With its acquisition of Eagle Boys, Pizza Hut’s network will be the biggest it has ever been in Australia. Photo: Neil Newitt Eagle Boys has 114 stores and less than 10 per cent of the $3.7 billion pizza market and Pizza Hut has 270 stores or about 20 to 25 per cent. Photo: Sonia Byrnes
Pizza Hut has gobbled up the ailing Eagle Boys chain, becoming a real threat to industry leader Domino’s.
Pizza Hut chief executive Lisa Ransom told Fairfax Media that the now Australian-owned company had merged with Eagle Boys and was in the process of rebranding more than 50 stores, boosting its overall store count to more than 320.
“We’ve been talking to both administrators of Eagle Boys, SV Partners, and the individual Eagle Boys franchisees over the last several weeks and we were able to come to a deal over the last few days,” she said.
“It’s a significant opportunity to grow the distribution and brand presence of Pizza Hut for our customers and take advantage of the economies of scale that come with being a bigger organisation.”
Eagle Boys has 114 stores and less than 10 per cent of the $3.7 billion pizza market while Pizza Hut has 270 stores or about 20 to 25 per cent. Domino’s has about 600 stores, giving it 50 per cent of the Australian market.
Eagle Boys collapsed in July, with documents filed with the corporate regulator showing the company either could not pay its debts or thought it might soon be unable to do so.
Market data at the time showed that even at its peak, the customers of Eagle Boys were among the least loyal in the fast food game and ready to permanently abandon the chain.
In September, three former McDonald’s executives, including Ms Ransom, and private equity firm Allegro took control of Pizza Hut Australia, after buying the master franchisee licence from US parent company Yum! Brands.
Later that month Fairfax Media revealed Allegro was taking steps to merge Pizza Hut and Eagle Boys, creating a strong number two competitor to Domino’s prime position.
“The best way to look at what’s happened is that this is a Pizza Hut acquisition and our partners are Allegro, who have a great history in transformational business,” Ms Ransom said.
“This was a very natural fit to be able to work with a group of franchisees who know the pizza business, but are also operating in areas where we don’t have Pizza Hut stores.”
Ms Ransom would not reveal the cost of the acquisition, citing “commercial in confidence”.
Pizza Hut is speaking with the remaining franchisees to see whether they can join its network. It will now have the biggest number of stores it’s ever had in Australia.
On Thursday, it officially opened a rebranded store in the northern beaches suburb of Collaroy.
Michael Cooper, store owner and Eagle Boys franchisee of seven years, said he was looking forward to the new opportunities.
“The Pizza Hut team really understands what it is like to work as a small business serving the local community and how important it is to maintain a local feel,” he said. “It’s also great news for local jobs and local pizza lovers.”
About half of the 50 stores will switch to Pizza Hut by the end of the year. Umina on NSW central coast will open next week, followed by stores in Western Australia, South Australia, the Northern Territory, regional NSW and Queensland.
In further news, it announced it will open an entirely new store in Newport in early December.
“We’ve got skin in the game now and Newport is the perfect place for us to open our store in time for a fantastic summer ahead,” Ms Ransom said.
Allegro, which owns Carpet Court, bus maker Custom and Great Southern Rail, will likely seek to exit its investment in pizza in a few years through an initial public offering. Latest consumer affairs news
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