Pizza Hut is winning big in China by betting on $7 pizzas

Pizza Hut won big in China in 2024.

Zhang Peng/LightRocket via Getty Images

Pizza Hut is attracting cash-strapped Chinese consumers with lower-cost offerings.Its parent company, Yum China, reported on Thursday that sales of pizzas under $7 rose 50% in 2024.The brand also launched a budget arm in China in 2024 called Pizza Hut Wow.

Pizza Hut in China is winning big by selling cheap pizzas.

The chain is leveraging weakened consumer confidence and expanding its lower-priced offerings to attract cost-conscious Chinese consumers.

Parent company Yum China, which also owns the country’s KFC operations, reported that Pizza Hut saw a 3% year-on-year sales growth in its latest quarter.

The earnings report also said that Pizza Hut saw its operating profit increase by 156% in the quarter compared to the year before.

Yum China’s chiefs said in the Thursday earnings call that the company has taken several steps to lower customers’ prices.

“We’re transforming Pizza Hut into a more mass-market brand by widening price range and enriching the menu,” Yum China’s finance chief, Adrian Ding, said in the call.

Ding said that sales of its cheap pizzas, priced under RMB50 — slightly less than $7 — increased 50% in 2024 compared to the year before.

Pizza Hut had also lowered the price of “about 30 iconic products,” starting from “RMB9.9 for the drinks and dessert,” Yum China’s CEO, Joey Wat, said to investors. RMB9.9 is roughly equal to $1.40.

The chain also expanded its budget wing — Pizza Hut Wow. The Wow stores offer smaller, cheaper versions of Pizza Hut’s regular fare. Wat said that despite the lower average ticket spend at these stores, they attract younger customers and expand Pizza Hut’s market.

Pizza Hut opened 412 new stores in 2024, bringing the total to 3,724. Wow stores, which were introduced in May 2024 and mostly converted from older Pizza Hut stores, exceeded 200 by the end of 2024.

“Pizza Hut has made significant progress in transforming itself to become more affordable for customers and more profitable for the company,” Ding said to investors in the call.

The chain has been successful in China, seeing positive transaction growth for eight consecutive quarters. Its success is partly attributed to the introduction of products that appeal to local tastes, such as its wildly popular durian pizza in 2024.

Yum China reported a total annual revenue of $11.3 billion in 2024, a 3% increase from the year before. Its stock price rose about 9% in after-hours trading on early Friday.

Representatives of Yum China did not respond to a request for comment from Business Insider.