After negotiations last year with BK Brasil — which operates the Burger King and Popeyes chains in the country — fell apart, the Domino’s pizzeria chain is looking inward to accelerate expansion this year. The company plans to open 35 stores this year, with growth especially in the Northeast region and with the attraction of new franchisees.
The strategy comes in line with the most recent investment: in September, the chain opened its second pasta factory in Brazil, in Fortaleza, Ceará. Another focus is to further increase the strength of digital sales, which are expected to receive investments of R$10 million this year. Among the projects are the subscription club, to be launched in the first half of the year.
“The last quarter was a record sales quarter. Now, the first quarter also started quite positive, despite the greater concern of the whole sector with inflation,” Fernando Soares, CEO of Domino’s in Brazil, told Valor.
The Brazilian operation is the fifth largest of the brand in emerging countries and the vision of the U.S. group is that the country has the potential for 1,000 stores, well above the current 327 units, of which 217 are franchisees. Domino’s has more than 18,000 stores around the world.
“The growth potential of the segment dropped after the pandemic. We managed to do well due to our greater exposure to deliveries,” he said, reinforcing the plan to reach 600 stores by 2025, but in “new formats” – with smaller stores, according to him, and even more focus on quality and delivery time.
The company does not reveal the numbers for 2021 but says that sales grew more than 12% in the year. A year earlier, sales had been R$455 million. Mr. Soares adds that the company’s revenue today goes beyond the 700,000 to 800,000 pizzas sold monthly in the country. “Our company is structured in other verticals and each area has a revenue generation, such as the franchising, distribution, engineering and technology fields. When you look at it from this perspective, the post-pandemic company has doubled in size.” The company is the one that negotiates with suppliers and then delivers the ingredients to the units.
High on the executive’s agenda is organic growth. He reveals that the demand has increased since BK Brasil and asset management company Vinci Partners, owner of DP Brasil (which is the master franchisee of Domino’s in the country), announced the end of the acquisition agreement in October.
According to the arrangement, Vinci would keep 16.4% of the shares of BK Brasil, but the deterioration of the shares months later weighed on the deal. The company, however, still has the right to exercise preference, until July, in an eventual new purchase negotiation.
“The failure [of the merger] was very friendly. It was a momentary situation caused by the economy, and the doors remained open. But we have been approached by a lot of other players. Not necessarily a complete merger, but more like ‘can I be with you at that point?’ We are attracting a lot of attention from the market,” he said. BK Brasil declined to comment.
In 2020, the sales of limited-service pizzerias — as this type of self-service and delivery restaurant is called — fell 27%, but rose again 24.8% last year, totaling R$3.48 billion, says Euromonitor. Although the category is still below the pre-pandemic period, Domino’s aims to take advantage of the 8.2% growth outlook for 2022. In an extremely scattered sector, it has numerical superiority: it controls 17.3% of the market, followed by Pizza Hut, with 7%, and Patroni, with 6%.
For this, the focus is on the control and analysis of data from the most diverse distribution channels, such as the apps, websites, WhatsApp and telephone, whose service was transferred in 2021 to a call center and the processes were digitalized. According to the executive, the service time worsened, but the ticket grew 30%. Today, 65% of orders are born in digital channels, but the ambition is to exceed 72% still in 2022.
Source: Valor International