Competitive Rivalry
Pizza Hut competes with Domino’s Pizza and Papa John’s, two other big international pizza businesses (Teoh, 2021). They are all involved in worldwide business, fast food franchises, dine-in, and delivery services, which puts them all in direct rivalry. Other pizza suppliers were squeezed due to the top three players’ aggressive price discounts and promotions. Pizza Hut competes with some small local pizza shops in addition to those pizza companies. They take advantage of competitive advantages by offering low-cost products and quick service.
The threat of New Entrants
Because of higher ingredient prices, slim margins, and increased competition from non-traditional channels, pizza chains are suffering from the effects of the deep recession.
Existing competitors keep lowering and discounting prices and expanding distribution channels create barriers to entrants as well.
Threat of Substitutes
Other conventional food chains provide clients with similar fast, convenient, and low-cost products and services. The prospect of alternatives influences price competition. Prices are more elastic because customers have more options.
Power of Customers
Pizza Hut is widespread, particularly in shopping malls, residential areas, college campuses, and offices (Teoh, 2021). Furthermore, customers are dispersed, with no visible influence on goods or pricing. As a result, they will not be affected by the loss of a few clients.
Customers are less sensitive to price variations in this business, which is somewhat inelastic. Thus, suppliers have a lot of pricing control power.
Power of Suppliers
Although the sector is labor-intensive, the labor supply is plentiful. Thus, businesses are typically unconcerned about their workforce.
With concentrated consumers, suppliers are more likely to maintain a long-term connection.
In order to maintain low costs and high-quality goods, many large fast-food chains are vertically integrated with their suppliers.
References
Teoh, K. (2021). Factors influencing customers’ purchasing behavior and satisfaction in Pizza Hut. Advances in Global Economics and Business Journal, 2(1), 39-56.