Yahoo Finance Posthaste: How Pizza Pizza's CEO is plotting to keep the dough rolling in amid a slowing economy
Good morning!
Pizza Pizza Ltd. has been through enough recessions by now to have gotten a recipe for success, not just survival, down pat.
“Never waste a good crisis,” chief executive Paul Goddard said. “Sometimes you have to make the bold moves when others are being a little conservative and that is your window to go in.”
That bold spirit is the secret ingredient Goddard is relying on as he works to expand his company amid an economy reeling from high inflation and the spectre of recession.
Pizza Pizza, one of Canada’s most notable purveyors of cheesy, greasy, carb-loaded goodness, has continued to chart a path for growth during the pandemic. Last year, the company, which has a presence in nine provinces and one territory, hit its growth target by three-dozen stores annually and announced plans to expand into Mexico.
“While many other (competitors) were understandably pulling in, if not closing locations, we really went on the offensive during the pandemic … and we said this is a great opportunity to get cheaper real estate and go on a building spree that we have never seen before,” Goddard said.
If history is anything to go by, Goddard is confident his plan will work. Before the Great Recession hit in 2007, the pizza maker bought Alberta-based Pizza 73. Pizza Pizza expanded the company by 50 per cent in about two years, the chief executive said.
Following his recipe for success will likely require adjustments, Goddard acknowledged, pointing to an unusual economic environment that’s brought supply-chain headaches and shortages of key ingredients. Pizza Pizza has been forced to stock up on things such as tomatoes, flour and salt to keep the pies rolling out of the oven. Goddard is also not risking disruption from semiconductor chip or commodities shortages, and has banked hardware servers and ovens to meet expansion plans.
Stockpiling, especially expensive items such as ovens, eats into profits, so Goddard is introducing measures to shore them up. Raising prices is one strategy, though it’s risky. Hiking the prices of key menu items, such as a one-topping pizza, could end up driving away value-oriented customers, for example.
But with inflation at the highest level in a generation, price hikes became inescapable, Goddard said. A cheese pizza that cost $9.99 before the pandemic is now a dollar more. To compensate and increase profitability, he’s aggressively targeting a different kind of customer: “gourmet” — or as gourmet as one can get for a fast-food chain.
“We introduced things like the keto pizza, cauliflower crust, plant-based chicken sandwiches,” Goddard said. “The margin on those is better than some of our core products.”
There’s also an opportunity to cut costs by going green. Gas prices have receded in recent months, but Goddard is thinking about piloting bikes and electric-vehicles in store delivery services.
Meanwhile, the economic road ahead remains rocky, and all indications point to continued, aggressive rate hikes from the Bank of Canada. Higher rates could slow Pizza Pizza’s growth.
“We don’t have direct control over interest rates,” Goddard said. “But I also feel like the recipe we’ve (employed) through other tough cycles and inflationary cycles has usually worked.”
He added, “It’s an opportune time to be opportunistic and go on the offence.”
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OILSANDS TAILINGS UN monitors recently visited northern Alberta for the second time since 2016 amid concerns from the Mikisew Cree First Nation over the Peace-Athabasca Delta slowly drying up. The international scrutiny comes as the federal and Alberta governments are working to develop new regulatory requirements that could enable the release of treated water from the oilsands mines for the first time since the sector’s inception. The Financial Post’s Meghan Potkins reports on the debate over what to to with 1.4 trillion litres of oilsands wastewater. Photo by Todd Korol/Reuters files
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The world’s most financially fragile countries have burned through the extra International Monetary Fund reserves they got last year, raising calls for a fresh injection to help them weather higher interest rates, food and fuel costs.
The IMF’s record US$650 billion issuance of reserve assets known as special drawing rights, or SDRs, last August “was badly needed,” and has been almost exclusively used by low- and middle-income countries, the Washington-based Center for Economic and Policy Research, a progressive think tank, said in a report Wednesday. Greece was the only nation classified as an advanced economy to use SDRs, allocating them to debt relief for crisis-era loans.
The allocation has been “a considerable success,” with 105 out of 190 member countries using the reserves — distributed in proportion to each country’s share in the fund — either for debt relief, hard currency, fiscal help or some combination of the three, said Andres Arauz and Kevin Cashman, the authors of the report. Of those nations, more than 30 used as least 90 per cent of their SDRs.
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After a disappointing start to 2022, stocks have shown resilience in the second half. Since the end of June, the S&P 500 has surged nearly 10 per cent. And according to JPMorgan, there’s still more upside ahead. The Wall Street gorilla recently reiterated its year-end price target of 4,800 for the S&P 500. With the benchmark index currently sitting at roughly 4,100, JPMorgan’s target implies a potential upside of 16 per cent. Our content partner MoneyWise takes a look at the call and where JPMorgan sees opportunities.
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Today’s Posthaste was written by Bianca Bharti (@biancabharti), and compiled by Victoria Wells, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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