Eagle Boys pizza franchisor collapses

Credit: Dennis Wilkinson

When Domino’s Pizza International Ltd (ASX: DMP) listed on the ASX in 2005, Eagle Boys Pizza was one of the four dominant chains of pizza restaurants in Australia.

Now comes news that the franchisor of Eagle Boys Pizza has entered voluntary administration. That’s not the individual pizza stores – of which there are more than 200 – which are owned by franchisees and will continue to operate normally.

In an announcement on its website, the company says the Australian Head Franchisor has been placed in Voluntary Administration with SV Partners assuming control of day-to-day operations.

The Eagle Boys national franchise is still up for sale, but given the dominance of the market by Domino’s and its aggressive expansion, one has to wonder who’d want to take that on.

In 2005, Domino’s had 333 stores across Australia and New Zealand. Eagle Boys had around 150 stores across Australia. Pizza Hut had an estimated 310 stores at the time, while Pizza Haven had 103 stores.

At the end of December 2016, Domino’s had 681 stores across Australia and New Zealand (not to mention 467 in Europe and 432 in Japan). That’s more than double the number it had in 2005.

Pizza Hut has around 270 stores in Australia currently according to its website – suggesting the company has gone backwards since 2005. Pizza Haven Australia’s 35 stores were acquired by Eagle Boys Pizza in 2008, giving the brand 270 stores – and it has obviously closed many since then.

Stores 2005 2016
Domino’s            333             681
Pizza Hut            310             270
Eagle Boys            150             200
Pizza Haven            103                 –
Pizza Capers               12             140
Crust Pizza             193
Total            896          1,484

Source: Company websites

The pizza quick service restaurant (QSR) sector is highly competitive, as the struggles of Pizza Hut and Eagle Boys have shown.

Retail Food Group Limited (ASX: RFG) has also entered the fray with two differentiated brands – Crust Gourmet Pizza and Pizza Capers and has 335 outlets. Pizza Capers was ranked 2nd in the market according to the company in 2014 – obviously behind Domino’s.

Foolish takeaway

The pizza sector is likely to evolve again over the next 10 years or so, although Domino’s and Retail Food Group show no signs of slowing down their growth. That may come at the expense of ‘lesser’ brands like Eagle Boys and Pizza Hut.

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Motley Fool contributor Mike King has no position in any stocks mentioned. You can find Mike on Twitter @TMFKinga

The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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