In my opinion, the numbers still seem moderate and guaranteed growth is on the way if the new concepts succeed. Both No Pizza and Social Burgerjoint look like good brands to start with. I’m not entirely sure about the Tasty Market concept; it feels like Finns’ lunch habits demand too much heavy food. Could it succeed in good locations?
How does risk sharing work at Kotipizza? Does Kotipizza just collect license fees from restaurant owners, and the restaurant owner takes all financial responsibility? If so, that’s an absolutely brilliant business model that scales to the sky. What other competitive advantages does Kotipizza have? If someone pitches it well to me, I might buy a slice of pizza
Well, that’s not a particularly brilliant business model. Many other fast-food companies operate in the same way.
Kotipizza’s expansion opportunities in Finland are quite limited. There are pizzerias almost everywhere it makes sense to set them up, and now, during this period of good momentum, restaurant-specific sales have reached a point where significant growth through that avenue no longer seems possible.
Kotipizza’s growth must come from new business ventures, and that involves a lot of risk. They might waste large sums of money abroad in this positive atmosphere.
The pizza will probably come for the exact reason that Finland runs out of growth space. Internationalization will give more impetus to growth. The risk there is new warehouses, as entrepreneurs also take responsibility abroad. I’m pretty confident that expansion into international markets will work.
What is your trust based on? It is a completely new concept whose functionality has not yet been tested anywhere. Kotipizza practically has no experience in international markets. Expansions in this field abroad have consistently failed.
Kotipizza can, of course, succeed in its expansion, but there are definitely no guarantees. Expanding abroad will take a large chunk of revenue in marketing costs.
In the domestic market, NoPizza will continue to focus on pizza, and the pizza market is already quite saturated, so NoPizza will certainly reduce the sales of Kotipizza pizzerias to some extent, even if the concept is slightly different. In addition, quite a few different pizzerias have recently opened, where you can get Italian-style pizza at a reasonable price.
Consumer demands are still in the direction where good ingredients and quality are valued. Kotipizza has, of course, invested in this in recent years, and for that reason, consumers have moved there. However, consumer demands will continue to grow, and that still requires changes from Kotipizza to stay in the game. Kotipizza could end up in a similar situation as ABC’s restaurants. Quality does not meet consumer demands enough, and consumption shifts to higher-quality and cleaner ingredients, which chains rarely produce because volumes are smaller when food specializes.
The strength of chains is that they produce mass for the masses, but as demand increases, specialties are required, and chains cannot meet that.
You are absolutely right that there are no guarantees of success. However, Kotipizza has good logistical expertise due to Food Stock’s background support, and their CEO is well-versed in international players and competitors. I don’t think the Scandinavian restaurant consumption culture is any different from the domestic one, so expanding to Sweden, Norway, and Denmark shouldn’t be that much different in terms of marketing and operational activities? I could be wrong here, of course, correct me if you know more about international restaurant industry marketing. So, business as usual, I’d say, pizza that sells in Finland also sells in Sweden and Norway?
I wouldn’t say that raw materials would deteriorate due to chains if the procurement manager simply chooses products well; rather, it makes it more cost-effective to deliver good raw materials to restaurant customers?
@g3235286 “Expansions of this industry abroad have consistently failed.” What examples were you referring to there? Interesting point! I don’t know the industry that well.
I didn’t mean that the raw ingredients would deteriorate. Kotipizza has good prerequisites to invest in good basic ingredients. If consumer preferences specialize even further, as has been the trend recently, some want organic, others authentic Italian flavors, and others quality, affordable basic pizza. Kotipizza cannot, within its concept, offer everything to everyone; it must stick to its basic concept, which has the largest volume, even if its demand decreases in the future.
Hesburger hasn’t expanded to other Nordic countries either, even though the culture is similar Each country has its own characteristics that are required for success. In Finland, Kotipizza switched to domestic ingredients because consumers wanted it. I doubt that Finnish ingredients would be as well-received in Sweden and Norway as local ones.
If you want to expand abroad, the options are: a good brand, another competitive advantage, or adapting to local demand. Kotipizza doesn’t have any of these to such an extent that I would believe in success. If they succeed abroad, it would be based on perfect execution and luck. However, I wouldn’t give that a particularly high probability.
Hesburger, as far as I know, operates in the Baltic countries. I don’t know how successful it is, but I certainly saw it there Kotipizza’s competitive advantage, as I understand it, is its clean and high-quality ingredients and efficient supply chain. We’ll see if that’s enough for No Pizza when they expand abroad. I don’t believe they need to serve all customers; those who want organic food will eat at specific places. They should choose the customer segment that appreciates what No Pizza can offer. What are some good examples of successful and unsuccessful restaurants that have gone international?
Yep. As Kauppalehti already wrote today Kauppalehti, it looks good otherwise, except for Chalupa.
One Social Burgerjoint and the first No Pizza have only been open for 12 days, but if you scale those to full months, roughly Social Burgerjoint’s sales would be 3x and No Pizza’s 2x compared to Kotipizza. Chalupa, on the other hand, is 0.5x. It’s probably too early to say how the concepts will work, but burgers seem to be selling like hotcakes.
Fafa’s announced this week that it is collaborating with the S Group (S-ketju). Foodstock will probably lose Fafa’s as a customer…?
That Fafas news is interesting. I was still expecting Kotipizza to buy Fafas. It would fit into their portfolio and could be a good concept for internationalization.
I did some investment research and went to test Chalupa in Tapiola.
Scores on a scale of 1-10.
Location: 6 (The back corner of Ainoa)
Interior: 8
Cleanliness: 9
Staff: 8
Humor: 9
Food: 8 (quantity 9, quality 8, taste 8, eatability 6)
Price: 9
Overall concept: 8
The ingredients are there. We tested one taco and one burrito. The ingredients are good quality for a fast food restaurant. Not the processed mush you usually get in fast food places. The taste is also quite good, but a little improvement is needed in the balance of flavors so that spiciness and freshness are in balance. Both portions were impossible to eat without making a mess of your entire face and both hands, and this could be improved a bit. The location is bad. I had been visiting Ainoa for a couple of months before I stumbled upon Chalupa by accident. Bottom line: with a few small improvements, it will be good for my taste and, for me, beats Taco Bell, McDonald’s, Burger King, and Subway. These are, of course, matters of taste.
I don’t own Kotipizza myself, unfortunately, because their pizzas are really good =) Every time the pizza tastes the same, with sourdough…toppings on display…mmm…
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…But yeah. Didn’t Kotipizza once try to internationalize with the name ‘Kotipizza’ but failed..? This No Pizza is a bit different in its operations, menu, etc. It’s being tested in Finland first, so I don’t think they’ll rush to try this abroad.
Fafas would have been a perfect (Chalupa aside) move by Kotipizza. I think they didn’t want to sell, but rather become a franchise-model operator like Kotipizza themselves. A smart move by them and the S Group (S-ketju) is a strong partner.
Nopizza will specifically not reduce Kotipizza’s sales or compete with Kotipizza entrepreneurs. The management has clearly stated this. Only this one will be opened in Finland, where the concept will be refined and tested. In my opinion, it’s a wise move. Not stepping on their own toes, and on the other hand, refining the concept in a familiar market before expanding abroad.
Yes, that’s right. When I made my comment, I imagined that more Nopizza locations would open in Finland and that it would primarily be an eatery. It seems to be more of a drinking spot with food just on the side
At the moment, I wouldn’t consider Nopizza a direct competitor to Kotipizza. Of course, it depends on what the concept ultimately turns out to be.
Have you noticed the increased foreign interest in Kotipizza (Finnish pizza chain) shares? Previously, purchases were mainly from Nordnet, Nordea, etc., but for some time now, foreign brokers have been at the top. While they are dumping, for example, Evli, they are stocking up on Kotipizza. It’s nice that it has sparked interest as an investment case elsewhere too. I consider this a nice holding while trade wars and doomsayers are splashing drops on the stock market windshield.
ps: I like that you present critical viewpoints on different companies; bringing them up and discussing them adds an important three-dimensionality to the analysis.
A pessimist is never disappointed, except when they have too much cash and stocks skyrocket
I’m not actually as critical of all companies as my messages might suggest. Many people on this forum just like to be so optimistic, so I’m forced to be a pessimist and also address the negative aspects of companies
The franchisee bears the risk, Kotipizza reaps the fruits of sales.
I don’t know the industry that well.