Study and Application of Microeconomics On [pic] Project Synopsis PIZZA HUT-The Introduction Pizza Hut is one of the flagship brands of Yum! Brands, Inc. , which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over 12,500 restaurants across 91 countries Table of Contents: < insert here> Introduction: Pizza Hut is one of the flagship brands of Yum! Brands, Inc. , which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella.
Pizza Hut is the world’s largest casual dining restaurant chain with over 13,000 restaurants across 97 countries and 143 stores across 34 cities in India. Pizza Hut is the leading casual dining restaurant in India. Pizza Hut made its foray into India with a restaurant in Bangalore in June 1996 and was the first international restaurant chain to enter this category and can be credited with pioneering the pizza market in India. Its great tasting pizzas and trademark dining experience have made it possible for the company to register a double-digit growth and scale up its presence to its current size.
With a 27 per cent market share of the eating-out market and over 70,000 footfalls per day across the country, Pizza Hut is geared to provide diners with the ideal place to have delicious food. Pizza Hut is known for its • Good Quality Food (Hygiene) • Brand Name • Food worth its Price • Good Service • New Kind and Styles of Pizzas in its Menu. Below figures LOCATION IN INDIA In India Pizza Hut has not included all kinds of Pizza which it serves elsewhere. But rather localized its menu as per Indian customers.
A critical factor in Pizza Hut’s success has been a menu that has constantly evolved and expanded to cater to the changing needs and specific preferences of customers in different parts of the world. In having understood the pulse of the customers in India, Pizza Hut has clearly established itself as a brand with an Indian heart. Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all root-based ingredients. Objectives
The project aims to study the micro economic aspects of India Food Industry. This study was mainly focused on Pizza Hut outlet. We propose to achieve the following objectives through our study: Objective 1: To conduct a market survey to judge the consumer’s preferences in terms of demand, utility and substitutes. Objective 2: To study the growth prospects for Pizza Hut in India Objective 3: To forecast the demand for Pizza Hut and also incorporate the seasonal variations in demand. To identify the impact of Advertisement on the sales. To analyze the sales of Pizza Hut Outlet via aspects of Behavioural Economics Importance of Study:
Globalization has a deep impact on the lifestyle of Indian population. Due to the increasing cross border influences, Indians are adopting the Western fast food. The reasons for this change are relatively young population of India with almost 50 % of people below 25 years of age and increasing work load, leaving less time for cooking. Pizza is one of these Western food items that are making inroads into the Indian food palate steadily over the last decade. Many big foreign names in Pizza chains like Pizza Hut and Dominoes have opened shop in India and are giving the traditional Indian food items a run for their money.
This project will help us understand the key practices used by Pizza Hut to increase sales and forecast demand. Competition: As portrayed by the below market share figures, the US fast food market is largely dominated by big chains such as McDonalds, Yum Brands, Subway, Burger King. Below figures show the Pizza sales of US market. Pizzahut is the market leader with around 14 % share. It also shows substantial control of big chains over the market (as compared with independents). The market is loosely concentrated with the top 4 firms having a share of 31. 47%. Top 8 firms account for a share of 36. 6%. Hence, by the concept of concentration ratios, we can categorise this industry as “loosely oligopolistic”. However, by the measure of Heirfindahl index, the value comes around 350, which does not indicate a trend more towards monopolistic competition than oligopolistic competition. By the same measure, In fast food industry, the top 4 firms account for around 40% market share. Heirfindahl index measures around 600. Hence, consistent with both the concentration ratios and Heirfindahl indexes, we can conclude that fast food industry is more oligopolistic than the pizzahut.
This implies that the pizza industry is more scattered among different players than is the fast food industry considered as a whole. [pic] [pic] |Nth top Player |Pizza Firms |Market Share(S%) |Heirfindahl(%S2) | |1 |Pizza Hut |13. 78 |189. 8884 | |2 |Domino’s Pizza |8. 35 |69. 225 | |3 |Papa John’s |5. 67 |32. 1489 | |4 |Little Caesars |3. 11 |9. 6721 | | |CR4 |31. 47 | | |5 |Papa Murphy’s Take ‘N’ Bake |1. 73628 |3. 14668 | |6 |CiCi’s Pizza |1. 579188 |2. 493835 | |7 |Sbarro |1. 42508075 |2. 030855 | |8 |Chuck E. Cheese’s |1. 2068524 |1. 456493 | | |CR8 |36. 86% | | | |?
S2 (all the firms) | |~= 350(approx. ) | For pizzerias, the largest component of cost is fixed cost. Sunk costs are fairly low because pizza ovens, chairs, tables, dishes and other items used in pizzerias can be resold if the pizzeria goes out of business. Variable costs are also fairly low- mainly the ingredients for pizza (flour, Tomato sauce, cheese, and pepperoni of a typical large pizza might cost Rs. 5 or Rs. 10) and perhaps wages for a couple of workers to help produce, serve, and deliver pizzas.
Most of the cost is fixed- the opportunity cost of the owner’s time (he might typically work a 60-70 hour week), rent, utilities. Because of these high fixed costs, most pizzerias (which might charge Rs. 50 for a large pizza costing about Rs 10 in variable cost to produce) don’t make very high profits. For indian fast food market, pizza-hut could exploit third degree discrimination to enter new towns. This can be done by introducing smaller pizzas with relatively cheaper ingredients, reducing exotic toppings etc. This can help theThis can be done along [pic]