Thailand's Pizza War, starring William Heinecke and the Pizza Company or The world of restaurants, fastfood, and pizza in Thailand.

US based "Pizza Hut" picked the wrong person to tackle with when they decided to end their association with the franchise business of William Heinecke in 2001. Instead of just accepting quietly the end of his "Thailand Pizza venture", the American born William Heinecke opened his own chain of pizza outlets in Thailand under the "Pizza Company" label and immediately took back the market share in pizza fast-food that he had built up for the American giant "Pizza Hut". Grabbing more than half the pizza market in Thailand in a matter of months.

Not stopping there, he is even planning to move against the world's biggest pizza chain "Pizza Hut" with a franchise of his "Pizza Company" into the Middle East, where American-branded businesses are not exactly in flavor at the moment.

William Heinecke, an American-born Thai citizen, likes to portray his battle with Pizza Hut as a David versus Goliath affair, and he's got a point. Baking more than 1.7 mln pizzas a day in 88 countries, the US-based Pizza Hut should by all rights have gobbled up Heinecke's Thailand based Pizza Company in one big bite.

But within six months of the March 2001 start, the Pizza Company's market share soared from zero to some 70 percent and now stands at about 60 percent to Pizza Hut's 40 percent, according to financial analysts in Thailand.

Despite the bad world economy and signs that Pizza Hut is preparing for a counteroffensive in Thailand, Heinecke plans to open two new outlets in Kuwait in the coming months and hopes for further expansion in the Middle East, China and even other Asian countries, where the sales of American owned companies such as Pizza Hut have dropped dramatically.

Pizza Hut and other American owned companies are being hurt in the Middle East by a boycott of American goods urged by Muslim preachers, students and intellectuals. Some US fast-food restaurants have closed in Egypt and Jordan while others are cutting prices and placing ads pointing to their Arab-owned and management and staff to win back customers.

The Pizza Company could profit from such a trend. A fully Thai-owned company, it has steered clear of an American-style pizza image, using Italian styled decor for its outlets and including spicy, Thai-style toppings on it's menu with even a "Tom Yam Kung Pizza," based on the famous Thai recipe of spicy-hot shrimp soup.

Heinecke also plans to move into China, where Pizza Hut will surely prove to be a vigorous competitor. Pizza Hut's sales in China are about US$1 billion, exceeding that of all fast food chains combined in Thailand. But William Heinecke won't be a total newcomer, having prepared the way before for Pizza Hut in China and even opened Pizza Hut's first outlet in China.

In Thailand, Heinecke acquired the Pizza Hut franchise in 1981 and very fast cornered about 95% of the Thai market. In 1999 a contract battle erupted and a out-of-court settlement was reached: Heinecke could continue to operate Pizza Hut outlets until January 2001, after which William Heinecke had to close down.

Heinecke wasn't defeated by this. He kept all the prime locations he had found for Pizza Hut and the vast customer database. He did new market research, and found that customers were willing to pay more if they could better pizza's with more local varieties of toppings.

Best of all, Heinecke's experienced staff numbered at some 4,000, including the 700 motorcycle delivery staff, stayed loyal to Heinecke and followed him in the new 'Pizza Company" adventure. They also got the sympathy of the Thai customers as they were a small Thai company threatened by a huge American corporation.

An analyst for Kim Eng Securities, said The Pizza Company won the war because it capitalized on its in-depth knowledge of Thailand's local market, including the Thai palette. Since people are now more discerning about pizza, they consider taste more than just the brand name and the Pizza company has developed a better pizza taste for the Thai people than Pizza Hut.

The Pizza Company plans to open more than 30 new outlets in Thailand this year, going to a total of 148, whereas Pizza Hut may add 2 to 3 new outlets to its existing 83. William Heinecke said his sales last year totaled 1.6 billion baht (US$37 million), estimating Pizza Hut did only about half of that.

American owned Pizza Hut said the focus is currently on consolidating their position in Thailand and training staff before launching any new expansions. Once these goals are reached, building new stores is easy. But if the team is not ready can't go to battle.

Pizza Hut won't give away any more of their Thailand strategy, but one thing is sure, the "Thai Pizza War episode II" will soon be shown in Thailand.