Hungry customers who walk into Pizza Huts run by franchisee Daland Corp. will soon be jolted back to the 1980s, greeted by Tiffany-style lamps under its bright red roofs from 40 years ago.
The goal: Use nostalgia to boost sales and loyalty of baby boomer and Gen-X customers in an era of digital ordering and touch-pad drive-thrus.
At 38 eateries so far, Daland is tweaking its real estate and menus to follow a retro trend tested in U.S. fast-food chains including Taco Bell, KFC and McDonald's. But it's doing so in a slower atmosphere with checkered tablecloths and different cooking styles.
“The full-service Pizza Huts were always built around that experience of the pizza coming straight out of the oven,” Daland President Tim Sparks told CoStar News in a phone interview. “Most people now are not getting that experience when they order a pizza that comes in a box — it just doesn’t have the same texture as a hot, freshly baked pizza.”
Based in Wichita, Kansas, where Pizza Hut was founded in 1958 by brothers Dan and Frank Carney, Daland is steadily turning its 82 dine-in Pizza Huts to what it has dubbed Pizza Hut Classic.
Daland, among the nation’s oldest Pizza Hut franchisees, has brought back the tablecloths and the brand’s once-familiar red cups and vinyl booths, along with the lamps that all but disappeared over the decades as corporate owners cut costs.
Also coming back are the communal salad bars that were once popular at Pizza Hut but generally faded away by the early 1990s. And a few restaurants have classic arcade games and old-style jukeboxes, along with the restaurants’ original red hue and booths redone to match the early-era dining room color schemes.
The changeover has been completed across 11 states, at a cost of about $90,000 to $95,000 per Daland location, with more in the works. Sparks said the investment has been well worth it, gauging by the crowds filling his dining rooms, including baby boomers and Gen-X customers as well as social-media-posting 20-somethings who have only experienced pizza via delivery.
The new-old eateries still face challenges. Daland will need to find a way to keep customers used to multitasking coming back to a slower, sit-down restaurant experience where the main menu item is pizza, a dish now often eaten on the go or while watching entertainment.
Full-service pivot
The pivot toward full service comes as the pizza industry has steadily moved toward pickup and delivery services for the past two decades. Pizza Hut has come under stiff competition from Domino’s, Papa John’s and numerous regional and local operators grabbing market share.
The typical dine-in, stand-alone Pizza Hut spans about 2,100 to 2,800 square feet. For that company and its national rivals, expansion in recent years has come largely through delivery and carryout services, housed in much smaller spaces in strip centers. That business model brings more expansion sites with cheaper rents, along with labor costs that are usually much lower than those of full-service restaurants.
The dine-in focus also runs counter to a larger restaurant industry trend of the past five years, as numerous major chains downplay onsite dining for the remote ordering that accelerated during the pandemic.
Restaurant industry consultant Darren Tristano said Pizza Hut’s nostalgia push has potential to increase the brand’s dine-in sales when most of its big pizza rivals are not active in that realm. The Pizza Hut menu generally offers a “high-value” dining proposition that also allows for social engagement, appealing to multiple generations, he said.
“If older consumers — boomers and Gen X — can find their way to the dining room with younger friends and family, they can build on the nostalgia a bit more,” Tristano, CEO of Foodservice Results in Chicago, told CoStar News. “Since many of these dining rooms likely need a refresh, the cost is not too expensive to bring back the older vibe.”
As with other brands relying on retro changes, Tristano said challenges for chains like Pizza Hut include turning restaurant updates into regular lunch and dinner trips to full-service eateries as many families are watching their budgets in the face of rising gas prices and other costs.
“Since it will include a tip, the cost is a bit higher, so that could be a tough call,” Tristano said. “Alternatively, other brands like Chili’s and Applebee’s have presented high-value meals in a more contemporary space.”
Community gathering spots
The last big wave of retro-based restaurant development occurred in the 1980s and 1990s, when chains like Johnny Rockets and Ruby's Diner sought to capitalize on 1950s nostalgia. Those chains over the years have significantly downsized in the U.S. amid financial challenges.
To the extent that chain restaurant flashbacks exist in the current U.S. market, they're not so much in remodels but more in the form of menu items from the 1980s and 1990s now being brought back, like Taco Bell's Meximelt and Gordita Supreme and KFC's honey barbecue sauce.
At the same time, McDonald's has introduced limited-time Adult Happy Meals and brought back its Changeables robot toy for a kids' Happy Meal.
Sparks said the retro approach has worked well in his company’s full-service Pizza Huts, which are predominantly in towns with populations under 10,000. Customers in those areas value the sense of community and connection that comes with in-person dining, he said.
Of the approximately 2,100 Pizza Huts in the U.S. offering full-service dining, 155 have either completed or are undergoing Pizza Hut Classic upgrades, according to the brand’s corporate parent, Yum Brands.
Changes are intended to evoke an era when Pizza Hut was an important venue for birthday celebrations, holidays and other social gatherings. “It’s about reconnecting with memories of gathering around the red-checkered-tablecloth covered table with friends and family,” Yum said in a statement.
Louisville, Kentucky-based Yum and its franchisees operate more than 20,000 Pizza Huts worldwide, including about 6,100 in the U.S. The brand has maintained steady international expansion over the past decade — much of it in the form of full-service franchised eateries — but has experienced declining sales in the U.S. Yum Brands is reported to be in exclusive talks to sell the Pizza Hut chain to private equity firm LongRange Capital.
Sparks said Daland, with a number of its executives and employees descendants of Pizza Hut’s founders, has 82 of its 93 restaurants designed as dine-in locations, and he’s planning to convert more to the “Classic” format.
He’s confident that more franchisees will take up the strategy, well beyond the current challenging restaurant economy. “I compare it to the time around COVID,” Sparks said. “Nobody was going to restaurants and people thought they wouldn’t be coming back, but they did come back.”
He added that “everything eventually comes full circle, and I think we are circling back to a place where people really appreciate this kind of experience.”