The Secret Way Domino's Pizza and Papa John's Are Killing Pizza Hut

Source: Domino's Pizza

Is my pizza there? Is my pizza there yet? How about now? With Domino's Pizza , the answer is a tap away on your smartphone with Domino's Tracker. With the delivery app for Pizza Hut of Yum! Brands , the answer is nowhere to be found. But they're just silly fun apps, right? Not anymore. Now it's digital or die.

Snake of the 1990s
Remember back when the purpose of cell phones was actually to mainly make phone calls, but they also had the game Snake on them? Snake was like the Pong of cell phone games -- very low-budget and simple technology, kind of like using the Pizza Hut app. I'm exaggerating a bit here; but if you use it before or after using the Domino's Pizza app or the Papa John's app, you'll almost feel like you're playing Snake all over again.

Only the Snake game actually works. I tried ordering a pizza three times, each time rebooting my phone, and finally gave up. I thought it was me; but across the Internet, you'll find reviews of people complaining that the Pizza Hut app has bugs, crashes, freezes, is missing menu name it.

Over 10 minutes frozen on the Pizza Hut app. Source: Author

Pizza Hut's app is not much better than pre-Internet mobile technology of the early 2000s. You can literally lose your appetite navigating the thing trying to order. As an example, with the Papa John's International app, you see a 3-D pizza with toppings fall on it as you select them so that you can see what your pizza will look like with the various choices. I had planned to just play with the app and experiment; but I found myself instantly hooked and tempted, and my impulses demanded that pizza pronto.

It's all about digital and mobile
David Novak, CEO of Yum! Brands, admitted on the last conference call: "Now let's talk about Pizza Hut which clearly had a disappointing quarter." Pizza Hut saw a 5% drop in same-store sales. This is during an unprecedented new Golden Age for Pizza Hut, Domino's Pizza, and Papa John's.

The reason why these chains are -- or should be -- dominating is that around 15% of all digital orders -- and growing -- are coming through digital means through computers, smartphones, and tablets. The smaller and even regional players cannot compete on this playing field. They don't have the time, money, infrastructure, or experience to build what is needed.

Domino's is killing it, with a 4.9% jump in domestic sales last quarter. For Papa John's, it's even better, with a 9.6% leap. Both of them credit their robust platforms. Domino's Pizza boasted on its conference call that it has 9 million profiles with saved orders and credit card information ready to go that allows orders to be completed with as little as five clicks. Two million of those profiles were new last quarter alone.

Source: Papa John's

Papa John's, meanwhile, expects to be the first to hit greater than 50% of sales through digital on a sustainable basis, which means throwing old-fashioned speed-dial ordering back into the Stone Age. Novak knows Pizza Hut has dropped the ball on this, and even acknowledged Domino's Pizza and Papa John's. He stated, that Yum! Brands needs "to do a better job engaging the digital consumer where our competitors are frankly doing a better job driving activation."

Watch the app, watch the jump
Not to oversimplify things, but Pizza Hut may just be an improved app away from getting jump-started again. Of course Pizza Hut will be competing with Domino's Pizza and Papa John's too; but as long as it can significantly improve its platform, there is a an enormous and growing pie big enough for the three of them to share.

Domino's Pizza CEO J. Patrick Doyle said Domino's is "thriving in the U.S.," and he credits technology for this. Papa John's is confident it will "drive the business forward" as it continues "to capitalize on digital expertise." There is no reason Pizza Hut can't do the same.

For an example of continuous improvement, Domino's Pizza had had three press releases in less than the last month concerning digital improvements. First it announced it will accept orders using Google wallet. Second, it unveiled its new iPad app that will take the experience "to a whole new level." Third, Domino's Pizza added a group-ordering tool. This tool allows you to quickly order pizzas for 50 or 100 random people at the office, job site, or birthday party, and it helps you figure out how many pizzas and which toppings to get quickly.

The goal is to make your life easier when ordering pizza. With Domino's Pizza and Papa John's, ordering is actually fun and a pleasure. With Pizza Hut, it's such a frustrating chore that I almost threw my smartphone across the room and picked up a real phone.

Novak stated during the Yum! Brands conference call there is a high sense of urgency for its digital-ordering technology to get upgraded. Now that Pizza Hut seems to have gotten a much-needed first-quarter wake-up call, expect to see numerous changes fast.

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Nickey Friedman has no position in any stocks mentioned. The Motley Fool owns shares of PZZA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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