Domino's is closing stores in Italy

Domino's Pizza has closed its Italian branches after seven years after the US brand failed to win over customers in the country where pizza was born.

The fast-food chain's Italian franchise partner, ePizza SpA, which operated 29 outlets across the country, filed for bankruptcy in early April.

As part of the bankruptcy proceedings, the company was granted 90 days of judicial protection from its creditors, preventing them from demanding repayment or seizing company assets. However, that deadline expired last month.

Domino's Italian business suffered from a combination of falling sales, rising operating expenses, high debt and an "exponential increase" in competition from traditional pizza restaurants offering delivery through apps like Glovo, Just Eat and Deliveroo, according to the April bankruptcy filing.

The Michigan-headquartered pizza chain has approximately 18,800 locations in 90 markets worldwide, most of which are operated by franchisees.

In early 2020, the US chain announced ambitious plans to open 850 stores in Italy and reach a 2 percent market share by 2030, but the pandemic has brought its Italian franchise partner to the brink of bankruptcy. "The Covid-19 pandemic and the ongoing, successive restrictions have severely damaged ePizza," the bankruptcy filing continues.

Domino's stopped accepting delivery orders from its Italian website on July 29. Domino's Pizza Inc, the US parent company, did not immediately respond to a request for comment. Marcello Bottoli, the chairman and largest shareholder of ePizza SpA, declined to comment when contacted by the Financial Times.

Last month, German grocery app Gorillas said it was pulling out of the Italian market, as well as several other European countries.

News of Domino's closing in Italy, first reported by Bloomberg, is another indication of the mixed fortunes of US restaurant brands hoping to find success with discerning Italian consumers.

The arrival of the first Starbucks in Italy in 2018 was greeted with skepticism. But Starbucks CEO Howard Schultz said last week the coffee chain, which operates a single coffee bar in Milan, is "thriving" and will open two more stores in Rome and Florence.

In 2021, ePizza SpA reported a turnover of 10.4 million euros, 8.6 percent more than the previous year but 36.8 percent less than the turnover planned for this year. As of December 2021, the company's cash reserves were just 492,000 euros, almost 80 percent less than planned.

In an annual report issued in April, the company blamed the poor sales performance on increased competition from "small restaurants" as well as "revenge spending" at restaurants as pandemic restrictions eased.