Domino’s closes stores in Italy for not being able to beat traditional pizzas

Domino’s Pizza closed its stores in Italy, after seven years in which the American brand struggled to win over customers in the birthplace of pizza.

The fast-food chain’s Italian franchise partner, ePizza SpA, which operated 29 branches across the country, filed for bankruptcy in early April.

As part of the insolvency proceedings, he obtained judicial protection for 90 days from his creditors, which prevented them from demanding payments or the attachment of company assets. But the grace period ended last month.

Domino’s Italian operations have succumbed to a combination of declining sales, rising operating costs, high debt and “an exponential rise” in competition from traditional pizzerias that now offer delivery via apps such as Glovo, Just Eat and Deliveroo, according to April bankruptcy filings.

The Michigan-based pizzeria chain has about 18,800 stores in 90 markets around the world, most run by franchisees.

In early 2020, the American chain announced ambitious plans to add 850 stores in Italy and reach 2% market share by 2030, but the pandemic has pushed its Italian franchise partner to the limit. “The Covid-19 pandemic and the long and successive restrictions have seriously harmed ePizza,” the bankruptcy documents add.

Domino’s stopped accepting delivery orders on its Italian site on July 29. Domino’s Pizza Inc, a US company, did not immediately respond to a request for comment. Marcelo Bottoli, chairman and largest shareholder of ePizza SpA, declined to comment when contacted by the Financial Times.

Last month, German supermarket app Gorillas said it was withdrawing from the Italian market, as well as several other European countries.

The news of the Domino’s closure in Italy, reported for the first time by Bloomberg, is yet another indication of the uncertain fate of American restaurant brands hoping to be successful among discerning Italian consumers.

The arrival of the first Starbucks in Italy in 2018 was met with skepticism. But Howard Schultz, the company’s CEO, said last week that the cafe chain, which operates a single cafe in Milan, was “flourishing” and would add two branches, in Rome and Florence.

In 2021, ePizza SpA recorded sales of 10.4 million euros (R$ 54.5 million), an increase of 8.6% compared to the previous year, but 36.8% below the sales target for that year. . In December 2021, the company’s cash reserves were just 492 thousand euros (R$ 2.57 million), almost 80% below budget.

In an update released in April, the company blamed poor sales performance on increased competition from “mom and dad” restaurants, along with “vindictive spending” by consumers at restaurants as pandemic restrictions eased.

(Collaborated by Donato Paolo Mancini)

Translated by Luiz Roberto M. Gonçalves