For a slice in the pizza

By Maggie Lu , Shanghai Star. 2001-03-15

Legend has it that it was Marco Polo who invented the pizza when he tried to make a Chinese meat pie back home. However no meat pie shop in China has as many customers standing in line outside waiting to be seated every day as does Pizza Hut. The boom of pizza also invite several competitors...

Jack Liu, president of the US-based Melrose Pizza。.


"IT'S ridiculous to see so many people waiting outside the Pizza Hut every day," said Hazel Li, a local media executive. "Is it really so delicious that it is worth wasting time to queue up?"

Most of those who find it worth standing in line for are young people keen to try new things.

"I felt nothing special after the first time I tried pizza and I seldom go to pizza restaurants," said Song Mei, a high school teacher.

She said Chinese dumplings and other dim sums are much better than pizza, and they are cheaper, too.

Compared to the US, where more than 80 per cent of young people are fond of pizza, the number of pizza enthusiasts in China is fairly small.

To most Chinese, Pizza Hut has been synonymous with the Western snack since the brand entered the country in 1990. The first outlet in Shanghai was opened in 1995.

When a young woman sought the telephone number of "Mister Pizza" through the 114 hot line, the staff asked "Is it a shop belonging to the Pizza Hut?"

It can probably be said that Pizza Hut has helped Chinese know the famous Italian delicacy.

Although Pizza Hut outlets are considered fast food restaurants in Western countries, they were settled as "lounge restaurants" in China.

Their well-designed and clean decors and good services contrast sharply with the noisy McDonald's and KFC restaurants.

"It's a good place to have a date for lovers because it's more elegant than ordinary restaurants and cheaper than the high-level ones," Song said.

President of Pizza Hut, Michael Rawlings, recently came to Shanghai in order to find out the secret of the company's success in the local market.

"Maybe our success in China was due to the fact that it's a novelty to the people, but the low price and high quality are certainly the main factors," Rawlings said.

He said the profit margin for Pizza Hut in China holds at 10 per cent.

"Sales in the country are excellent, even better than in the United States in some sense," he added.

"In the US, we have the main competitor Domino Pizza in delivery services," said Peter Kao, general manager with the Shanghai Pizza Hut Co Ltd. "And we are facing an adjustment of taste to meet the demands of the younger generation after developing more than 40 years in the country."

To attract more local customers, Pizza Hut is trying to adjust the taste to meet the fondness of Chinese.

"We chose domestic ingredients which are more acceptable to local customers although the cooking method is the same as in the US," Kao said.

However, the baking process has been standardized to maintain the quality in all the chain stores and to raise efficiency.

"Every step in the process has a set standard of time and different people are responsible for different steps," he said.

Although competition in this trade is not so fierce as that between the McDonald's and KFC, some newly born pizza shops such as Melrose Pizza & Cafe and Gino Cafe are eyeing the market. However, sources from Melrose and Gino admit they can't compete with Pizza Hut yet.

"We are at the growing stage, while Pizza Hut has matured," said Jack Liu, sales manager of Melrose, a brand created by an American and a local partner two years ago.

Melrose, which has opened seven outlets in the city, offers American-style pizza, while the Taiwan-based Gino stakes its claim as Italian style.

"Since Pizza Hut is a worldwide brand, its main goal is to dominate the market through great investment in locations, decor and advertising, rather than bring in profits," Liu said. "We focus on profits in every outlet with small investment."

Melrose sets its eyes on expatriates in the city at the very beginning and 90 per cent of its customers are foreigners. Now it has turned its attention to local people.

Melrose pizzas maintain a strict American flavour and do not change according to the local taste.

"We want to show Shanghai people the pure flavour of pizza," Liu said. "Since the prime cost of Pizza Hut is higher in China, their pizzas are more expensive than those in the US."

To compete with Pizza Hut, the Melrose has lowered the prices of pizzas that correspond to those made in Pizza Hut.

Meanwhile, the prices of those kinds that Pizza Hut doesn't have are high, about 80 yuan ($9.6) for one, in order to catch real pizza fanciers.

However, the Gino Cafe, which has nine outlets in the city, competes with Pizza Hut as a "lounge restaurant."

"We offer many other choices besides the genuine Italian pizzas," said Li Minghai, a manager of the Gino Cafe.

It still keeps the tradition that one chef handles the whole pizza-making process, which is better than the assembly-line product, according to Li.

This brand is more popular among foreigners and white collar workers, even with prices that are higher than Pizza Hut.

Facing the growing competitors, Kao expressed great confidence in Pizza Hut.

"Pizza Hut will still be tops in a market we have known well," Kao said.

Copyright by Shanghai Star.

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