Papa John's India arm eyes more stores

In the Rs 2,300-crore pizza market, where Dominos holds 70% share, Papa John's has a meagre market share after Pizza Hut

OM Pizza, the Indian franchisee of Papa John’s, the world’s third-largest pizza delivery company, is planning to open more stores in the country from 2015. The firm, owned by the Mittal family, forayed into Indian food services space by acquiring OM Pizza & Eats last year.

Currently, Papa John’s runs about 20 stores across the country. Atulya Mittal, director, Avan Projects and son of Vinod Mittal, younger brother of Lakshmi Niwas Mittal, said, “After we took over, the focus has been on consolidation. Overall, we see good progress in strengthening our core operations and the focus will be on new stores.”

In the Rs 2300-crore Indian pizza market, where Dominos holds 70 per cent share, Papa John’s holds a meagre market share, after Pizz Hut.

MORE TO BITE

Rs 2,300-crore Size of the Indian pizza market
20: Number of stores Papa John’s has across the country

• At present, Papa John’s holds a small market share behind Pizza Hut

Mittal said, “There will be more focus on opening stores from 2015. So, we have focused the first half of this year on consolidating our operations and streamlining store-level functions. We have also launched a few new products and will continue to do so.”

Without disclosing further details he said, “I can’t talk about specifics on capital expenditure or store count. But we are happy enough with the way we see our current stores performing and we are cautiously optimistic on our store opening count. We will focus on one or two specific geographies to open stores to build our clusters. In terms of new pizzas, we have an exciting line-up planned for the rest of the year. The 2015 line-up will be decided sometime later this year.”

Avan Projects bought controlling stake in Om Pizza from TVS Capital for Rs 25 crore in December 2013. During the buyout, Om Pizza had been operating 20 Papa John’s outlets with an annualised revenue of Rs 25 crore, with expected annual cash loss of Rs 8-10 crore.

TVS Shriram Growth Fund 1A (TSGF) had forayed into Om Pizza in December 2012 by investing Rs 50 crore. Later, TSGF invested Rs 20 crore more in the company, taking the total investment to Rs 70 crore in Om Pizza. TVS Capital and the Jawad Group of Bahrain, continues to hold a minority stake in Om Pizza.

Retail consultancy Technopak Advisors’ Saloni Nangia said, “Pizza has the highest market share among international quick service restaurants in India, and has the widest acceptance across consumer segments. The current players — both international and Indian companies — have developed the market for pizzas in India over the past two decades. While the market potential is strong, brands entering or re-entering the market will need a strong differentiated value proposition to be able to create an impact in the market.”

According to Mittal, Avan Projects does not plan to focus on ‘The Great Kabab Factory', the business bought along with Papa John's under Om Pizza and Eats. The firm also does not have any immediate plans to diversify into other food service space in India.

“We see tremendous opportunity in the pizza space and will look beyond that space, once we feel we have done justice to the Papa John's pizza brand. This is not to say we don't evaluate other opportunities in food and beverage from time to time. But as of now, we see Papa John's as the most exciting F&B opportunity on our plate,” he said.