Editor's pick: Originally published Jan. 4. Updated to add analyst comments and include details on Burger King's new value platform.
In an effort to bounce back from a disappointing 2015, Pizza Hut is hoping five bucks is too tasty of a deal for diners to pass up.
Starting Monday, the Yum! Brands (YUM) -owned pizza giant, which operates more than 6,000 locations in the U.S., will begin offering what it calls the "$5 Flavor Menu." The menu offers consumers a choice of several items, including a medium one-topping pizza, eight buffalo wings, and a pasta dish, for $5 each. The only catches: a person has to order two or more items from the menu and there is an extra charge for pan pizza, which varies depending on location.
"Five dollars is a price point that is easily recognizable by consumers," said Jeff Fox, chief brand and concept officer at Pizza Hut in an interview. Fox added that "five dollars is probably a category breaking price point." The price certainly breaks from the typical cost of a medium pizza at Pizza Hut, which normally goes for between $9 to $10.
The five-dollar menu comes on the heels of Pizza Hut's re-commitment to value showing signs of gaining traction in what has been an ultra-competitive fast food pizza market. Late last year, the company launched the "Anytime Deal" (two medium pizzas for $6.99 each), and the "Triple Treat Box" (two medium one-topping pizzas, an order of breadsticks and a Hershey's ultimate chocolate chip cookie, all for $19.99).
Partly as a result of its new promotions, Yum! expects Pizza Hut's same-store sales in the U.S. to rise 3% in the fourth quarter after being unchanged in the third quarter.
Fox declined to comment whether the items on the new menu will be profitable, or are simply loss leaders to get people through the doors and trading up to more expensive items.