Pizza's 'Big 3' Plot Sustained Rebound From Soft 2000 Sales <b></b>

With the pizza category's price war showing no signs of easing, its three largest chains are wielding new strategies, products, advertising messages and customer service upgrades in bids to sustain early rebounds from soft 2000 sales.

Segment leader Pizza Hut said it remains focused on making product innovations, improving operations and reimaging older assets.

Domino's, meanwhile, has canceled its "Bad Andy, Good Pizza" campaign, replacing it with television commercials that promote delivery. The segment's No. 2 chain is also accelerating unit growth.

And No. 3 Papa John's, which recently downsized its senior management team and streamlined its corporate structure in the face of an unspecified number of planned store closures, said its goals include improved unit-level operations and economics through new training programs.

The pizza category's aggressive and ongoing price promotions seem to be driving sales so far this year. Pizza Hut posted an 8 percent increase in comparable-store sales in January followed by a 2 percent jump in February.

Papa John's reported an 8.9 percent jump in February same-store sales after a 1.9 percent increase in January.

Domino's does not divulge monthly same-store sales trends.

For fiscal 2000, Papa John's posted the strongest systemwide domestic comparable-store sales gains, at 2.3 percent. Pizza Hut reported a 1 percent increase for the year and Domino's said its same-store sales last year were flat.

However, Pizza Hut's performance marks a shift in momentum within the category, because the Dallas-based chain sustained positive comp-store sales growth in consecutive years, lapping especially challenging comparisons from 1998 and 1999, when the hot-selling Big New Yorker pizza was introduced. Analysts noted that Pizza Hut had been unable previously to maintain same-store sales increases for more than one year in a row. "In 1999, Pizza Hut's comps were up 9 percent for the year, on top of 6 percent comp-store sales growth in 1998," said Mark Kalinowski, a restaurant analyst with Salomon Smith Barney in New York.

"Taken in context, I would give the edge to Pizza Hut," he said, in sizing up the battle of the three category leaders.

Some industry observers and pizza operators attribute last year's slowdowns in the segment to the rise of casual dining, which siphoned off customers who might have ordered pizza. But others point to Pizza Hut's launch of the Big New Yorker in 1999 as the event that changed the landscape of the pizza segment.

For more than two years, Pizza Hut has sold its Big New Yorker at a $9.99 price point, a move that some say forced the other national chains to lower their prices.

All three chains voiced a commitment to delivering better customer service this year. According to the American Customer Satisfaction Index report, released recently by the University of Michigan Business School and based on 50,000 consumer interviews, Papa John's scored the highest satisfaction rating of all national fast-food chains. Its score rose 1.3 percent last year, to a rating of 77.

In contrast, Pizza Hut's score was 70, which was an increase of 2.9 percent from 1999, and Domino's received a rating of 69, a 3 percent jump from last year.

Miles said Pizza Hut already had made customer service improvements while growing delivery operations and rebuilding older units with new formats, such as the 3-year-old "main path" concept that focuses on counter service, limited seating and individual meals. He said the company has opened about 75 main-path stores, and franchisees have opened a similar number as well.

Meanwhile, Domino's opened 418 stores last year, representing the chain's highest increase since 1988.

The chain that hasn't just focused on new products so far this year is Papa John's, which is looking instead to drive sales through better store-level execution and marketing as well as improved customer service, according to Chris Sternberg, vice president of communications for the Louisville, Kentucky-based company.

"In the long term, what we hope to do is to have very satisfied customers who are willing to pay more for our product, but it takes time to develop customers who are that loyal," Sternberg said. "Our real goal is to differentiate ourselves and show customers why our product is worth more. Over time we ought to be able to get more per pie, but we are not there today." -Nation's Restaurant News