From Mexican pizzerias to fast food restaurants across Europe: Alcea is growing at a rate of 100 stores per year | Economy and Business

The Domino's Pizza branch in Galapagar, Madrid, Spain, and the two Starbucks outlets in Fuenlabrada are the latest openings by Mexican multinational Arcea. The company operates these outlets, as well as other well-known restaurant brands such as Foster's Hollywood, Chili's Bar & Grill, Popeyes, Burger King and California Pizza Kitchen. There will no doubt be more by the time this article is published. The group is growing at a pace of opening two outlets per week in at least one of six European countries: France, the Netherlands, Belgium, Luxembourg, Portugal and Spain. European CEO José Luis Portela explains that the company will “continue on the same path” with 100 new restaurants (60% owned and 40% franchised) under its control in 2023, reaching a total of more than 1,500 in the Old Continent in 2024. The company's plans, announced in 2023, call for the opening of another 400 outlets by 2025.

The group's origins lie in a Domino's franchise that brothers Cosme and Alberto Torrad opened in Mexico City in 1990 with the help of their mother. It took just nine years for the company to be listed on the Mexican Stock Exchange. Since then, the family has become the majority shareholder and expanded throughout Latin America, and in 2014, to Europe with the acquisition of the Zena Group. Over the past decade, it has taken market share from fast-food restaurants on the other side of the Atlantic.

Alcea acquired the Vips Group at the end of 2018 and in 2019 gained the exclusive rights to operate Starbucks in France, Belgium, the Netherlands and Luxembourg. There were rumors of a possible European initial public offering (IPO) in 2019, but the company said it had no such plans at the moment. The last announcement was back in March, when the company acquired the remaining minority shares in the capital of its European subsidiary for 238 million euros ($259 million), including the shares of the Arango family, founders of Vips, who hold 5.13%.

Behind this phenomenal growth is a steady rise in sales, which reached a record high of nearly 1.27 billion euros ($1.38 billion) in Europe last year and rose 6 percent to 300 million euros ($326 million) in the first quarter. This is despite the fact that consumption is being subdued in many European countries where the company operates, as Portela acknowledges. His quarterly balance sheet reflects the fact that Israel's attacks on Gaza have caused many consumers to turn their backs on U.S. franchises in France and the Netherlands. “We have seen an impact on Starbucks brands, especially in Central Europe and France, since October, but we believe this is temporary and we are optimistic and positive,” he said. “Now we have the Olympics coming up and we are preparing and hiring to meet the increased demand.”

The company's financial results are experiencing another virtuous circle effect. Lower energy costs (but not equal price declines) and a normalization of the Consumer Price Index (CPI) for many food products helped drive operating profit up by about 11% in the first quarter of this year. Globally, Alcea's European operations account for 30% of sales and 20% of profits. “Latin America and Europe are different markets,” Portela said. Margins are higher in Mexico due to lower labor and leasing costs there.

Four Factories

But Alcy's business strategies are similar across the board. Alcy has four factories in Spain, making everything from crust for Domino's Pizza to sandwiches for Starbucks and Foster's Hollywood ribs. Its main loyalty club in Spain has about 1.8 million followers and offers discounts and incentives to customers who dine at its restaurants. “Our customer profile is very diverse,” Portela says. “At Starbucks, we have everyone from 15-year-olds to older people who tend to use and consume different products. My generation drinks lattes and black coffee, while younger people like cold drinks and cappuccinos. Vips is an old brand, and people come for its famous pancakes. Domino's has everything, so it attracts a slightly younger customer base.”

Consumers are looking for novelty and variety in how they order. “Burger King is introducing digital kiosks for ordering,” says Portela. “At Starbucks, you can order through an app and pick it up right at the delivery area without going through the cash register. At Foster's, VIPS and Friday's, the waiter will serve you, but if you're in a hurry and don't want to wait for the bill, you can pay through the app and walk out.”

Arcea employs 22,626 people across the continent, most of whom earn the minimum wage. At least those in Spain will benefit from a minimum wage increase in 2024. “Here and across the world, we are seeing strong growth. Higher wages mean higher spending capacity,” Portela added.

In terms of distribution, 30% of Arcea's sales come from digital. The company operates through its own platform and through aggregators such as Glovo. “Customers ask us to make it easy for them to interact with other brands,” Portela explains. “If they want delivery, they can do it through our app, by phone or through the channel that gives them the best experience. It's not just about burgers, salads and pasta dishes, it's also about the service, the ordering facilities and the cleanliness.” Arcea is confident that it will continue to grow despite widespread concerns about obesity and sedentary lifestyles. In Mexico, nearly four in 10 people over the age of 15 suffer from obesity. The country's obesity rate is the second highest among Organization for Economic Cooperation and Development (OECD) countries, just six points below the United States (42.8%). “Fortunately, there is plenty of room to grow,” Portela says.

Franchise System

Alcea's operations use different methods to operate third-party brands, either exclusively in one country or as franchises of other companies. In the case of Burger King in Spain, the main operator is the restaurant brand Iberia. It also has its own brands, such as Vips, some of which are franchised. The brand with a presence in most European markets (6 locations) is Starbucks, while the brand with the most number of stores is Domino's (384 locations).

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