Telepizza takes on the world with Pizza Hut merger

Founded in 1988 by Cuban immigrant Leopoldo Fernández Pujals with the backing of a group of small investors from Madrid and Vigo, Galicia, Telepizza is currently the largest non-American pizza chain in the world.

As a result of the merger, Telepizza will rebrand its branches in Latin America as 'Pizza Hut', although it will still offer the telephone and internet home delivery service which, 30 years ago, set it apart from the rest of the fast food industry in Spain and Europe.

But the 592 branches in Spain and the 108 in Portugal will retain the brand name of 'Telepizza'.

Having started out from humble beginnings in a small shop in Madrid, Telepizza now has 1,300 branches, most of which are in Spain, with its second-largest market being in Chile, which has 135 outlets, followed by Poland, with 115, Portugal and Colombia, with 108 each.

Guatemala has 85, Perú 50, El Salvador 43 and Ecuador 11, and branches are present in single figures elsewhere in Latin America – Bolivia, Panamá and Paraguay – as well as in the former Portuguese colony of Angola, Switzerland, Russia, and one shop each in the United Arab Emirates and Iran.

The deal between the two companies, dubbed 'historic' by its leaders, is largely to enable Telepizza to take advantage of the fact Pizza Hut is a much stronger brand in Latin America.

In three years' time, three-quarters of all Telepizza branches outside of Spain and Portugal will be rebranded, rising to 100% in five years, except in Chile where Telepizza is a household name and where 50% of outlets will be renamed in five years and the remainder within a decade.

Telepizza will now become a master franchise owned by Pizza Hut and will have control of 950 branches in around 30 countries in Latin America and the Caribbean, except Brazil.

Another 1,300 branches will open in the region in the next 10 years, rising to 2,550 within 20 years.

Whilst Spain and Portugal will keep the Telepizza name 'for life' according to the firm's European director of operations Fernando Frauca, the deal will enable the Pizza Hut brand to gather strength in the two Iberian countries, since it is currently lesser-known – the American firm has 80 branches in Portugal, but only 25 in the whole of Spain.

“We're going to offer franchises the chance to grow in their home territories by opening branches with the Pizza Hut brand – but in Spain, Telepizza is very well-developed and its growth capacity is limited,” Frauca explains.

As yet, Telepizza does have room for expansion into smaller towns – it is currently only present in district capitals and major cities – and plans are afoot to increase its number of outlets to 1,000 in Spain in the short to medium term.

According to Telepizza's managing director Pablo Juantegui, the deal allows the firm to 'double its number of outlets, countries and staff practically overnight' without affecting its debt levels, and the aim is for the Spanish firm's gross profits to reach €100 million by the year 2021, or 50% more than last year.

Juantegui has declined to detail exact financial figures following his meeting with Pizza Hut International's chairman Milind Pant, but assured that the contract would not include 'share or capital commitments'.

The agreement between the two countries will run for 50 years – initially 30, but renewable thereafter for 10-year periods – in Spain, Portugal and Chile, and for 25 years in the remaining countries, starting at 10 years then renewable for 10 and five years after this.

Photograph: Telepizza on YouTube