Pizza Hut’s ongoing brand repositioning towards a modern delivery concept includes a slow-but-steady conversion of dine-in assets to smaller stores optimized for delivery along with progress in the form of: product quality enhancements; stronger value offerings (including national price points); increased national ad spend to support value and its NFL & NCAA sponsorships; a 3-minute delivery speed improvement; 2H18 kick-off of Hut Rewards; mobile app updates in late 2017; higher customer satisfaction scores; and a return of its throwback Red Roof logo. Recent product quality initiatives include: added cheese on pizzas; menu rationalization (fewer topping options) which helps execution; and clean ingredient initiatives. More recently, its Pan Pizza was reformulated with a different cheese blend, crispier crust & more sauce and is now baked in a newly engineered pan. Fortunately, the brand appears to be restoring its core menu equity around innovation and, while everyday value has been difficult to implement given a bi-furcated system marked by different cost structures for its dine-in & Delco assets, the brand has made progress in this regard with steady value layers that include: its $5 ‘N Up Lineup (choose 2 for $10+) which serves as a platform for new news; and 2 month promotion windows around its $7.99 online/pick-up price point. More so, significant COGs out-performance suggests a potential for Pizza Hut to further improve its value equation. Also, we believe WingStreet provides the brand with a key competitive distinction that could be better leveraged – taking a cue from Wingstop’s industry leading comp performance. All-the-same, Pizza Hut’s challenges are significant which reflects that while 90% of its business is either takeout or delivery, 46% of traditional system stores (excluding 1,350 dual-brand express units) include dining rooms and are not ideally set-up for delivery. The much-needed conversion of dine-in assets (46% of traditional stores) has been relatively slow at a time when the chain’s dine-in comps are underperforming the system’s off-premise sales by high-single-digits. Also, the system’s struggle with implementing everyday value became apparent in 3Q19’s -3% comps decline which was attributable to a decision to allow operators to use higher price points in its $5 Lineup, helping margins at the expense of traffic. Unfortunately, these challenges are proving troublesome to some over-leveraged operators that are poorly situated to comply with the system’s mandate to transform dine-in assets to Delcos in better markets. In conclusion, while Pizza Hut’s turn-around strategy is very sound, the prevalence and complications of its dine-in assets means that the system’s progress will require patience while new capital is sourced to complete the system’s necessary asset conversion plan.