Telepizza moves away from the agreement signed with Pizza Hut to face the expansion of the brand in Europe and Latin America. , the Spanish chain made a commitment to Yum!, the owner of the North American brand, to open a total of 1,300 restaurants within ten years.
After the integration of Telepizza and Pizza Hut into the new Food Delivery Brands, a year and a half ago, it reached a total of 2,700 establishments, but that number has now been reduced at the end of the first quarter to 2,270 stores and, according to the market, due to the continuing restrictions that continue to exist in many countries where they operate. However, if you also include stores outside of the Yum! -in Ireland, Russia and Angola- Food Delivery Brands would, however, have 2,457 stores, according to the company’s latest quarterly report.
Thanks to the alliance with the North American giant, Telepizza, which has sold its brand to Yum! For 10 million euros, it became the master franchisee of Pizza Hut in Latin America (with the exception of Brazil), the Caribbean region, Spain, Portugal and Switzerland, thus leaving the rest of the markets in which it was present.
in retreat
The company has thus already left Poland, Iran, the Czech Republic, the United Kingdom, Malta and France and the market also takes it for granted that there will be new closures in the coming months. Currently, the main market for Food Delivery Brands is Spain, with a total of 763 establishments (697 operating under the Telepizza brand and another 66 with Pizza Hut); the second is Portugal, with 236 stores (140 of the Spanish brand and 96 of the American brand) and the third is Mexico with 221, all of them under the Pizza Hut banner.
KKR, the US investment giant, which excluded Telepizza from the stock market in 2019, already notified its shareholders last year of the seriousness of the situation due to the coronavirus pandemic (Covid-19) in its businesses, as well as in the consequent drop in the valuation of its investee portfolio. In a document submitted to the US stock market regulator (SEC), he warned that it was “impossible to predict with certainty the full magnitude” of the impact of the pandemic, but acknowledged that he had “concluded that many of the our investments will reduce their value” compared to what they had at the end of 2019.
Red numbers
The problem is now compounded by the red numbers. The group led by Jacobo Caller announced on August 5 that it had closed the first half of the year with red numbers of 20.3 million euros, which is 47% less than the losses of 38.5 million euros of the same period of the previous year, but the data is not comparable due to the confinement that took place last year and that forced the closure of restaurants, which could only keep home delivery active.
And, although due to the pandemic, the contract was reviewed last May and that commitment was delayed one year, until 2030, far from growing, the group has closed a total of 430 stores since December 31, 2019, which which is equivalent to 16% of its entire network.
Also along the same lines, the chain’s sales grew by 8%, to 524 million euros, with a special acceleration in the second quarter, when they amounted to 270 million euros, representing 32% more.
ebitda goes up
The adjusted ebitda (gross operating result) in the first six months of the year amounted to a total of 14.8 million, 114% more than the previous year, of which almost 9 million euros correspond to the second quarter of the year, with a growth of 187%.
Despite the difficulties in opening new stores, the group’s chief executive maintains that “in recent months, we have worked on updating our business model seeking to improve the group’s efficiency, as well as promoting our expansion plan”, announcing that during the second semester new establishments will be opened “as the projects already underway are completed”.
As reported by elEconomista.es in April, after the takeover of Food Delivery Brands by KKR, the company has carried out . Thus, in recent months, Manuel Loring, CEO of the company in the EMEA region, has left the company; Fernando Frauca, CEO for Latin America; Ignacio González Barrajón, COO (Head of Operations) in the Emea Region, who joined as the new CEO of Drake Foodservices, the largest Papa John’s franchisee in the world, in the United Kingdom; and Miguel Justribó, Director of Communication.
A weakened dome
In the company environment, the departure is also expected in the coming weeks of more executives who are negotiating an agreement in this regard. Pablo Juantegui, who was executive president and CEO of the group since 2009 until last year, has remained president for the moment, but without executive functions and, according to the sources consulted, he could also leave the company in the short term. The future looks so complicated.
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