid its website, packaging and staff uniforms, and introduced dozens of odd new products.

In China, after dropping the salad bar, Pizza Hut introduced business lunches, and in 2014 it added breakfast and late-night service. At the end of last year it turned one branch in Beijing and one in Shanghai into concept restaurants with special menus and open kitchens. It has changed its menu twice a year since 2008. The company has clearly worked hard to please Chinese consumers.

But nothing since has given people the same chance to take part, or the same spontaneous buzz, as the salad bar. Pizza Hut never meant to leave young people behind. Young people simply drifted away from it.

In 2005, Yum China broke away entirely from Yum Restaurants International and began reporting directly to headquarters in the United States. For a long time afterward, China mattered more to Yum globally than its home market, the U.S. That was when Pizza Hut began expanding fast: in three years its store count jumped from 230 to 291 and then to 404.

Another coincidence: also in 2005, Sudan Red dye was found in the seasoning for KFC's New Orleans roasted wings and New Orleans chicken burgers. It was the first food-safety scandal KFC had faced since entering China in 1987. From then on, food-safety scandals cost fast-food chains, KFC and McDonald's among them, more and more.

Yet in China, KFC has always been Yum's most important brand, making up about 75% of all Yum China stores. Next to the profit and revenue the giant KFC brings in, Pizza Hut has always been orders of magnitude smaller.

After KFC ran into trouble, Yum put all its hopes on Pizza Hut, whose atmosphere and prices still suited the young people who did most of the spending.

In a sense, Pizza Hut was given the job of lifting Yum's image. From then on it was caught in a bind, pulled between "patching KFC's holes" and "being the respectable Western restaurant young people liked."

Once Pizza Hut took on that role, it drifted away from the reasons young people actually went there.

Pizza Hut gradually stopped being a stylish, tasteful Western restaurant and became more and more like fast food. It became fixated on the queues outside its doors and the high table turnover they represented. Staying open from morning to night was one way to raise turnover; some Pizza Huts in prime locations are now open 18 hours a day. It wants you to eat fast and leave fast.

The focus was on raising sales quickly, not on the dining experience. Pizza Hut's delivery arm, Pizza Hut Delivery, is also worth a look. It can be seen as the chase for table turnover taken to its limit: more convenient, faster, with no need to deal with customers face to face. Those were all fast-food tactics.

Pizza Hut Delivery came to China as early as 2001, set up as a separate brand rather than a sub-brand of Pizza Hut. The two had their own websites, their own delivery staff and different menus, and Yum at one point seemed to rank Pizza Hut Delivery above Pizza Hut itself.

But Pizza Hut forgot the most important question: was pizza really what young people couldn't get anywhere else? Search Weibo for "Pizza Hut Delivery" and you will find plenty of complaints about the food. Back in the day, young people weren't talking about how Pizza Hut tasted. They were talking about what it stood for: Western, young, fun, upscale.

Pizza Hut also chose locations more and more the way fast-food chains do, chasing foot traffic. Once it had opened two or three branches in each landmark shopping center, such as Xujiahui in Shanghai or Xidan in Beijing, and filled them up, it began opening in second-tier malls and big supermarkets to keep growing, including shopping plazas built around Tesco or Wumart. It even moved in near tourist sites, parks and family-heavy neighborhoods: the Pizza Huts at Qianmen and the Temple of Heaven in Beijing both opened in recent years.

In short, it is no longer where young people gather, or where upscale diners go. Its place may have been taken by Starbucks, Wagas and the like. Even within pizza, diners now have far more choices: Mr. Pizza, known for hand-kneaded dough; the more refined PizzaExpress from Britain; Tube Station, with its American country style and giant pies; and Le Caesar, famous for its durian pizza.

Pizza Hut's competition is far more complicated than it looks.

Shen Jiake, who misses the salad bar, will probably be disappointed. But even if Pizza Hut brought it back, he might not return. Pizza Hut has become a symbol of fast food. It can no longer offer young people anything fresh, distinctive or upscale. Young consumers have lost their curiosity about it and no longer prefer it. It has become a place to grab "whatever": because it is nearby, or because you happen to pass it when you're in a hurry.

Every generation of young people is different, which is why people born in the 1970s, 1980s and 1990s each carry their own labels. But young people in every era are drawn to new things and embrace brands that "represent me."

Pizza Hut was once one of those brands, a place where young people chatted, celebrated birthdays and went on dates. Young people today still want to meet face to face, and they still want to take photos and post them to Moments. Who could have guessed, ten years ago, that phones and Wi-Fi would matter so much in restaurants? And people's dependence on phones and Wi-Fi runs straight against Pizza Hut's turn toward fast food.

A seemingly unrelated change in technology may have driven away its most loyal customers more effectively than losing the salad bar ever did. So what will become of today's hottest youth brands ten years from now?

Charts: Lin Yuyao

Cover image from Pizza Hut's official website, Flickr and Tube Station's official website