Shakey’s Pizza [PIZZA 8.35 5.70%] [link], owned by the Po Family of Century Pacific [CNPF 23.50 unch] fame, saw its net income increase 148% to P121 million in FY21, beating the P254 million loss that it booked in FY20.
PIZZA’s systemwide sales were up 6% (up 18% in Q4 y/y), and the company beat its 2021 expansion goal of 30 stores by building and opening 37 new locations.
PIZZA said that it plans to further “accelerate” expansion as part of this “re-opening play” by targeting 42 new stores for the traditional PIZZA brands in 2022, plus another 150 Potato Corner locations.
PIZZA bought Potato Corner from its Singapore-based parent company in December 2021 for just P161 million, and assumed complete control of the brand that has more than 1,000 french fry kiosks in the Philippines and other major markets in SE Asia.
In the press release, PIZZA said that delivery will be a “key pillar” of growth going forward, and will be supported by its new “Shakey’s Super App” and “31-minute delivery” deal in Metro Manila.
PIZZA said that, barring any major disruptions, it expects to beat its pre-pandemic bottom-line in 2023.
MB BOTTOM-LINE
I was really skeptical of PIZZA back during the dark days of the initial lockdown in 2020, because it seemed like the company was caught by surprise when the gradual shift from in-store to out-store dining was suddenly forced to happen basically overnight.
It suffered losses that were natural for a company dependent on in-store dining, but the larger questions asked of PIZZA’s management were always related to what happens next.
How would PIZZA adapt its current in-store model to play nicely with the dine-out preference that was expected to become dominant?
How could PIZZA pivot its portfolio of brands to better match those growing preferences in a way that was most profitable for PIZZA shareholders?
It seems like PIZZA’s management has borrowed a page out of the Fruitas [FRUIT 1.12 0.88%] playbook, and leaned into growing itself as an app-based delivery platform.
First, by developing the app itself, but later by acquiring and developing brands that are better suited for delivery and “location lite” installations, like R&B Milk Tea, and especially Potato Corner.
I love the Potato Corner acquisition, partly because I freaking love eating Potato Corner food, but also because it seems like the name recognition and coverage of this brand is greater than the price-tag that PIZZA paid to take control of the whole thing.
Potato Corner products are the perfect “non-meal” gap filler to draw users to the Shakey’s Super App for merienda, and the name is just so well-known that it is likely to draw people into the app ecosystem specifically for Potato Corner, who might also stick around for some Shakey’s Pizza or Peri-Peri chicken.
This kind of thinking should be considered the bare minimum, though, for companies in this sector. Having a delivery strategy is no longer a differentiator; the real differentiator is the ability to generate profits through the new model at a rate that is comparable to pre-pandemic levels.
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