Pizza Hut partnering with Telepizza to grow global footprint
In what sounds a little like the a pizza-fied version of the UN, Pizza Hut has joined hands with the world's largest non-U.S. pizza delivery company — Telepizza Group — in a master franchise alliance designed to grow both companies across Latin America (excluding Brazil), the Caribbean, Spain , Portugal and Switzerland.
A news release said the landmark deal:
- Doubles Pizza Hut's footprint in the alliance-covered regions designated above.
- Pushes Pizza Hut to the top category position across Latin America and the Caribbean in unit count.
- Elevates Telepizza Group to the status of Pizza Hut's largest master franchisee globally by unit count.
- Makes Telepizza a top multi-country pizza operator worldwide.
"This ground-breaking deal is a major milestone in our journey to become the most loved, fastest growing pizza brand in the world, and Telepizza Group is the ideal partner, with the capability, commitment and capital to accelerate Pizza Hut's expansion into key high-growth regions like Latin America," Pizza Hut International President Milind Pant, said in the release. "Geographically, this long-term, strategic alliance with Telepizza Group will make Pizza Hut accessible to more consumers over time, helping fulfill our mission of making it easier to get a better quality pizza."
Telepizza Group Executive Chairman and CEO Pablo Juantegui said the alliance is designed to sync with the company's strategic plan to boost pizza delivery's customer experience aspects through a management model focused on that very goal and "best-in-class operations."
"The deal accelerates our global growth plan, nearly doubles the scale of our business and extends our international reach to 37 countries, which represent more than 500 million potential consumers," Juantegui said. "The aspirations and capabilities of Telepizza Group and Pizza Hut International are complementary, and we are confident this deal will drive significant value for customers, employees, franchisees and shareholders as it represents an ideal platform for future growth opportunities."
Highlights of the alliance include:
- Spain and Portugal: Telepizza is already Spain's a leading player, and in Portugal, Telepizza will also operate both brands' stores now as well as overseeing Pizza Hut franchisees. Telepizza will use Pizza Hut's top capabilities and signature products there.
- Latin America (excluding Brazil) and the Caribbean: Telepizza Group will "progressively" convert stores of the brand there to Pizza Huts, while using the Yum Brand's overall awareness to grow and enter key markets. As the area's master franchisee in these areas, Telepizza Group will oversee Pizza Hut franchisees who will continue to operate Pizza Hut stores there.
- Unit Development Growth. Telepizza Group will aim to open 1,300 or more stores by 2028, in the covered areas with a total growth of 2,550 stores by 2038, and the vast majority of the newly opened locations falling under the Pizza Hut brand, including all stores in Latin America and the Caribbean.
- Supply Chain: Telepizza Group will manage Pizza Hut's supply chain in Latin America (excluding Brazil), the Caribbean, Spain (including Andorra), Portugal and Switzerland and will become an authorized supplier of Pizza Hut establishments. Both groups will explore further possibilities of collaboration in this field worldwide.
- Telepizza overall impact: The alliance will nearly double Telepizza Group's store portfolio to more than 2,500 units and $1.3 billion (USD) in system sales while putting the brand in 37 countries with more than 500 million potential consumers. It is aiming for $120 million (USD) EBITDA by 2021.
- Pizza Hut overall impact: Pizza Hut moves up to No. 1 in unit count for pizza in Latin America and the Caribbean. In all the alliance-covered regions Telepizza Group will now oversee nearly 1,000 Pizza Huts and contribute nearly 1,500 of its stores to Pizza Hut's global unit count. Pizza Hut International franchisees in the area will fall under Telepizza Group management. Pizza Hut sees this as a long-term initiative to grow faster and increase profit growth, as well in what will be a combined initial unit count of nearly 2,500 stores. Nonetheless, the company said it is still not expected to significantly impact Yum! Brands' core operating results or cash flows over the next few years.
"Telepizza Group is the ideal partner to help us deliver on this focus across Latin America (excluding Brazil), the Caribbean, Spain, Portugal and Switzerland, because of their incredible depth and capability in franchise operations and supply chain management," Pizza Hut Global Chief Growth Officer Enrique Ramirez, said in the release. "Leveraging the strong experience of our Pizza Hut franchisees, we expect this to accelerate the growth of Pizza Hut with a best-of-both approach."