Yum! Brands, Inc.’s (YUM - Free Report) subsidiary brand Pizza Hut announced that it entered a definitive merger agreement with a leading online ordering software and service provider in the restaurant industry named QuikOrder. The acquisition, which will be the largest one for Pizza Hut till date, is expected to close this month.
The acquisition will allow Pizza Hut to deliver personalized online ordering services and accelerate digital innovation in more than 6,000 restaurants in the United States. As it is, in 2018, roughly half of Pizza Hut’s U.S. sales were processed through QuikOrder's platform.
In fact, backed by various digital initiatives, unmatched franchise operating capability and bold restaurant developments, shares of Yum! Brands have gained 11.1% so far this year, outperforming the industry’s rally of 10.3%.
Increased Focus on Enhancing Delivery Services
The proposed acquisition deal underscores Yum! Brands’ extensive focus on enhancing its delivery capabilities. The company is continuing its transformation process toward a single point-of-sale system in the United States.
To this end, in fourth-quarter 2017, Yum! Brands announced a partnership with online food delivery platform Grubhub (GRUB - Free Report) to enhance online sales and delivery from its restaurants. Additionally, Yum! Brands implemented various digital features in mobile and online platforms across all of its brand segments to enhance guest experience. Yum! Brands have also worked toward making its delivery services swifter and the initial results so far have been positive.
To enhance its delivery services, the company announced Pizza Hut’s partnership with Toyota that will facilitate delivery of pizzas via driverless vehicles, showcasing innovation for the companies. Advanced technological implementations to improve guest experience are also proving to be fruitful for Pizza Hut’s international business.
Notably, the U.S. quick-service pizza providers can be considered as pioneers among other restaurateurs in bolstering digital capabilities.
Incorporation of better technologies has been a key sales-driving strategy of large pizza chains in the United States. In order to boost sales, U.S. pizza giants like Domino’s (DPZ - Free Report) and Papa John’s (PZZA - Free Report) focus on providing efficient service through digital facilities while keeping an eye on the prices.
We believe that the recent move will also equip Pizza Hut to counter competition from other fast food chains while giving it a competitive edge over other pizza providers.
Yum! Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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