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Pizza Hut slashes mobile ordering prices in a bid to entice diners

Pizza Hut to unveil new Uber like app.
Source: Pizza Hut
Pizza Hut to unveil new Uber like app.

As Domino's digital ordering technology helps power its industry-leading growth, competitor Pizza Hut is trying to grab a larger piece of the mobile pie.

In an effort to entice new and existing users, Pizza Hut is offering customers 50 percent off full-price pizzas that are ordered online. The deal is available on the company's website and through its mobile app from Jan. 2 to Jan. 9.

"Pizza Hut is constantly pursuing ways to simplify the ordering experience," Doug Terfehr, senior director of public relations and partnerships at Pizza Hut, told CNBC. "Digital ordering continues to be our fastest-growing segment of purchase with mobile playing the largest role in that growth."

Like many of its competitors, Pizza Hut was an early adopter of digital and mobile ordering. Roughly half of the company's delivery and carryout orders are placed digitally, with 70 percent of its online sales coming from mobile devices.

But the company has incentives to push these sales even higher. Not only do mobile orders offer customers an easier way to pay, but their average check is higher than those generated from in-store orders.

Across the industry, mobile order checks could be as much as 20 to 30 percent higher than a traditional in-store check, according to Andrew Feinberg, a principal at consulting group Deloitte. That's because customers have more time to consider their options, and restaurants are better able to upsell.

Upselling is a technique by which a chain can offer upgrades or add-ons to meals at regular or a discounted price, in an attempt to ring up a higher sale.

"This is not about digital. This is not about mobile order and pay. It's really about customer experience," Feinberg told CNBC, speaking about mobile ordering in general. "Customer experience is the linchpin for all of this. And the best brands, the best restaurant companies, are thinking first about customer experience and choosing a road map of digital capabilities specific to their brand."

Feinberg noted that many restaurants are adapting to their customers' changing spending habits, allowing for cash transactions, credit cards, Apple Pay, Google Android Pay, Samsung Pay and other forms of mobile payments.

"Consumers want an easy-to-use and secure mobile payment solution," said Austen Mulinder, president and CEO of Ziosk, a technology company that produces tablets with a menu, ordering options, games and a payment system.

The company's tablets can be found at Chili's Grill & Bar, Olive Garden and Red Robin.

"When a restaurant goes all in on mobile payment, they will also adopt a mobile wallet strategy too," Mulinder added. "This means that guests can store their membership credentials and offers in their mobile wallet. So a guest can log in to [a loyalty program], earn and/or redeem points and offers, and pay by tapping their phone."

Digital orders have increased by 45 percent across the industry since 2014, according to The NPD Group, and now account for nearly 1.7 billion in food service visits.

Last quarter, digital ordering, improved product quality and the "Piece of the Pie Rewards" loyalty program were driving factors for Domino's 13 percent jump in same-store sales.

"Mobile ordering and payment will grow exponentially," Bonnie Riggs, a restaurant analyst at NPD, told CNBC. "Domino's is a prime example of the opportunity that exists with this technology. The chain has been on the leading edge of creating ways for customers to place their orders using numerous platforms. This is convenience at its best. Look for many restaurant operators to follow suit and capitalize on this growth opportunity."