the consultant game: little caesars' international expansion strategy
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page 1Jonathan Donado - 2016
Make a
Selection :
HELP Little Caesars’ CEO !!~ Play the Game ~
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Congratulations! You have been selected as an external consultant by
Little Caesars. Based on the information herein, you must help the
company decide what is its best business strategy to grow in
international markets.
1
01. Game Objective
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02. Main Challenges in International Markets
- Growth has been concentrated in Central America and Middle East. No presence
in China or India.
- While Little Caesars has a strong presence in the USA, it lags behind its competitors
(Dominos, Pizza Hut, Papa John’s, etc.) in the international arena. Competitors
growing faster abroad than Little Caesars.
Low presence in foreign markets
- In some countries Little Caesars has just 1 store (Australia, Panama,
etc). Vast opportunities for growth.
- In-store sales growth lower than competitors.
Limited number of stores in existing countries
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03. World Pizza Market Overview
Source: PMQ 2016 Market Report
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03. World Pizza Market Overview
Source: PMQ 2016 Market Report
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03. World Pizza Market Overview
International Pizza Market Overview
65% of pizza sales are in international markets
with $83.B annual sales◉
Except Europe all other foreign regions have a
higher sales growth rate than the USA:
- USA: 3.7%
- Latin America: 4.0%
- Africa: 7.1%
- Asia-Pacific: 17.7%
◉
$129.2BTotal Worldwide Market [TWM] including USA
$83.2BServiceable
International Market
[SIAM] without USA
Source: PMQ 2016 Market Report
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2014 Sales in Billion US Dollars
0.84
2.67
3.23
4.12
5.5
Papa Murphy
Papa John's
Little Caesars
Domino's
Pizza Hut
6
04. Competitive Landscape in 2016
Sources: PMQ 2016 Market Report; Annual Corporate Reports
Competitors have an average of 7% sales
from international operations:
- The international market is highly fragmented
- Pizza Hut has only 45% of sales from outside
of US. It has 7% in-store sales growth.
- 94% stores operated by franchises.
- It opened 608 new stores in 2015 which 355
were in China. It is still allocating financial
resources to grow its 1572 stores (a ratio of 6:1
to Dominos) in China and its 431 stores in
India.
- Dominos has operations in more than 80
countries. China (989 stores), India (868
stores), and Mexico (622 stores) are its top 3
markets.
- 71% of its sales come from its top 10 markets
through 4 master franchisees.
- Dominos has increased its international sales
22% in the last 2 years
- Papa John’s operating in 39 countries.
Opened over 235 stores abroad in 2015. It
expects 75% of new opening from abroad.
- It increased its international sales 7.5% in 2015
- It is planning to sell its 45 owned stores in
China.
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04. Competitive Landscape in 2016
0
2000
4000
6000
8000
10000
12000
14000
16000
Pappa John's Little Caesars Domino's Pizza Hut
# o
f S
tore
s
International
Domestic
Domestic International TotalStores Stores Stores
Pappa John's 2,691 1,505 4,196
64% 36%
Little Caesars 4,025 698 4,723
85% 15%
Domino's 5,112 7,330 12,442
41% 59%
Pizza Hut 8,236 5,492 13,728
60% 40%
RANKING Number of Most Stores
Stores International
Pizza Hut 1 2
Dominos 2 1
Little Caesars 3 4
Pappa John's 4 3
Sources: Annual Corporate Reports
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Dominos has 10X times more stores abroad than Little Caesars. Similarly, almost 60% or its stores are outside of the
USA. Little Caesars has a tremendous opportunity for growth in the international markets.
% Of
International
Stores
International Stores Units (size of circle equals number of stores)
YOUR
LOGO
60 %
30 %
4,000 8,000
Sources: Annual Corporate Reports
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04. Competitive Landscape in 2016
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05. Little Caesar’s International Presence
Source: Little Caesars country websites
2016 Little Caesars International Locations
Australia 1 0.1% 0%
Bahrain 6 0.9% 1%
Canada 76 10.9% 12%
Costa Rica 1 0.1% 12%
Dominican Republic 1 0.1% 12%
Egypt 5 0.7% 13%
El Salvador 9 1.3% 14%
Guam 1 0.1% 14%
Guatemala 30 4.3% 19%
Honduras 24 3.4% 22%
Jordan 3 0.4% 22%
Kingdom of Saudi Arabia 81 11.6% 34%
Kuwait 11 1.6% 36%
Mexico 346 49.6% 85%
Panama 1 0.1% 85%
Puerto Rico 16 2.3% 88%
Turkey 85 12.2% 100%
USVI 1 0.1% 100%
TOTAL 698
Top Little Caesars International Locations
Mexico 346 50% 50%
Turkey 85 12% 62%
Kingdom of Saudi Arabia 81 12% 73%
Canada 76 11% 84%
Little Caesars high potential for growth in
international markets. Both in existing countries
and expanding to new geographical regions as
well as China and India:
- Over 80% of stores concentrated in only 4
countries.
- No presence in South America, Asia, Europe
or continental Africa.
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06. Little Caesars SWOT
- Strong product and corporate branding built over 50 years
- Marketing and advertising capabilities providing greater visibility
- Value product highly recognized by consumers
- Large opportunity for expansion in all international markets
- Increase in per capital income in foreign countries makes Little Caesars an appealing dining option
- Use of e-commerce technology for mobile purchasing not fully deployed in foreign markets
- Low presence in some countries makes it challenging leverage advertising /marketing campaigns
- Intense competition from other US pizza chains in foreign countries
- Foreign Exchange risks based on political instability abroad
- Rising commodity costs and volatility
Strengths Weaknesses
Opportunities Threats
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Vision• To be the world's most successful pizza chain
Mission
• To be an innovative global leader by focusing on convenience, exceeding customer expectations with extraordinary value and great tasting products, provided by outstanding people resulting in strong returns to our stakeholders.
Values
• Integrity & Ethics
• Value; Product Quality
• Customer Service
• Excellence
• Urgency
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07. Little Caesars Foundation for a Strategy
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08. Little Caesars International Constraints
Low RiskMaster Franchisees Minimize Capital Expenditures
In order to grow abroad it is important to minimize CAPEX, Risk (foreign
exchange and political) and use a Master Franchise model, without corporate
store ownership.
• Reliance on local partners to
expand foreign operations
• Master Franchisees shall have
financial capability to expand
store networks in short span
periods
• Select countries with high
political stability to reduce
foreign currency exchange
volatility
• Cluster countries by
geographical areas for supply
chain efficiencies
• CAPEX reduction allows
corporate flexibility to use
cash for other strategic
initiates
• Lower investment will increase
ROI for Little Caesars on its
foreign business
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09. Little Caesars Strategies Options:
Increase stores through Master Franchisees, increase presence in South
America, China and India.
Grow in countries with lower barriers of entry and risk
Expansion in new Countries
Analyze and monitor below-average stores to train employees
Create Marketing promotions/advertising to attract repeated customers
Create Loyalty programs
Increase market share in Existing
Countries – Open new stores
Grow in-store sales
Assist Master Franchisees to expand store networks in their countries
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10. Your Decision: Consultant’s Strategy
What strategy should Little Caesars
use to expand abroad ?
Make a choice….
and share it in LinkedIn
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