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 ~

Linkedin.com/in/jonathandonadoJonathan Donado


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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.

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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

2Linkedin.com/in/jonathandonadoJonathan Donado


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03. World Pizza Market Overview

Source: PMQ 2016 Market Report



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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




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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

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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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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



http://www.dominos.com/

http://www.dominos.com/

http://order.pizzahut.com/home

http://order.pizzahut.com/home

http://www.papajohns.com/

http://www.papajohns.com/


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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


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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Let’s stay in touch

Linkedin.com/in/jonathandonado

www.branded.me/jonathandonado

twitter.com/donadosays

Jonathan Donado

Bilingual senior general management executive

with expertise in international business and

Mergers & Acquisitions (M&A).

Business

The Consultant Game: Little Caesars' International Expansion Strategy