Supply chain of Pizza Hut in Pakistan

Posted on March 30, 2012 by Ali Husnaen

1 Vote

Supply chain of Pizza Hut

Submitted By: Ali Husnaen (09-HITEC-BBA03)HITEC University taxilaPakistanAcknowledgement
I am grateful to Allah, Who enables me to complete this
project on Pizza Hut effectively. I am also thankful to my
respected teacher Mr.Farrukh Idrees, because without his
generous co-operation and direction, the accomplishment
of this project would not be possible.
Dedication
To my Loving Parents and Honorable Teachers.

Introduction
Pizza Hut was initiated in the year 1958 by
brothers Dan and Frank Carney in their
hometown ofWichita, Kansas. Pizza Hut is an
American restaurant chain and international
franchise that offers a variety of
delicious Pizzasalongside other mouthwatering menu items including a wide range
of Starters, Soups & Salads, Pastas,
Sandwiches, Desserts and Beverages.

Pizza Hut is a subsidiary of Yum! Brands,

Inc. There are more than 6,000 Pizza Hut restaurants in the United States, and another 5,600+ store located in 94
other countries across the world.
Pizza Hut Pakistan
Pizza Hut initiated its operations in Pakistan with its first restaurant in 1993. The journey that started then continues to
this day, as the chain consists of over 40 outlets spread all across Pakistan, and its the largest restaurant chain in
Pakistan. Karachi the business hub of the nation also serves as the most populous consumer focal point for Pizza
Hut in Pakistan. The Clifton outlet of Pizza Hut has won numerous regional rewards for exceptionally high sales
volumes. The team at Pizza Hut has launched various amazing flavors and toppings during there time in Pakistan.
The critically acclaimed topping, Chicken Tikka, which has swept the world since its creation, was introduced for the
first time in Pakistan.
VISION STATEMENT
To own majority shares of both the casual dine in and delivery sectors in Pakistan and to become the industry
leaders through customer mania.
MISSION STATEMENT
To be the first choice among restaurants and delivering brands by developing our people capability to deliver
maniacal service, product quality, 100% customer satisfaction, innovation and building great look and feel restaurants
to provide attractive returns to our stake holders.
QUALITY MANAGEMENT
To ensure rigid international bench-marks in the quality of products and services at all its restaurants across the
world, Pizza Hut has a secrecy shopper program in which an unknown official visits a restaurant and evaluates it on
certain defined parameters called C.H.A.M.P.S. that stand for Cleanliness, Hospitality, Accuracy, Maintenance,
Product quality and Speed. Based on the report submitted by the official, the restaurants are rated and in the rare
case of finding under performers, they are kept under strict vigil

This is the most important for a food chain like Pizza Hut. All the employees back of-the-house i.e. the kitchen
assistants are trained accordingly. They are given extra classes in order to meet the quality standards set by Pizza
Hut around the world. This strategy is important in order to satisfy the CHAMPS. This strategy is strictly implemented
in Pizza Hut in order to fulfill the quality standards. Different quality management staff is also there at Pizza Hut. The
shift managers have the task to observe whether the quality standards are met or not, whereas there are a total
quality management department at the main office in Gurgaon. This department has the task to implement quality
standards and know whether they are achieved or not.
JIT STRATEGY OF PIZZA HUT
Pizza hut works on JIT they order direct supplies according to demand. For just in time strategy they prepare
themselves few hours before

All team members are prepared before peak hours with vegetables required for toppings. They keep things
ready in the line. Keep lemonade syrup ready so that they just have to add 7 up when the customer ask for
Lemonade.
They be ready with different patties ( pizza base)
During peak hour they provide the pizza making time of 15 20 minutes. While there cycle of making one
pizza is only 7 minutes. In normal case they provide the pizza making time of 10 14 minutes.

This they do, so that the customers have food as early as possible and their table gets vacant early so that more and
more customers are served.
Products of PIZZA HUT

Starters
Soups
Salads
Pizzas
Pastas

Beverages
Deserts
Sandwiches

Supply chain
The movement of material from source to end customer is called supply chain. Supply Chain includes purchasing,
manufacturing, warehousing, transportation, customer service; demand planning, supply planning and Supply Chain
management. It is made up of the people, activities, information and resources involved in moving a product from its
supplier to customer.
Supply chain network for Pizza Hut
Supply chain of pizza hut starts from the suppliers of pizza hut. There are many suppliers of the pizza hut but we
divide them in two parts.

Direct suppliers
Indirect suppliers

Direct suppliers
There are three direct suppliers of Pizza hut named as:

Pepsi Company

Bake parlor company (Buns)

Habib oil Mills (First mineral water)

Indirect suppliers
Pizza hut have many indirect suppliers because they need all other material like Cutlery, meat, vegetables, sauces,
and all other material come from their warehouse named as Commissary. That material is purchased by
Commissary means indirect suppliers of Pizza hut are:

Meat market (Their owns cattle)

Vegetable market

Sauces companies
Explanation:
Pizza Hut demands the direct material on daily basis. On every day end pizza hut manager forecasts the demand of
next day and gives the order to the suppliers than next day morning the goods come to the Pizza hut. All indirect
material i.e. vegetables, sauces, meat, cutlery and all material is purchased by the ware house named by
Commissary. The material comes from warehouse by the trucks on every Wednesday.
Then Pizza hut takes the orders from its customers who come to pizza hut and also take the orders from the delivery
service there is a specialized system in pizza hut which is connected to the delivery orders service so that 1 order list
at a time come in the kitchen and at the managers table also. Than production of pizza according to order starts and
they deliver it with in 45 minutes at the door of customer and in pizza hut they just take 20 minutes to prepare the
pizza and serve it to the customer.
Ware house of Pizza Hut:
Its ware house is situated in Bahadurabad. The name of ware house is commissary. In this ware house they have
indirect material. Pizza hut has also ware house of customers records. Pizza Hut claims to have the largest fast food
customer data warehouse in the world with 40 million US households or between 40 and 50 per cent of the US
market
Pizza Hut Outlets

City
KARACHI

Outlets
Clifton 1

Address
QM Building, Plot# BC 15, Block, Khayaban-eRoomi, Clifton
Clifton 2
Plot No. GPC-6, KDA Scheme 5, Kharkhar
Chowrangi, Clifton
Zamzama
19-C, Zamzama Commercial Lane-9, Phase V, D.H.A
Gulshan-e-Iqbal 36-B, Hina Centre, Gulshan-e-Iqbal
I.I Chundrigar
Mitha Chamber, I.I Chundrigar Road
Road
North Nazimabad D-5, Block-D, North Nazimabad
Sea View
Sea View
Cantt. Station
Cantt. Station
Shahbaz
14-C, Lane 2, Kh-e-Shahbaz, Phase 6, D.H.A.
Atrium Mall
249, Staff Lines, Zaib un Nisa Street, Saddar
Shaheed-e-Millat Shop S-104 & Mazzanine Floor, Plot 7/4, block 3,
Road
DMC Housing Society, Shaheed-e-Millat Road
Rashid Minhas Plot No. 8, Block 10-A, KDA Scheme No.24, Main
Road
Rashid Minhas Road
Sharae Faisal
Shop No. 6, Al-Kamran Centre, Plot # 7-A,Block 6,
P.E.C.H.S.
M. Ali Society Plot No. 12-C, Reliance Arcade, Muhammad Ali
Soicety
Gulshan Block 7 1-B/FL-6, Block 7, Gulshan-e-Iqbal
Nazimabad 2
Opposite Matric Board Office
Korangi
Plot ST-6/4, Sector 24, Chamra Chowrangi, Korangi

(Industrial Area) Industrial Area

Gulberg
89/B-1, Gulberg-III, M.M. Alam Road,Aligarh
Chowrangi
Mall Road
73- Mall Plaza, The Mall
M-3
Fortress Stadium
Defence
122-Y, Lahore Cantonment Soceity, Defence
Railway Station Railway Station
Johar Town
Plot #15, Block N, Johar Town
Iqbal Town
Block 6, Near Akbari Store, Allama Iqbal Town
Barkat Market Barkat Market 8, Power Block, Garden Town
Gulberg Delco 4-E-1, Hali Road, Gulberg 3
PSO Sunshine
PSO Petrolium (Sunshine), Abid Majeed Rd. (Girja
Chowk), Cantt.
Plot # 45, Hotel Indus, Thandi Sarak
HYDERABAD Hyderabad
ISLAMABAD Jinnah Super F-7 13-1, Sector F-7, Markaz, Jinnah Super Market
F-10
1-K, Plaza, F-10 Markaz
Peshawar
Captain Karnal Sher Khan, Stadium, ShamiRoad,
PESHAWAR
Peshawar Cantt.
LAHORE

Demand estimation of Pizza Hut

Pizza Hut estimates demand on daily bases. Demand estimation is based on past experiences where chances of
buffer are also considered and 10% buffer ratio is taken. Demand estimation is done through the mutual participation
of the managers of the particular outlet. While estimating customers demand, both, the home delivery orders of
customers and those customers who used to dine inn, take into account.
Operations/production management of Pizza Hut
Operation process started. From 8am to 11am pizza hut gets open for the production function only. From 11am till 3
at night, customers are welcomed to come in and enjoy their meal. Operation/production includes the preparation of
pizza dough according to the estimated demand. The preparation of dough is go through by three different
processes.

First process includes the addition of different spices and yeast in flour. All the ingredients are measured
and followed SOPs to help maintain the same taste at all outlets in all cities. Skilled and trained labor is

used to make the whole process speedy and efficient as well as to reduce the lead time of each process.
After the addition of spices, in second process, the different sizes of dough is prepared to response the

requirements of customers.
In third process, dough gets baked.

All of the three processes include machines and labor both. Each dough is not prepared by a single person but each
person is assigned to complete a single task in order to improve efficiency. Till 11am, all the dough get prepared and
rest of the pizza preparation process i-e, filling, topping and baking, is done after receiving orders from customers.
After the order placement of customers, preparation of pizza get started, the preparation time of pizza or the serving
time of customers order is max 16 minutes. Whether there are too many customers orders and takeaways, but the
pizza huts serving time never exceeds up to 16 minutes. Their ready dough helps them to make the entire customers
satisfy in time. Incase of unexpected large number of customers or too many take away and delivery orders, the work
is done in a way that one person spreads sauce, other add veggies, other one fills meat and the other person

spreads cheese on it and then finally pizza goes in oven. This chain helps to serve customers as quickly as possible.
But in normal routine only one person is responsible to prepare a single order (filling, topping etc).
The detailed steps in pizza production are given below:

Identify toppings
Saucing procedures
Using quality rings
Layout method overview
Placement of Pizza in the oven
In-store production, time concept
Need to give priority to home delivery tickets
Hands-on practice of making pizzas
Making half-n-half pizzas, single topping pizzas, special instructions, substitutions, making
Using the Peak Revenue Period Checklist
Explain the service times of all items served by the station
Closing of the make table
Storage of left over toppings
Cleaning procedures
Thawing charts usage and placing meats for thawing
Tracking wastages on the make table

In pizza hut, here is no inventory left at end. All the pizzas are prepared as per customers demand. But sometimes,
incase of any food festival or food stalls at exhibitions, there may some error occur to estimate the demand of
unexpected arrivals of customer. If expected demand is high as compare to actual demand then finished goods
inventory may left. At the end the cost has to be paid by company. To cut this cost pizza hut has a straight policy that
this ending inventory (remaining pizzas) neither distributed among employees/workers nor stored in refrigerators to
resell the next day but directly through into dustbin. The aim is to demotivate workers for producing extra units, keep
them not to think that remaining pizzas would be serve to them or they may takeaway to their homes. The other
reasons are to estimate demand more carefully and not to compromise on quality.
Strategy of Pizza Hut
Pizza hut is using performance measurement to achieve leadership position & twice as likely to handle a major
change successfully.
Supply chain strategy must consider the potential trade-offs existing between Cost, Quality, Quantity, Service
But Pizza hut compete on cost and services basis. Their Performance measurement system is link with its all
suppliers or traders to achieve breakthrough performance in satisfying the end users.
FISH BONE
Fish bone is a cause and effect diagram to identify potential cause of problems. Pizza hut always try to have
customer satisfaction on priority and if there customer are not satisfied, what are the main cause of unsatisfaction.
These causes can be behind a unsatisfied customers.
Distribution channels
The type of distribution channel used by Pizza Hut is the direct channel. The direct channel is successful when there
is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large
number of buyers, but a small amount purchased by each.
Pizza Hut uses three different methods of selling its products directly to the market.
-The first method of distribution used by Pizza Hut is delivery. Customers can call Pizza Hut ahead of time, place an
order, and the order is delivered to the customers home.

-Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order
and either leave with the order or eat at the restaurant
-The third method of distribution is online ordering. Customers can now go on the Internet and place an order.
Recommendations:
The supply chain strategy of Pizza Hut is very good but there area of supply is so small. They are providing there
products only in big cities of Pakistan. There is so much demand in small cities like Sargodha, Gujarat, Sialkot, and
Gujranwala. There other competitors are moving in theses cities so if they will not make there outlets there they will
lose competitive advantages.
The other thing is there prices are high if they will lose there prices poor people will also like to buy there pizzas and
the house hold trend of food will change after some time, people will like to buy food rather then making it at home.
After implementing theses strategies they can get:

Maximum return on their investment

Value proposition
Expands their business growth
Increase in sales