International -- European Business: ITALY
In Italy, the McDonald's of Pizza? (int'l edition)
Autogrill is expanding, franchising, and marketing like crazy
With a father from Naples and a mother from Genoa--Italy's rival culinary capitals--Paolo Prota Giurleo knows a thing or two about good home cooking. But as chief executive of Autogrill, the biggest European fast-food chain, he is weaning his compatriots from dishes that take hours to peel and simmer. In their place, he offers pizza, fries, and a soft drink. "There's space for both in Italy," says Prota Giurleo.
Autogrill is doing more than changing Italian eating habits. From a collection of failing roadside restaurants, it has grown into a $1.4 billion Mediterranean-style fast-food empire in less than two decades. Autogrill accounts for 78% of highway eateries in Italy. Now, facing a nearly saturated domestic market, it is financing expansion and foreign acquisitions. At home, the goal is to change Autogrill's image from roadside operator to city fast-food restaurant through its pizza subsidiary Spizzico and its Ciao pasta-and-salad-buffet outlets. Meanwhile, the international growth plan would put its pizza all over Europe. Already, Autogrill is in every major European country except Britain and makes 25% of its sales outside Italy--up from just 5% two years ago.
With global fashion giant Benetton Family Holding behind it, Autogrill may well succeed. In the 1970s, state holding company IRI took over a batch of badly managed roadside eateries and bars. The businesses were repackaged under the name Autogrill and privatized in 1995, and Benetton accumulated a controlling 57% of the company. Not surprisingly, franchising and marketing powerhouse Benetton has been pushing Autogrill to follow its lead. For example, Spizzico franchises will rise from 25% of the chain to 50% in the next three years--a big plus for going global.BIG DEAL. Autogrill hopes to make a splash with a five-story, 6,000-square-meter mall set to open in March adjacent to Milan's gothic cathedral. The $16 million Autogrill Duomo will include three restaurants, a beer hall, children's play area, coffee bar, and retail shops. In addition, Autogrill is continuing a $360 million European shopping spree. On Dec. 23, the company acquired the Frantour restaurant unit of the French state railroad company, SNCF. The $56 million deal will give Autogrill 50 new restaurants at 13 train stations across France. The acquisition has helped boost Autogrill's share price by 30% since early 1998.
Frantour is just the latest in foreign acquisitions, mostly bought within the past two years, for a total of 635 outlets. Only McDonald's Corp. has more restaurants and higher sales in Europe. But Prota Giurleo sees the Golden Arches as an ally. In fact, McDonald's and Spizzico restaurants operate under the same roof in some locations. "Hamburgers and pizza work together," says Prota Giurleo. As long as Europe's appetite for fast food keeps growing, the two should coexist just fine.By Monica Larner in Milan