Pizza Hut: Fairy tale comes true as Pepsi Co buys the company (1977)
By Paul Stevens – The Atlanta Constitution (Georgia) November 6, 1977
Wichita, Kansas — Frank Carney shielded his eyes from the sun’s glare and pressed his nose to a window of the small brick building to peer into the roots of his success.
“I heard someone tried to start another restaurant in here a few years ago,” he said after scanning the vacant interior. “I guess he hoped there still was some magic left in the place. But they didn’t make it.”
There appeared to be magic at the site on South Bluff Street in 1958, when Carney and his brother, Dan, opened a pizza parlor that has blossomed into Pizza Hut Inc — the nation’s largest pizza restaurant chain.
“It was almost like a damn fairy tale,” mused Carney. After all, he said, who could expect a nationwide chain of 3,000 restaurants and sales of $550 million to emerge from the handiwork of two brothers who had to borrow $600 from their mother to open the business, and who knew nothing then about making pizza?
But it happened. And after experiencing one of the most dizzying growth rates in the food industry, Carney and Pizza Hut are about to embark on a new path.
Pizza Hut will be swallowed whole by the PepsiCo Inc., if stockholders of the Wichita-based pizza firm approve a merger agreement Monday. Carney says approval is certain.
If he’s right, Pizza Hut will join such firms as Frito-Lay and Wilson Sporting Goods as subsidiaries of PepsiCo. Carney, who called the shots for Pizza Hut for 19 years, will be working under someone for the first time in his life.
But the 39-year-old Wichita man, who dropped out of college to start the venture, will be financially rewarded for the loss of freedom. His shares of Pizza Hut common stock will be converted into PepsiCo stock worth about $15 million, depending on the market price Monday. He will join the PepsiCo board of directors and remain president of Pizza Hut.
“I’m probably going to have some reaction on the emotional side when the deal goes through,” Carney said. “But overall the way it rationalizes out with me is that I really believe PepsiCo is a fine company, but I think Pizza Hut will have a lot to do with the future dynamics of that company.”
“So we’re not closing the book, we’re just beginning another chapter. A new chapter, as far as I’m concerned. I fully intend for Pizza Hut to be the fastest-growing subsidiary in PepsiCo. I fully intend for the food service division, if we perform, not only to be the fastest-growing division, but to probably be the largest division in PepsiCo. So my focus is out there.”
Financial need is a strong motivation for some companies absorbed in mergers, but it was not the case with Pizza Hut. The firm’s growth rate is on target with Carney’s goal of $1 billion in sales by the early 1980s. Pizza Hut averages opening a new restaurant every day.
But diversification has long been a goal of Carney, who believes that no one food service operation, with the exception of coffee shops, can appeal to all ages of the population.
Pizza Hut acquired other specialty operations in the late 1960s, but incurred substantial losses and sold them. A year ago this month, Carney and other board members decided that instead of seeking to absorb other food firms, Pizza Hut should join a larger company.
Pizza Hut launched a search for large corporations that were making acquisitions and were compatible with a restaurant business.
The search narrowed to five firms, and Pepsi-Co was chosen. Carney expects the merger to have no effect on the rapid growth of the chain, which currently is testing markets near New York City.
Dan Carney, who dropped out of active participation in Pizza Hut management five years ago, also will be a major PepsiCo stockholder with common stock worth about $11 million, if the merger goes through as expected. But brother Frank plans to stay active. “I’ve got to perform or I don’t get anywhere but out,” he said.
Meantime, down on Bluff Street, five miles west of the new $10 million headquarters building that Pizza Hut will soon occupy, the old brick structure gathers dust and weeds while awaiting another tenant.
Vintage Pizza Hut food & restaurants in 1970
The outside of an old Pizza Hut, with its iconic roof design (1970)
Inside were tables covered with red and white checked tablecloths
A place for kids, families & couples (1971)
Pizza Hut promotions & sponsorships (1973)
PR materials include Rich Little, basketball teams, and another version of the company logo
Making the pizza pies, ’70s style
Great spaghetti! Pizza Hut on-table promo
A retro-style Pizza Hut store
Vintage Pizza Huts around the world (1974)
Pizza Hut pizza is fast becoming an international food. Foreign operations have grown successfully and are expected to be greatly expanded in the coming years.
Forty-seven company-owned and franchised Pizza Huts are now operating in Mexico, Canada, Costa Rica, Australia, West Germany, and England. Six are under construction and two others have developed to the lease-signing stage. About half are company-owned and half franchised units. Inquiries for franchising have been received from many countries throughout the world.
A joint venture between Pizza Hut, Inc. and Sumitomo Shoji Kaisha, Ltd. has resulted in the formation of Pizza Hut Japan, Ltd., which expects to open its first Hut in fiscal 1974. Australia, followed by Canada, leads in Hut activity, both in number of operating units and in total volume of sales.
The pizza served in the foreign Huts is the same basic product as served in the U.S.A. — thin crust, spicy sauce, mild cheese, and lots of topping.
The most noticeable difference in the product is its presentation, especially in Germany. To match the expected dining atmosphere more nearly, the Pizza Hut menu often includes a full wine list. The Operations Manual has been translated into German, Spanish, and soon will be translated into Japanese.
Pizza Hut International furnishes management personnel to assist in each country; however, all employees are hired from the local community.
Family-friendly vintage Pizza Hut restaurants in 1974
How they made the pizza in the kitchen in 1974
Fresh food & ingredients seen in 1976
Food & menus at vintage Pizza Huts in 1976
From Cavatini oven-baked pasta to Thin ‘n Crispy or Thick ‘n Chewy pizza, there’s a delicious solution to family appetites at a Pizza Hut restaurant.
Pizza Hut to-go
The Pizza Hut system’s prompt carryout service provides the satisfaction required by customers, in taste in quality, for today’s active lifestyle.
Thick and chewy under their roof (1976)
“There are a lot of good things under our roof” was the new advertising theme adopted during the year. With our expanding menu, this theme clearly shows the appealing food items available to our customers.
“Thick ‘n Chewy” pizza, a second pizza product introduction was completed in the early fall and by the end of fiscal 1976, and represented approximately 20 percent of our total restaurant sales.