Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Yum's Pizza Hut Set for Big Growth in Latin America, Iberia

Stock MarketsMay 27, 2021 09:23AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Christiana Sciaudone

Investing.com -- Latin America will soon be home to a lot more Pizza Huts.

The pie purveyor, which has already conquered much of Asia, is projecting solid growth south of the border and in Iberia, where stores are set to more than double as the taste for America's favorite slice of Italy infiltrates local cuisines. 

That said, succeeding in the region is not without its problems -- economic downturns, currency fluctuations, inflation pressures and, of course, the occasional dictator can burn even the best-laid plans. So Pizza Hut is hedging risks as it always does, by never going it alone.

"We always partner with somebody from the country, we don't go it alone," said Enrique Ramirez, general manager for Latin America & Iberia, in a video interview earlier this month. "We have to adapt and be flexible to be successful."

Yum! Brands (NYSE:YUM) hit a record this month after announcing a dividend of 50 cents per share and a $2 billion share buyback plan, as well as strong first quarter results. After conquering much of Asia, Pizza Hut is now turning its attention to other regions with the most potential. Pizza Hut currently bring in the smallest share of revenue versus its sister brands KFC and Taco Bell, which together comprise Yum! Brands. But Pizza Hut saw the highest same-store sales growth for the first quarter of 2021, and while the U.S. was heavily responsible for that, Latin American & Iberia will lead the division's growth in units in the coming years. 

Of total Pizza Hut sales, the U.S. represents 45%, while Asia and China together lead with a total of 30%. That's followed by Latin America & Iberia, with 10% of total sales for the most recent quarter. Of more than 17,000 total global locations, the region has 2,500. That is set to more than double to 5,500 in the coming years, emphasizing the increasing importance of those markets.

Earlier this month, Pizza Hut opened its 1,000th Fast Casual DelCo (FCD) location in Guadalajara, the same city where its first-ever Mexico location opened 52 years ago. The new store model is a higher-margin concept that first rolled out in 2017 and a move away from the traditional in-store dining restaurant Pizza Hut was first known for. The stores are smaller with lower costs and faster profitability. 

"We see that the growth is mostly in delivery and carryout, that's why we're pushing that model," Ramirez said. The plan to open or renovate more such locations is in different stages of development in different parts of the world, and where the dine-in model works well and is profitable -- like in El Salvador and Peru -- it will remain.     

Currencies in Latin America are well-known for dramatic fluctuations, as well as potentially expansive inflation and a lack of trustworthy public institutions. To avoid some of those pitfalls, Pizza Hut seeks to develop local suppliers, as well as to add local flavors. 

Latin America & Iberia are expected to increase by about 6% a year in number of units, versus about 4% for overall unit growth. Latin America has 1,500 locations, with another 1,000 set to be added in Brazil and Mexico. Colombia also has room to run, and the company is eyeing markets it's not currently serving, including Argentina. The Iberian market, meanwhile, is also set to grow, adding another 500 stores from 1,000 today. In Spain, Pizza Hut also partners with Telepizza, a local brand, meaning they can build up both brands for market share.    

U.S. brands have had mixed success in Latin America, and in fact Pizza Hut was present in Argentina, for example, last century before closing shop. But it looks like now they've found a recipe that works. 

 

Yum's Pizza Hut Set for Big Growth in Latin America, Iberia
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Joseph Obrzut
jzut May 26, 2021 6:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Pizza Hut. Papa Johns. No way. Dominoes or Little Ceasers or Joes Pizza Whelling IL.
ben sc
ben sc May 26, 2021 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
pizza empanadas
Ismail Serat
Ismail Serat May 26, 2021 4:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
i need too
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email