Restaurants of all kinds have scrambled to keep customers

Restaurants of all kinds have scrambled to keep customers coming in during recent difficult economic times. Pizza Hut is in an unusual spot. It isn’t exactly fast food, but it isn’t quite full-service fare either. Pizza Hut has never been perceived as being on the low end of pizza prices. As the economy sagged, all these factors cooled down business for the red-roofed purveyor of pies. So Pizza Hut did what many companies did. It cut prices. At first, it shocked the pizza category with its “$’l 0 any” promotion—any pizza, any size, any crust, any toppings, for just $10.

Customers really responded to the limited time offer. But as soon as the price deal ended, Pizza Hut’s incremental promotional revenues disappeared. So the company has made more permanent adjustments to the new frugality reality. To increase customer loyalty, it has introduced everyday low prices. Most medium pizzas cost $8, most large pizzas cost $ 10, and most specialty pizzas cost $12, these price cuts represent up to 50 percent reductions from previous pricing. Under this new pricing, Pizza Hut expects that revenues will Increase significantly, But the new pricing mechanism will require some time before it proves itself.

Car Pizza Hut sustain such dramatically lower prices and still remain profitable?