- Title: Pizza brands battle for Russia's far-flung regions
- Date: 21st July 2017
- Summary: MOSCOW, RUSSIA (RECENT - JULY 14, 2017) (REUTERS) DOMINO'S PIZZA RESTAURANT / DELIVERY CAR DRIVING BY CUSTOMER ORDERING MENU SCREEN OVER COUNTER CUSTOMERS AT COUNTER DOMINO'S WEBSITE ADVERTISED ON SCREEN VARIOUS OF COOK MAKING PIZZA IN BACK PIZZA RUSSIAN HEAD AT DP EURASIA, GUVENC DONMEZ, SPEAKING TO JOURNALIST (SOUNDBITE) (English) RUSSIAN HEAD AT DP EURASIA, GUVENC DONMEZ, SAYING: "Russian market is a huge market and we see that especially for the quick service restaurants - we are defined as that. The market is really really huge, especially for our business right now. We are seeing a potential of 1,500 stores in Russia for Domino's in the long term and we definitely want to reach that potential in Russia." VARIOUS OF PIZZA BEING BROUGHT TO CUSTOMER (SOUNDBITE) (English) RUSSIAN HEAD AT DP EURASIA, GUVENC DONMEZ, SAYING: "What I can tell you for this year particularly we are investing out 500 million rubles in total into the Russian business. You know, a big part of this is going for the expansion." VARIOUS OF COOK PUTTING CHEESE ON PIZZA (SOUNDBITE) (English) RUSSIAN HEAD AT DP EURASIA, GUVENC DONMEZ, SAYING: "And going forward I would say that in the mid-term we expect to invest into the Russian business around 300 million rubles every year." VARIOUS OF CUSTOMERS IN RESTAURANT (SOUNDBITE) (English) RUSSIAN HEAD AT DP EURASIA, GUVENC DONMEZ, SAYING: "Overall, what's really good with our business, especially for the franchisees is the payback period. The expected payback period is less than three years and given the economic environment this is very attractive return. And secondly, this is a very nice cash business. So, most of the stores, they start making profit from day one because of already existing demand and the already existing e-commerce infrastructure." DOMINO'S PIZZA DELIVERY VEHICLES OUTSIDE RESTAURANT MOSCOW, RUSSIA (JULY 21, 2017) (REUTERS) CUSTOMERS AT COUNTER OF PAPA JOHN'S RESTAURANT PAPA JOHN'S SIGN IN RUSSIAN VARIOUS OF COOKS PREPARING PIZZA VARIOUS OF PIZZA GOING INTO COOKING MACHINE COOK REMOVING PIZZA FROM MACHINE SAUCE CANS ON SHELF WORKER CARRYING PIZZA IN BOX TO COUNTER PIZZA BOXES CUSTOMER PICKING UP PIZZA AND LEAVING (SOUNDBITE) (English) HEAD OF PAPA JOHN'S HOLDING IN RUSSIA AND BELARUS, CHRISTOPHER WYNNE, SAYING: "We see great opportunity in the Russian regions. First of course we'll focus on the larger cities outside of Moscow and then in the next two years we'll begin to focus on the cities with populations around 100,000 people. We believe that in the Russian regions there is a possibility to open another two to three hundred stores in the next five years." PAPA JOHN'S LOGO IN RUSSIAN ON SHIRT (SOUNDBITE) (English) HEAD OF PAPA JOHN'S HOLDING IN RUSSIA AND BELARUS, CHRISTOPHER WYNNE, SAYING: "Food delivery is a new concept for a lot of Russians in the regions, so their habits are slightly different than even those habits that we see here in Moscow. So we have to educate the consumer about the product and about the service of delivering pizzas home. Having done that we obviously have a significant challenge in terms of the logistics, getting our product to the regions. The infrastructure in Russia currently is obviously at a different level than we see in a lot of other countries. And maintaining quality across Russia. We want to sell the same quality pizza in Novosibirsk that we sell in Moscow." PAPA JOHN'S LOGO IN RUSSIAN ON WALL (SOUNDBITE) (English) HEAD OF PAPA JOHN'S HOLDING IN RUSSIA AND BELARUS, CHRISTOPHER WYNNE, SAYING: "For the next five years we plan to open 60 to 80 stores per year. And again we believe that obviously the number of stores is important, but using the Internet to leverage our fixed assets we believe that we can continue to maximise the sales from each individual store. And we think that the total potential in Russia is around 600 stores currently." DELIVERY BOY PUTTING PIZZA INTO BAG DELIVERY BOY EXITING RESTAURANT VARIOUS OF PAPA JOHN'S DELIVERY VEHICLES
- Embargoed: 4th August 2017 16:03
- Keywords: Russia business Papa John's Domino's pizza Russia pizza restaurant expansion fast-food market
- Location: MOSCOW, RUSSIA
- City: MOSCOW, RUSSIA
- Country: Russia
- Topics: Economic Events
- Reuters ID: LVA0016QNUEK9
- Aspect Ratio: 16:9
- Story Text: Global pizza brands Domino's and Papa John's are preparing an assault on Russia's provinces, betting they can turn a profit far from Moscow as online card payments become more widespread and consumers get to know foreign brands better.
While stay-at-home Muscovites can order an array of international pizza brands from Sbarro to Domino's to Papa John's, regional cities such as Rostov-on-Don and Nizhny Novgorod are still chiefly the preserve of small local chains.
Multiple challenges have kept global fast food brands wedded to major Russian cities, including patchy transport links, bureaucratic delays, finding an army of chefs who can maintain quality, as well as the sheer cost of shipping often perishable ingredients across a vast country that spans 11 time zones.
Western fast food chains have also had to adapt menus to suit Russian palates better, once the allure of new foreign tastes has worn off. One of Domino's best-selling pizzas is the "Russian" with 13 toppings including potato, beef, pork, bacon, mushrooms, pepperoni and cheese to help ward off the cold.
But Domino's Pizza's Russian franchisee, DP Eurasia, believes the time is now right to expand beyond Moscow, where sales at the 76 outlets it had at the end of March are far outstripping growth in its main market Turkey.
Like-for-like sales in Russia have risen 30.1 percent this year up to May 21, whereas the comparable figure for Turkey was 6.3 percent growth.
Domino's was Russia's third-largest pizza chain last year yet its share of the fragmented market stood at less than 2 percent, according to Euromonitor International.
DP Eurasia's Russian head said he saw room for 1,500 Domino's outlets in the longer term.
For now, the company is using part of the 148 million pounds ($192 million) it raised listing shares in London in June to add 40 outlets this year, venturing as far as Krasnodar, 1,200 kilometres (750 miles) south of Moscow.
Domino's closest rival is not standing idle. The Russian franchise of US chain Papa John's International Inc. sees room for 60 to 80 store openings each year over the next five years.
A Papa John's Russia spokesman told Reuters the company had imported 90 percent of products before the 2014 food ban came in but had replaced all its suppliers within six months.
DP Eurasia acknowledged the restrictions could adversely affect its business, even though it too had managed to replace the banned imports.
It also said there could be challenges in rolling out the franchise in places with less dense populations than Moscow but believes it can stay profitable thanks to greater purchasing power and economies of scale. - Copyright Holder: REUTERS
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