Market event/issue

PIZZA is targeting to open 15 new Shakey’s and 15 new Peri-Peri Charcoal Chicken outlets in 2021.

Opinion

Recall that in FY20, PIZZA deferred CAPEX to open 38 new stores due the COVID-19 outbreak. While not fully disclosed in the press release, we expect the 30 new stores this year to include smaller ghost kitchen formats compared to the traditional brick-and-mortar stores requiring higher capital outlay. We note that traditional store formats in the restaurant industry cost 10 times more on average than cloud kitchens.

While PIZZA incurred a P462 Million net loss during 9-Month 2020, we expect a return to positive earnings in fourth quarter of 2020 (4Q20) due to the shift to smaller ghost kitchen store formats and the seasonal surge in holiday spending. We favor PIZZA in the restaurant sector due to its strength in delivery, which accounted for ~60% of sales last year. (APS TP: P8.75)

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