Pizza Hut bets on LatAm, Caribbean with Telepizza deal

BENGALURU: Yum Brands Inc’s Pizza Hut said it signed a franchise agreement with Madrid-based Telepizza Group SA, in a deal that would make the US company the largest pizza chain in Latin America and the Caribbean.

Telepizza will oversee nearly 1,000 Pizza Huts and contribute nearly 1,500 of its stores to Pizza Hut’s global unit count across all markets including Spain, Portugal and Switzerland.

Over a period of time, Telepizza would convert all its stores in Latin America (excluding Brazil) and the Caribbean into Pizza Hut stores, Milind Pant, Pizza Hut International president told Reuters.

Latin America accounted for 6% of Pizza Hut’s total sales in 2017, according to Yum Brands’ first-quarter earnings release.

“As of now... we are not thinking of any more franchise alliances,” Pant said.

Telepizza Group aims to open at least 1,300 new stores over the next 10 years, and 2,550 stores over 20 years. The vast majority of the new store openings will be Pizza Hut, including all stores in Latin America and the Caribbean.

The deal would make Telepizza, Pizza Hut’s largest master franchisee globally by store count.

Pizza Hut has been posting weak sales and has missing same-store sales estimates for the last two quarters, according to Consensus Metrix.

The Telepizza deal is not expected to have a significant impact on Yum Brands’ core operating results or cash flows over the next few years, the companies said.

The Spanish chain, which operates in 23 countries and owns brands such as Telepizza and Jeno’s Pizza, reported sales of 561mil (US$664.28mil) in 2017. — Reuters