Domino’s Pizza Inc, the world’s largest pizza company, declared that it will shut down its operations in the home of Pizzas – Italy – earlier this month. The company which has operations in close to 90 countries fell out of favour with customers in Italy as many Italians preferred going to local restaurants instead of eating at the American outlet.
Domino’s Pizza operated in Italy for seven years and closed the last of the 29 branches this month. The company borrowed large sums of funds to keep afloat its 880 stores but most Italians favoured local restaurants.
The pizza chain struggled despite expanding delivery services and declared that it will close its stores even after seeking protection from creditors as it ran out of funds and falling short on its debt obligations.
Domino’s first entered Italy in 2015 after agreeing to a franchising agreement with ePizza SpA. The company tried to distinguish itself as it provided a structured national delivery service and also introduced American-style topping like pineapple in its menu.
Meanwhile, Italy’s traditional pizza makers scaled up operations. They ramped up their delivery operations and signed deals with third-party services such as Deliveroo Plc, Just Eat Takeaway.com NV or Glovo to ensure that their products reached customers’ doorsteps amid the Covid-19 pandemic.
“We attribute the issue to the significantly increased level of competition in the food delivery market with both organized chains and ‘mom & pop’ restaurants delivering food, to service and restaurants reopening post pandemic and consumers out and about with revenge spending,” Domino’s franchisee partner ePizza said to its investors, according to a report by news agency Bloomberg, when it released its fourth-quarter 2021 results.
Domino’s reduced operations in the country in 2020 and stopped offering delivery from its website on July 29. Some customers, according to Bloomberg, however, posted queries on social media asking why their orders were not being accepted or why their local stores were shut.
The closure of the outlets comes after a tribunal in April in Milan where the court provided the company protection against creditors for 90 days, ePizza said in a filing. The court order which prevented the creditors from asking for debt repayments and seizing its assets expired on July 1. At the end of 2020, the company had debts worth $10.8 million as per the the latest audited annual reports.
(with inputs from Bloomberg)