A Domino’s Pizza in Galapagar and a Starbucks in Fuenlabrada (both in Madrid) are the latest two openings of Alsea, the Mexican multinational that operates the Starbucks brands Domino’s Pizza, Foster’s Hollywood, Vips, Fridays, Burger King and Ginos. By the time this report has been published there will surely be more, because the group is growing at the rate of two openings a week in one of the six European countries where it is present (France, Netherlands, Belgium, Luxembourg, Portugal and Spain). José Luis Portela, its CEO for the continent, summarizes that in 2023 they reached one hundred new restaurants (60% owned and 40% franchised), and that in 2024 they continue “on the same path” after surpassing the global figure of 1,500 establishments on the continent. His plan, announced in 2023, involves opening 400 establishments by 2025.
The origin of the group is in a Dominos’s franchise opened by brothers Cosme and Alberto Torrado in Mexico City in 1990 with the help of their mother. It took them only nine years to jump onto the stock market in their country, where they continue to be listed today (the family is the main shareholder) and from where they have been expanding throughout Latin America. Since they made the leap to Europe in 2014 by purchasing the Zena group, they have not stopped gaining market share on this side of the Atlantic among fast food operators. At the end of 2018, Alsea acquired the business of the Vips group and in 2019 it acquired the exclusive rights to operate Starbucks in France, Belgium, the Netherlands and Luxembourg. Although in 2019 there were echoes of a possible IPO in the Old Continent, the company assures that at the moment there is no plan in that direction. The last announcement is dated last March, when they signed the purchase of the remaining minority stakes in the capital of their European subsidiary (among them that of the Arango family, founders of Vips, who had 5.13%) by 238 million.
Behind this meteoric growth are sales that are advancing at a steady pace – they had a record turnover of 1,265 million in Europe last year and in the first quarter they grew by 6%, to 300 million – despite the fact that, as Portela acknowledges, to the north of the Pyrenees there is a certain caution in consumption. Its quarterly balance reflects that many consumers are turning their backs on American franchises in France and the Netherlands due to Israel’s offensive in Gaza. “There has been an effect since October, especially with the Starbucks brand in Central Europe and France, but we think it is temporary and we look forward with optimism. Now the Olympic Games are coming, we are preparing, hiring people for the increase in demand,” explains Portela.
The accounts are noticing another cyclical effect, this one positive: the fall in energy costs (which, however, has not been accompanied by an equivalent fall in prices) and the normalization of the CPI in many foods has caused their operating results to grow almost 11% in this first quarter of the year. The European business globally represents 30% of sales and 20% of profits. “Latin America and Europe are different markets,” reasons the executive. Lower labor and rental costs in Mexico and its area mean that margins are higher there.
Four factories
The way of operating, in any case, is similar everywhere. Alsea has four factories in Spain that produce everything from the dough for its Domino’s pizzas to Starbucks sandwiches and Foster’s Hollywood ribs. Its main loyalty club in Spain has almost 1.8 million followers and offers discounts and incentives for customers to have breakfast, lunch or dinner at one of its restaurants. “We have very varied profiles. At Starbucks we have everyone from fifteen-year-olds to older people who tend to use and consume different products. Those of my generation take the Coffee latte or black coffee, young people prefer cold drinks, or cappuccino. Vips is a long-standing brand, there are people who come to snack on the famous pancakes. Domino’s Pizza has everything, but with a slightly younger clientele,” Portela lists. Consumers look for new features and a variety of channels at their disposal. “At Burger King we have digital kiosks to place orders. At Starbucks you can, for example, order through the app and pick up your order directly in the delivery area without going through the checkout. At Forter’s, Vips or Fridays a waiter will serve you, but if you are in a hurry and don’t want to wait for the bill you can pay in the app and leave.”
With 22,626 employees on the continent and a large proportion of basic salaries, Spain has noticed the impact of the rise in the lowest salaries encouraged by the rise in the SMI. “Here and in the world in general there has been strong growth. Better salaries offer more consumption capacity.”
Regarding distribution, 30% of its sales are digital. They operate with their own platforms and through aggregators (such as Glovo). “Customers ask us to make it easy to interact with brands. Yes I want delivery I can do it through the application, the phone… Whatever the channel, you have to focus on the best experience. It’s not just the hamburger, the salad or the pasta dish, but the attention from the moment you arrive at the premises, the order, the cleanliness… They are confident that they will continue to gain weight and space in consumers’ stomachs despite the advance of sedentary lifestyle and obesity. “Fortunately there is a lot of room to grow,” she concludes.
Franchisee and franchisor
Alsea’s business responds to a range of formulas: they have agreements to exploit third-party brands (for example with Starbucks), something they can do exclusively for a country or as franchisees of another company (it happens with Burger King in Spain, where the main operator is Restaurant Brands Iberia). They also have their own brands (such as Vips) that they also operate with their own stores and franchises. The brand with which they are present in the most European markets is Starbucks (6) and the most numerous in stores is Domino’s (384).
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