Pizza Hut now an empire

LOUISVILLE, Ky. — Dan and Frank Carney borrowed $600 from their mother 50 years ago and opened a small pizzeria in Kansas using second-hand equipment in what was once a bar.

The dream was to make enough pizzas to pay for college and earn a little money on the side for the family.

That humble enterprise with a humble name — Pizza Hut — is now the world’s largest pizza chain, with $10 billion in annual sales and more than 11,000 stores worldwide.

“We were able to build something from nothing,” Dan Carney said, recalling the hardscrabble early days and that first pizzeria in Wichita, Kan., which opened 50 years ago Saturday.

The chain known for its red-roofed restaurants is now updating its look, with plasma TVs, sports bars and local sports memorabilia. It’s also rolling out tubs of baked pasta and piles of fried chicken wings to go with its famous pizzas.

It is a tough time for pizza makers, who are strapped by rising costs for cheese and flour and by consumers who have been pinched by a slow economy.

Last year, Pizza Hut Inc. closed more U.S. restaurants than it opened, which it attributes to such factors as leases ending and outlets being sold.

Analysts say Pizza Hut was due for an overhaul, and that the new menu may help it through a rough time for the industry.

Analyst Larry Miller with RBC Capital Markets said “the iconic red roof store is dated.” “From a bigger picture, longer-term view, this is a brand that’s starting to differentiate itself from the competition in some really unique ways,” he said.

Pizza Hut went public in 1970 and was then acquired by PepsiCo Inc. in 1977. Frank Carney left the company three years later in a clash with the new owners. Pizza Hut’s corporate parent changed again in 1997 when PepsiCo spun off what is now Yum Brands Inc., a Louisville-based company that also owns Taco Bell, KFC, Long John Silver’s and A&W All-American Food Restaurants.

“I’m proud every time I see Pizza Hut doing well because that’s part of me,” Frank Carney said.

Now 70, he is a competitor with a stake in 73 Papa John’s pizza stores in Wichita, Houston and Hawaii.

“Good competition keeps everybody on their toes; them and us,” Carney said.

Pizza Hut began an aggressive advertising campaign this spring to publicize the new menu. It says the effort paid off in the first month, when it sold 2 million pans of pasta, doubling its expectation, said Pizza Hut President Scott Bergren.

The company sells chicken wings in an agreement with WingStreet.

“We have changed our sales mix substantially,” Bergren said.

Bergren declined to say what kind of profit margins the company was seeing for pasta and chicken wings compared with pizza, saying, “these are all profitable products.” Ingredient costs like wheat, cheese and chicken have soared in the past year.