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Share of the Mobile Pie

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The final day of NRFtech 2011 kicked off with a mobile strategy presentation by Pizza Hut CIO Baron Concors.

The chain, Concors said, “has a history of taking calculated risks. We don’t mind being the first mover on something, or making an investment early. Our goal is to be where our customers are.”

Pizza Hut launched its first mobile site for ordering in 2007; it has had a presence on Facebook and Twitter since 2008, and launched its iPhone app in 2009. “Just recently,” Concors said, “we launched apps for the iPad and Android, and any day now we’ll have one for Windows Mobile 7.”

The decision to launch an iPhone app evolved from several sources. One was the company’s awareness of the ubiquity of mobile communications; another was the rapid adoption of smartphones by the general public. In corporate America, Concors pointed out, people have been carrying these hybrid telephone/Internet devices around for years. “Now it’s not just the corporate sector,” he said, “it’s everybody. People want access to web pages, they want video and they want apps.”

The iPhone was introduced into the market in June 2007; in January 2009, Pizza Hut’s executive team members took a look around and noticed that every one of them was carrying an iPhone. “We said, ‘Look, something’s happening here, and we need to be ahead of the curve,” Concors recalled.

Feeding the machine
The team’s first decision was to pick a demographic to target. They had a lot of choices, but the one they were particularly interested in reaching was the group they call collectively “an eating machine.”

An eating machine, Concors explained, is the college and after-college guy: He lives with his buddies, has no interest in cooking and spends a good portion of his day playing video games. Whatever he wants, he wants it fast and easy. He wants to be fed a lot, and he wants, essentially, on-demand feeding. “We thought … this is the kind of guy who would use a Pizza Hut app,” he said.

As it turns out, they were wrong. In March 2009, as the Pizza Hut executive team was still in the decision-making process about building an iPhone app, A.C. Nielsen released a study showing that there were just as many iPhone users 55 and older as there were 13- to 24-year-olds. The executive team realized that the opportunity was broader than they’d anticipated, so the app needed to be designed to appeal not only to eating machines but to their parents as well.

Meanwhile, prospective customers were having real challenges ordering from the mobile website without an app. The process took too much time and transactions were difficult to complete — problems that, coolness aside, account for much of the popularity of iPhone apps. “So we knew it was an emerging platform we had to get in front of,” said Concors. “But we were still having the same debates with the executive team. ‘Where’s the ROI?’ ‘Are we going to cannibalize our e-commerce channel?’ ‘Is this going to attract new customers, or is it just going to be a shift?’ And, of course, ‘Aren’t mobile apps just for kids?’”

In the midst of all this, however, the executive team realized these were the same conversations that took place when Pizza Hut was debating whether or not to have an Internet presence. They also realized, now as then, that the cost of waiting too long could be very high.

“Even more important to Pizza Hut,” Concors said, “was the question, ‘What if we don’t do this and one of our competitors does?’ This is an ultra, ultra competitive business — not just the food category, but specifically pizza. We’re always looking to find ways to differentiate ourselves and provide an over-the-top customer experience. If you buy and use a smartphone, you want to use an app, because that’s a big part of the experience of owning the thing. We knew that if we didn’t provide it, someone else would.”

Go big or go home
Once Pizza Hut made the decision to build the app, it never looked back. “When we talk about competing in the pizza space,” Concors said, “we have a saying: Don’t bring a knife to a gunfight. If you’re going to do something, do it big and do it right. Don’t just put something out to have something out there.”

The app caused Pizza Hut to make a basic shift in the way it approaches IT — basically, to be prepared to support whatever comes next. It built a robust infrastructure centered around an application programming interface that can handle orders regardless of the channel. The app, the 6,000 Pizza Hut stores and the website all go through the same API.

One thing it didn’t worry about was volume. “When you launch a new app you don’t know how popular it’s going to be,” Concors said. “On the other hand, we have events like the Super Bowl where we’re transacting hundreds of orders a second, so we didn’t have the scalability concerns that would come with a traditional launch.”

Lessons learned
Through the development process, Pizza Hut came to understand the level of testing required for an app, specifically for Apple. When you submit an app, Concors said, you have no idea how long it’s going to take for Apple to approve it. “If they find something wrong with your app, you’re going back to scratch, and you’ll have to resubmit. Proper testing is vitally important.”

So is paperwork: Make sure you register as an iTunes developer early, because that takes time, too. One thing that doesn’t take any time at all? Reviewing your agreement with Apple. “There’s no point in having your legal department get all excited and do a lot of redlining,” Concors said. “You do it Apple’s way or not at all.”

Concors observed that mobile is just a microcosm of what retailers face today — the ever-decreasing gap between innovation and expectation. “We used to have a lot of time between when something would enter the market and when we’d have to respond to it. Now we don’t.”