The Closing Bell: Yum CEO says Pizza Hut poised for a turnaround; ‘sensational month’ for F-Series; construction labor woes; and more
Welcome to The Closing Bell. This is your last stop for biz scoops and big news before the weekend — a roundup of stories that can’t wait till Monday.
Yum Brands CEO: Fight for the largest slice of pizza market is no longer just about quality
Pizza Hut has a lot of work to do in order to compete for more market share in the highly competitive pizza category, Yum Brands CEO Greg Creed said, but the good news is it has nothing to do with the pizza itself.
“We don’t have a ‘we have to fix the pizza’ problem,” he told attendees of the Bernstein 33rd Annual Strategic Decisions Conference on Wednesday.
During the first quarter of 2017, Pizza Hut’s same-store sales declined 3 percent. But now that the franchisees have gotten on board with plans to invest $130 million to try to turn the underperforming Pizza Hut brand around, parent company Yum can start a new marketing campaign and new technology that executives hope will right the ship, Creed said.
“Three years ago, I think everyone thought KFC U.S. was down and out for the count,” he pointed out. Yum made a similar investment in KFC a few years back and since the chicken chain’s sales have continued to improve.
A single point-of-sale system will be installed in all Pizza Hut stores, and the company will look for a technology that it can apply to Pizza Hut to improve the customer experience.
“It used to just be about being better,” Creed said, because anyone can argue that their pizza is better. “What you are going to win the war on is who makes it easier to get a better pizza.”
The consumer doesn’t want to pay $17 for a pizza and eat it while sitting in a fast-food dining room, he said, which is why Pizza Hut has been slowly closing its “red roof” locations that catered to dine-in customers.
“They’re old, they’re tired, they’re big, and they’re in the wrong location,” Creed said.
In their place, Pizza Hut is opening smaller stores focused on delivery and carry-out business.
“We are seeing dramatic sales increases where we are doing this shift,” Creed said, providing the example of stores in Shreveport, La., where weekly sales rose to $31,000 from $14,000 after they adopted the new style of store.
During the conference, Creed also offered up an interesting insight on decision-making when it comes to the brands’ menus.
He told the crowd that an intern once suggested adding ranch dressing to Taco Bell’s menu. Creed, aside from hating ranch dressing, said it didn’t match Taco Bell’s branding because it wasn’t Mexican inspired.
“If you don’t have clear brand positioning, you will do dumb things,” he said.
Ford reports strong consumer demand for Louisville-made Super Duty, Escape
Ford Motor Co. said it had a strong sales month in May with “sensational” performance by the F-Series pickup, including the Louisville-made Super Duty.
Demand for the Louisville-made Escape fell nearly 10 percent, but a Ford official told Insider that the decline was a result of the timing of fleet purchases from businesses, government agencies and other organizations. Escape sales to retail customers improved in May.
The automaker said Thursday that it sold 241,126 vehicles in May, up 2.2 percent from a year earlier. Truck and SUV sales improved, and car sales fell, which has become a “consistent story,” said Mark LaNeve, vice president of U.S. marketing, sales and service.
In a conference call with analysts and media, LaNeve said Thursday that May was a “sensational month” for the F-Series, of which the company sold more than 76,000 units, up 12.8 percent compared to a year earlier. For the year, F-Series sales are up 8.5 percent.
“The F-Series momentum story continues,” LaNeve said. “We have the best product in the category.”
Since the new model of the pickup was introduced, it has gained market share, and consumers are buying more expensive models even though Ford has reduced its incentives, he said.
“If anything, the new Super Duty’s done even better,” LaNeve said.
The Super Duty is made exclusively at Kentucky Truck Plant in Louisville.
Ford said SUV sales in May improved 4.2 percent, with the Edge, Flex and Explorer all posting gains. Escape sales fell 9.8 percent to 27,830, a five-year low for May. However, Erich Merkle, the company’s chief U.S. sales analyst, told Insider via email that Escape sales fell only because the lower sales from fleet customers.
“Fleet sales tend to be very choppy from month to month,” he said.
Escape sales to retail consumers increased in May, he said, and for the year, Escape sales are up 3 percent, “which is a record start for Escape.”
New chicken chain headed to Louisville … at some point
The phrase “take me to church” will take on a different meaning for Louisville residents within the next few years.
Church’s Chicken is rising up from the south to take on KFC and other fast-food chicken competitors per a newly announced franchise agreement.
The Atlanta-based chain signed a multiyear agreement with restaurant development company Goalz Restaurant Group to open Church’s locations in six states, including Kentucky, Church’s announced.
“The Goalz Restaurant Group has a proven history that fits perfectly with Church’s domestic expansion strategy,” Tony Moralejo, executive vice president of international business and global development at Church’s Chicken, said in the announcement.
Church’s has more than 1,600 locations in the United States and internationally.
The agreement was just recently signed, so it will take a bit for the franchisee to figure out where and when it will open the first Church’s in Louisville. However, according to the agreement announcement, Goalz Restaurant Group will develop 20 restaurants a year. The restaurant locations will be spread among the six states, which include Kentucky, Ohio, Florida Colorado, North Carolina and South Carolina.
Goalz Restaurant Group has partnered with Tennessee-based American Development Partners, which will fund the real estate acquisitions, construction and design, the announcement states.
The Kentucky markets for development include Lexington and Louisville. Seeing as Lexington got a Shake Shack, it seems only fair that Louisville should get the first Church’s in the state. Of course, we’ll have to wait to find out.
New health care facility to open in St. Matthews
The ribbon is being cut today at 1 p.m. on a new health care facility at 3945 Nanz Ave. in St. Matthews.
Holiwell Health is an integrative medical facility that looks at the physical, as well as emotional, environmental and mental aspects of a person’s life that affect their health. It is owned and operated by Dr. Deborah Ann Ballard, who worked in KentuckyOne Health’s Healthy Lifestyle Centers and is a graduate of the University of Louisville’s medical school.
The facility offers primary care, acupuncture, nutrition counseling, health coaching and counseling, among other services. Holiwell Health also runs a teaching kitchen where dietitians, health coaches and guests can show clients how to prepare healthy and delicious food.
Its hours of operation are 9 a.m. to 5:30 p.m., Monday through Friday. Starting June 12, a physician at Holiwell Health will be available for follow-up visits, emergencies and urgent care via a telehealth system. —Caitlin Bowling
Louisville Orchestra and KY Author Forum share Main Street digs thanks to businessman David Fenley
Here’s your warm, fuzzy announcement of the day, proving not all news is bad.
The Louisville Orchestra management has been looking to move closer to the Kentucky Center for the Arts on Main Street from their offices at ArtSpace on Broadway. Meanwhile, UofL’s Kentucky Author Forum also has been looking for a place to call home that was close to the Kentucky Center as well.
Enter local entrepreneur and businessman David Fenley, who loves both organizations and decided to give an in-kind donation to get them both new office space on the sixth floor of the Doe Anderson Building, 620 W. Main St. It was a match made in heaven.
“The Louisville Orchestra and the Kentucky Author Forum are vital parts of our community, and I felt it was incumbent upon me to help bring their goals and dreams to fruition by doing what I could to help,” said Fenley in a press release. “What the LO is doing is changing the orchestral environment, and I want to do what I can to support them.”
The new 8,500-square-foot space will allow a consolidation of LO’s production department by making room for its music library currently located in the basement of the Kentucky Center.
“When David heard that we desired to be on Main Street, he immediately became involved in making it financially possible for us,” said LO executive director Andrew Kipe in the release.
Mary Moss Greenebaum, founder and producer of the Kentucky Author Forum, said: “The music of composers and the words of authors should cohabit amicably. Further, the orchestra and the Kentucky Author Forum are linked by two other commonalities: overflow audiences in our own community and a presence in the national cultural conversation.” —Sara Havens
La Chasse hires new executive chef
Upscale European restaurant La Chasse has named a new executive chef.
Andrew Welenken has taken over the kitchen at the restaurant at 1359 Bardstown Road near Cherokee Parkway. Welenken most recently served as chef de cuisine at the English Grill inside The Brown Hotel and was executive chef for a time at Buck’s.
“Chef Andrew brings a tremendous amount of creativity and talent to the table, in both culinary and administrative terms. His years of experience as a top Louisville chef and his deep understanding of a wide variety of culinary techniques and cuisines make him a perfect fit for La Chasse,” owner Isaac Fox said in a news release.
Fox added that La Chasse hopes to offer more farm-to-table dining and special dinner events.
Welenken succeeds Alexander Dulaney, who was executive chef La Chasse since it opened in 2015. Dulaney now works as chef de cuisine at Harrison Smith House and Star Hill Provisions, both of which are run by chef Newman Miller. —Caitlin Bowling
Fed: Labor shortage undermines construction sector
The labor shortage in Louisville is hamstringing construction projects, and the low number of homes available for sale are hampering real estate sales, according to a report by the Federal Reserve Bank.
A construction contact in Louisville told the Fed that “the shortage has affected their ability to complete work,” the Fed said in its Beige Book released Thursday.
The labor shortage extends beyond construction: Employers in the Fed’s St. Louis district, which includes Kentucky, struggled to find “skilled or motivated employees.”
Louisville employers and the chamber of commerce have, for years, complained about the lack of available workers with the proper skills and qualifications — though economists also have told Insider that higher wages might relieve at least some of the labor pressures.
The Fed said that 61 percent of contacts in the St. Louis district said “wages and labor costs were higher or slightly higher than a year ago.”
Other findings in the report:
- Health care sector struggles: One Louisville hospital announced layoffs “citing uncertainty around health care reform and low patient volumes. Another health care provider cited high costs as a reason for lower-than-expected sales over the past quarter.”
- Tight housing market: “Several contacts reported that significant shortages in inventory have hindered sales, particularly in Louisville, as single-family demand has continued to be strong. Local inventory levels are mostly expected to decline further in the coming months.”
While auto dealers in the St. Louis district reported slowing sales, economic activity overall “has continued to increase at a modest pace, and contacts continue to hold a generally optimistic outlook for overall activity for the remainder of 2017.” —Boris Ladwig