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By Brenda Goh
SHANGHAI (Reuters) - In a Shanghai bistro, surrounded by brass trimmed lamps and Italian marble, models and Chinese stars sported outfits of black, white and electric purple, the signature colors of veteran American fashion designer Anna Sui.
The catwalk-style event is no fashion show, however. Instead it is part of a major push by fast food giant Yum China Holdings Inc (YUMC.N) to give its Pizza Hut brand a high-end makeover amid rising competition and flagging sales.
The glitzy store and haute couture underscore a sharp strategic shift Pizza Hut is taking to revive its fortunes. The pizza chain has experienced tumbling same store sales this year that have dragged down Yum China's overall growth.
"The brand needs to be somehow rejuvenated," said Leon Zhang, Shanghai-based partner at branding consultancy Prophet, highlighting a rise in health-focused consumers and a growing array of options for Chinese diners that have hit the chain.
Pizza Hut has taken note. Alongside the tie-up with Sui - more at home at fashion shows in New York or Milan - it will open a test center for innovative products in Nanjing this week and roll out new "Kiosk" and "Express" store formats.
The chain has removed some badly received products - such as pizza topped with expensive abalone shellfish - and shut some concept stores, including one with robot waiters.
Pizza Hut says it has spent at least $60 million in upgrading its products since September last year and is introducing new technologies such as those allowing customers to order food by scanning QR codes on the tables.
Jeff Kuai, the pizza chain's general manager, said the brand had "streamlined" its menu and bolstered its online presence to catch up with its better-performing sister brand, fried chicken chain KFC.
"We've learned a lot from the KFC turnaround and are making progress on all aspects of the Pizza Hut revitalization plan," Kuai said in comments sent to Reuters. "We are confident in our revitalization plan and committed to returning the brand to growth."
STANDING OUT
The Pizza Hut turnaround is not Yum's first salvage job in China. The firm had to restore confidence in all its brands after a food scare in 2012 and again in 2014. In 2015 it opened a high-end Italian restaurant as a test "lab" in Shanghai.
The New York-listed firm, spun off from Yum Brands Inc (YUM.N) in 2016, owns Pizza Hut, KFC and Taco Bell in the country and is the largest fast food operator in China with more than 8,100 outlets. It is valued at $13.4 billion and looking to more than double its number of stores to 20,000 in the long-run.