May 8, 2018 / 11:04 AM / 5 months ago

Pizza Hut expanding beer delivery test in Arizona and California

LOS ANGELES (Reuters) - Yum Brands Inc’s (YUM.N) Pizza Hut chain is expanding a beer delivery test to nearly 100 restaurants in Arizona and California this month as industry leaders vie for market share in the face of sluggish growth.

Operators are seeking creative ways to boost sales as restaurant traffic growth has been weak to flat for several years due to competition ranging from grocery stores that sell prepared food to a proliferation of meal kit companies.

Pizza Hut started its beer delivery project in downtown Phoenix in December as part of a larger push to set the chain apart from rivals like Domino’s Pizza Inc (DPZ.N).

Domino’s does not deliver alcohol, but it recently added 150,000 new delivery “hotspots” at U.S. parks, beaches and other destinations that do not have traditional addresses in a bid find new business.

The enlarged Pizza Hut test will include Arizona cities such as Tucson, Prescott and Winslow. California cities include Los Angeles, Bakersfield, Sacramento and Santa Barbara.

More than 1,700 of Pizza Hut’s roughly 6,300 U.S. units have liquor licenses, giving the chain a potential lead over some rivals.

A cook removes a pizza from the oven in the kitchen at a Pizza Hut restaurant, March 29, 2011. REUTERS/Danish Siddiqui

“Many Pizza Hut restaurants are already licensed to serve and distribute beer, without third party services, additional fees, or extended wait times,” Pizza Hut Chief Marketing Officer Zipporah Allen told Reuters.

Pizza Hut’s beer delivery drivers will be at least 21 years old and trained in local alcohol laws, the company said. They have the authority to cancel a beer delivery order if customers cannot verify they are old enough to legally consume alcohol.

Pizza Hut’s announcement landed hours after privately held Panera Bread Co said it had completed the national roll-out of its own food delivery service to 897 cities.

While pizza chains and Panera do their own delivery, many other restaurants farm the work out to companies that take a slice of revenue.

Strategy firm Pentallect Inc has forecast that U.S. third-party food delivery industry sales will grow from $13 billion in 2017 to $24.5 billion by 2022.

Pizza Hut parent Yum, which also owns the Taco Bell and KFC brands, earlier this year spent $200 million to buy a 3 percent stake in food delivery company GrubHub Inc (GRUB.N).

McDonald’s Corp (MCD.N) partners with UberEats for fast-food delivery in the United States.

DoorDash, which delivers craft beer six-packs for BJ’s Restaurants Inc (BJRI.O) in some California markets, has been offering alcohol delivery in select cities since 2016.

Reporting by Lisa Baertlein in Los Angeles; Editing by Richard Chang

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