Telepizza

Résumé du document

TP has grown from a single store in 1988 to the largest pizza chain in Spain. At the end of 1997 they had 399 stores and an estimated market share of 62% in Spain. But what made it so successful? Telepizza has an almost obsessive commitment to growth. At the moment, they have three possibilities, namely expansion within the domestic pizza market, international expansion or introducing new concepts as TeleGrill. • Domestic Expansion: Growth has been at 20% p.a. during the last years and Telepizza is positive for an ongoing growth by comparisons to the US-market. TP knows on the other hand that market penetration is going to be a tough job since there is already a TP in every Spanish city with more than 20.000 inhabitants,. Hence, domestic growth can mainly be obtained by up-sizing the volume per order.
In my opinion, domestic growth should be pursued but not as a primary means of expansion.

Extraits

[...] Case Telepizza 1. Why has Telepizza done so well? TP has grown from a single store in 1988 to the largest pizza chain in Spain. At the end of 1997 they had 399 stores and an estimated market share of 62% in Spain. But what made it so successful? There are several reasons for that in the TP concept: Management philosophy: TP only hires the best people and puts a lot of effort on development. This leads to an outstanding commitment and high flexibility. [...]

[...] They either come up with a moderate growth or are stagnating. So why should TP outperform all its competitors? As we have seen, TP offers a new service with a great acceptance by the Spanish (and partly by the international) market. But, to get it to the point, share price is the projection of all the (here: outstanding!) future expectations. So in case that forecasts are more positive than the real development, share price will fall. Reasons for that could be that TP has a ‘cool' and trendy image at the moment, but people get fed up with eating pizza and prefer eating at McDonalds in the near future. [...]

[...] TP hopes to introduce a new concept each year. Even though it seems to be easy to repeat the TP success it is highly questionable in my eyes if TP does not cannibalize itself. Due to their strong brand and the similarities between TG and TP, people might think they still eat at TP when eating at TG (and even if they do not, they still eat fast food). Since people like variety, it could be a hard task to keep up with growing expectations by establishing new brands. [...]

[...] Or that opening up new stores even more rapidly brings up problems (e.g. finding good staff and franchisees on short notice). Or those customers do not like TP in other countries where they are supposed to grow now at the same growth rate they did in Spain. So to make it short, share price is based on more than positive expectations and TP will have to try hard to meet them, especially where the above mentioned factors that made TP successful are partly not maintainable as the company gets ‘supersized'. [...]

[...] TP offers promotions and a Kid's Club. They are centrally producing their dough in Spain and buy the other ingredients from two or three manufacturers in order to ensure consistent quality and taste. Apart from the new and appropriate management concept, market features were in favour of TP, because the pizza delivery market in Spain was fairly underdeveloped Assessment of growth options Telepizza has an almost obsessive commitment to growth. At the moment, they have three possibilities, namely expansion within the domestic pizza market, international expansion or introducing new concepts as TeleGrill. [...]