Eagle Boys goes out with a squawk

AUSTRALIA’S third largest pizza chain has finally come crashing down to earth, and they can thank Domino’s for the experience.

Eagle Boys has fallen. Picture: Jono Searle

EAGLE Boys Pizza has collapsed into voluntary administration.

The nation’s third-largest pizza chain behind Domino’s and Pizza Hut confirmed the news in a statement on its website on Friday afternoon.

“The Eagle Boys Dial-a-Pizza Pty Ltd (Eagle Boys) Board of Directors confirm the Australian Head Franchisor has been placed in Voluntary Administration as of Thursday evening 14 July 2016,” the statement said.

“This does not extend to franchisees — all Eagle Boys stores remain under the control of individual franchisees and will continue to operate normally.”

Administrators SV Partners have taken control of the day-to-day running on the business and will attempt to negotiate a sale.

“The administrators are in the process of identifying restructuring measures,” it said.

“Eagle Boys stores across Australia will continue to trade during this process. For Eagle Boys customers, franchisees, employees and suppliers it’s ‘business as usual’ while the administrators’ review is underway.

“The Eagle Boys national franchise remains on the market for sale.

“The Eagle Boys management team is looking forward to the prospect of growing the brand under new ownership and would like to thank Eagle Boys customers, franchisees and team members for their ongoing support during this time.”

The pizza chain has faced significant difficulties over the past five years. In 2014-15, nearly half of its stores closed down, dragging its market share from its estimated peak of 8.1 per cent in 2013-14 with 340 stores to 4.6 per cent in 2016-17, according to IBISWorld.

Domino’s has about 25 per cent market share of the $3.7 billion industry, with Pizza Hut lagging behind at 10.7 per cent.

Eagle Boys, caught in the middle of an aggressive price war between Domino’s and Pizza Hut, found itself unable to pay its debts. Fairfax last year reported that 30 Eagle Boys franchisees were considering taking legal action against head office.

Customer food traffic data by market research firm NPD showed Domino’s increased its traffic by 14 per cent last year, while visits to Pizza Hut collapsed 15 per cent, and Eagle Boys lost 7 per cent.

IBISWorld industry analyst Andrew Ledovskikh said the huge success of Domino’s versus its competitors highlighted how stores that failed to adapt to changing consumer preferences would suffer.

“Changing consumer trends have favoured premium and healthy food produce in recent years, to the detriment of traditional fast food outlets,” he wrote on Tuesday.

“This trend has played out in the pizza restaurant and takeaway industry, as Pizza Hut has struggled to maintain growth as smaller pizza store operators have increasingly offered premium produce. However, Domino’s Pizza has bucked this trend by making use of its extensive store network to focus on convenience.

“Instead of attempting to compete with premium pizza stores or add healthy options to its menu, the company has expanded its store network, which has grown by over 100 stores in the past five years, and focused on technology-related convenience.

“For example, Domino’s implemented an SMS ordering system and a 20-minute delivery guarantee in 2015, and trialled a 10-minute delivery guarantee in New Farm, Brisbane, in the same year.”

He added that the rise of online ordering platforms such as DeliveryHero, Menulog, Foodora and Deliveroo had allowed smaller restaurant and takeaway businesses to access a wider customer base and more effectively compete with larger food brands.

“However, these ordering platforms usually charge a percentage of the transaction as a fee to the restaurant operators, which can reduce profit margins for companies that use these services,” Mr Ledovskikh wrote.

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