the company is drowning in the market that it itself created

The first time I ordered food at home, it was from Telepizza. It’s possible that you do too. In the nineties, Telepizza was the perfect plan for hangouts to watch football or a movie at home. They had no competition. Today yes, and a lot. This, together with decades of treating the company as a financial asset and not as a long-term business, has caused the current situation: the company’s accounts are bleeding and there are serious doubts about its viability.

Debt, restructuring and losses

According to one PricewaterhouseCooper audit published in Merca2in 2024 Telepizza lost more than 48 million euros and carries a total debt of 150 million euros. The expected turnover for this period was 300 million euros, but they achieved 249.9 million, 18% less. This is in addition to expenses that amounted to 18.6 million euros in 2024 alone.

Spain continues to be its strongest market and accounts for 60% of all its income, but also where the loss is greatest (almost 25 million euros). According to PwC, there are “material uncertainty regarding the continuity of the business”, and it is not the first time they have warned of something like this. They did another audit of the company’s accounts in 2022 in which they showed “significant doubts about the Company’s ability to continue as a going concern.”

Telepizza is at a crossroads: it needs to generate income quickly to cover expenses and debt, but at the same time it needs to invest if it wants to become competitive again in the current landscape. The accounts don’t work out.

Telepizza and the delivery boom

The food delivery landscape has radically transformed. Telepizza no longer competes in the market it founded, but in a totally saturated ecosystem where there are more and often better options.

According to Dashmote data in 2024between 2019 and 2022 the delivery market in Spain doubled its income, reaching 5,000 million euros and in 2023 it would grow to 6.6 billion. Not all the mountain is oregano, the main delivery operators They also cannot boast of stability and profitsbut for Telepizza the reality is that, where they once reigned, now There are hundreds of thousands of restaurants available.

It also happens that pizza is no longer the favorite option to order at home. According to DBK dataIn 2024, hamburger restaurants accounted for 61% of the market. Fried chicken restaurants and “other concepts” also grew, while pizzerias decreased their turnover by 1.8%. There is also the problem that entering this model implies give a third of income in commissionssomething that does not suit Telepizza very well in its delicate situation.

Given this panorama, Telepizza has opted to encourage orders through its app and website. Recently They celebrated a pyrrhic victory: They are the pizza brand with the most users through their website and appreaching a total of 1.8 million monthly users. The problem is that the figure is not even striking. To put it in context, Burger King and McDonald’s have 4.7 and 4.5 million users through their apps respectively.

Telepizza’s strategy involves reinforcing its own channel and betting on loyal customers who already know them and return to their app, but at the same time has become practically invisible for the rest of the public, who have many more pizzerias to choose from through the apps. It is an isolation strategy.

The final chapter of a series that began decades ago

To understand how Telepizza is today, you have to look back. The current situation is the consequence of a trend that began in the nineties. After a spectacular IPO in 1996, at the end of 1999 its founder sold his stake (months before the collapse of the dotcom bubbleby the way). This sale marked the beginning of an era in which Telepizza became a financial asset at the hands of venture capital funds and its valuation fell with each movement.

In 2007, Telepizza went public after the takeover bid by the Permira and Ballvé fund and was valued at 850 million euros. In 2016, after the entry of the KKR fund, it went public again, although with quite disastrous results. Here the valuation had dropped to 780 million euros, but the worst thing is that not even three years passed when the KKR group launched another takeover bid again for take it out of the bag againvaluing it only in 600 million euros.

Paradoxically, 2017 was a good year for the company’s accounts, which achieved record profits. Right after it was signed the agreement with Pizza Hut in which Telepizza committed to opening 1,300 restaurants, almost nothing. The plan ended up going awry internal tensions and the pandemic. In the end Telepizza broke up with Pizza Hut in many of the countries in which it was going to operate.

In 2023, the debt caused the KKR fund left the equation and a financial restructuring was signed in which the company passed into the hands of its creditors, among which are Oak Hill and Fortress, two opportunistic funds, also known as vulture funds. Under this new mandate the objective was to try to stabilize the losses with the exit from Latin Americaalthough They couldn’t sell everything.

In contrast, its most direct competitor, Domino’s Pizza, has had a stable trajectory of growth and is in good financial healthyou just have to look at its growth curve on the stock market. In addition to the global parent company, behind Domino’s Pizza Spain is Alsea, the Mexican restaurant provider which also manages brands such as Starbucks, Burger King or Foster’s Hollywood.

Venture capital has squeezed Telepizza so much that has left it without operating marginleading it to a delicate situation that has lasted for years and that calls into question its continuity. In the end, the secret was not in the dough, but in being a restaurant chain and not a financial asset that passes from hand to hand.

Image | Telepizza

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