Court rejects Pizza Hut franchisees’ injunction against new “sales strategy”
Pizza Hut general manager, Graeme Houston said the company is pleased with the Federal Court's ruling, whereby it rejected an injunction lodged by 80 of the brand's franchisees.
The franchisees applied for an injunction on June 24 on the basis that parent company Yum! Restaurants Australia's new "sales strategy" would cost $10 million and put many of them out of business.
Federal Court judge Jayne Jagot rejected the injunction, stating there was no evidence Yum! was acting in its own interests at the expense of its franchisees.
Housten is confident the strategy will prove successful in Australia as it has in international markets.
“Pizza Hut and our franchisees are together ushering in a new era for this market and putting a high-quality, high-value competitive model in place that has proven successful in the US and New Zealand markets," he said.
“Growing our customer base is our focus and by offering a simplified menu with all pizzas under $10 with no compromise on quality, we believe we have a winning formula."
According to The Sunday Telegraph, Yum! hopes the strategy will drive sales.
Yum! market director, Kurtis Smith told the court the pricing strategy was in response to “concern about a downward trend in financial performance and the steady loss of customers in the Pizza Hut business in Australia over the last 10 years”.
The court heard Smith told Yum! senior executives something had to be done to “arrest the decline” last December, and that the company had introduced leaflet drops and advertising to raise awareness about the price drop.
The judge told the court the company had acted in “good faith with the intention of advancing the interests” of the whole organisation.
As part of the new strategy Pizza Hut has reduced its Classics range pizzas to $4.95 every day of the week; meanwhile pizzas from its premium menu are available for $8.50 pick-up.