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YUM! Brands' Pizza Hut Expands Digital Ordering Capabilities

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Shares of Yum! Brands, Inc. (YUM - Free Report) outperformed the Zacks categorized Retail–Restaurants industry from the beginning of the year to Oct 31. In this span, Yum! Brands gained 18.1% while the industry declined nearly 4%.

The spin-off of the company’s China division into an independent, publicly-traded company on Oct 31 has however hampered the growth tale. Post separation, shares of the company underperformed the broader industry by recording a decline of 26% till today, as against industry’s growth of 7.2%.



Nonetheless, the company is leaving no stone unturned to subsidize the effects of the spin-off as well as to bring its growth story back on the track.

One such attempt in this direction is the expansion of digital ordering capabilities of Pizza Hut brand, by allowing voice ordering via Amazon.com, Inc.'s (AMZN - Free Report) Alexa personal assistant.

Starting Dec 15, customers can make use of Alexa Voice Service and place a carryout or delivery order at Pizza Hut by saying phrases such as "Alexa, open Pizza Hut" and "Alexa, ask Pizza Hut for a pizza" on Amazon Echo, Amazon Tap, Echo Dot, Amazon Fire TV and Fire tablets.

Customers will be able to repeat previous or favorite orders, as well as directly pick a pizza from a list of popular pizzas, thereby bringing ease and expediency to the ordering experience for the pizza-lovers.

Foray into Technology

The digital wave has hit the U.S. fast casual restaurant sector. Therefore, more and more restaurants are deploying technology to enhance guest experience. Yum! Brands is also not far behind in the race, as the company is continuing its transformation process toward a single point-of-sale system in the U.S. by 2017-end.

Meanwhile, Pizza Hut has been increasingly adding new ways to order over the last year. In Jul 2016, it unveiled a social ordering platform chatbot that facilitated conversational ordering of pizzas and other menu items on Facebook, Inc.’s Messenger and Twitter, Inc. . Earlier, the company also announced its new "Visible Promise Time," which allows its customers to view a projected timeline of when their food will be ready prior to placing the order.

Thus, the extended ways to order a pizza along with the eventual roll-out of an enhanced mobile ordering platform by the end of 2017, could aid in improving Pizza Hut's sales trends going forward. Notably, Pizza Hut's comps fell 2% in the U.S. markets in third-quarter 2016, following a 1% and 5% gain in the second and first quarter, respectively.

Bottom Line

Going forward, we believe that the company’s efforts to revive business by driving growth at KFC, Pizza Hut and Taco Bell brands, following the separation of the company’s all-important China division, bode well.

In fact, in this regard, Yum! Brands recently revealed plans related to the international expansion of its Taco Bell brand, which is the world’s largest Mexican-inspired restaurant chain.

However, the China business accounted for more than half of the company’s total revenue and has played a pivotal role in its solid performance over the last few years. Thus, will have to wait and see how profitable the endeavors turn out to be and whether they can lift the currently Zacks Rank #5 (Strong Sell) rated company.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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