IMC CMO, Alex BX Pinto also says that the company’s main focus is performance marketing
Owner of several restaurant brands, IMC (International Meal Company) defined three of them to grow faster in Brazil: Pizza Hut, KFC and Frango Assado.
To this end, the company is undergoing a transformation journey, which includes among the main strategies the creation of its own digital sales channels, without losing sight of brand building.
The most important thing in the food segment is to sell today, but also to build tomorrow, emphasizes Alex BX Pinto, CMO at IMC. In this interview, the executive talks about results and objectives.
What is the BMI balance sheet in 2022?
Since 2021, there has been a complete change in the business, with changes in the organization’s leadership, but also through a journey of transformation. Basically, the objective is to put the company in a new direction. And this journey has taken us through five consecutive quarters of very strong recovery in sales and Ebitda. We are only at the beginning, but we understand that this journey will bring many results to IMC in the coming years.
What is this journey of transformation?
The journey has some important pillars. The first and most important is operational efficiency. Restaurant is a business that needs daily control of the system, both franchises and own stores, seeking to have more margin. Another important pillar is expansion, which is heavily conditioned on reducing the number of brands. IMC has several brands in the portfolio, but we defined that some of them should grow faster than others. In this case, Pizza Hut, KFC and Frango Assado in Brazil. Expansion is fundamental to continue growing. Another pillar is digital transformation, which has to do with the new full service paradigm in Brazil, where face-to-face sales become less important. Out-of-home consumption is already higher in the country and there is enormous room for growth inside the consumer’s home. And not only adjusting the product, but also having more digital sales channels available to the customer.
And what were the results?
IMC broke sales record in the third quarter of 2022, which rose 20.7% and totaled R$ 882 million, and also an Ebitda, the best in the company’s history for the period, of R$ 96 million – a growth of 23 .1% compared to the same quarter of the previous year. A big challenge was that, after the pandemic, sales in stores dropped a lot. As of 2021, this begins to be resumed and since the first quarter of 2022 it already shows a positive number versus the pre-pandemic period, obviously with a different scenario, of products and prices. But today the company already earns better than the pre-pandemic period. Of course, this three-year period had inflation in between, which poses an additional challenge for the category.
How is the IMC digitization process going? Has the company increased the number of digital sales channels?
Some brands have their own delivery service. Delivery came to weigh 40% of our sales during the pandemic. This weight has decreased, I believe that a reasonable number is that around 30% of sales today are via delivery. The total billing volume remained stable during the year. Everything indicates that delivery consumption will remain. What happened is that in 2022 the recovery in physical sales was much greater than the growth in delivery. We introduced some of our own digital channels and, depending on the average, we expect to reach 15% of our total sales with our own channels. In some brands, digital sales reach more than 40% of the total. It is a very relevant business for our portfolio.
From a marketing point of view, what are the main challenges?
The most important thing in the food industry is selling today, but also building tomorrow. How it manages to generate transactions every day, because our business still has a big challenge in recovering the number of customers lost due to the pandemic. This is because the profile has changed, people come less to stores and consume more at home. Our main focus, for the coming years, will be on performance marketing, on generating transactions in our own channels. The challenge is how to do this and, at the same time, build a brand. In the past, there was the four Ps division, where you separated advertising from price. Nowadays there is no way to do that. You can’t say that a certain activity is just promotional, to generate traffic, because you need to invest in both things at the same time, because money is one. We have just launched, for example, a Pizza Hut campaign in which we make a series of jokes about the digital world, with Paulo Vieira making comparisons of how to hut life. The purpose of the action was to generate traffic, because we wanted to communicate that the brand had a promotion with a new price. But if we put only the promotion, it would generate zero attention for the consumer and it would not change the perception he had of the brand. So we combine the two things. Priceless brand communication in our category is unlikely to happen in the short to medium term. We already had initiatives that are more entertainment to generate consumer attention, but the vast majority of our investment is to combine both things.
Which agency serves the brand?
The Pizza Hut account is with DPZ.
Pizza Hut a main brand?
Brand investment in Pizza Hut and KFC similar. The difference is that Pizza Hut has many more stores in Brazil: there are 270 versus almost 160 for KFC. greater capillarity, but average revenue is lower than that of KFC stores. Therefore, the similar marketing budget.
And who serves KFC?
A The Heart.
And how is Frango Assado communicated?
It’s different, because what matters for traffic generation is not necessarily advertising. The consumer journey is very different. The stop, in most cases, is not planned. Frango Assado stores are on highways, while KFC’s are basically in shopping centers and Pizza Hut’s have a mix, with points in malls, airports and streets. Frango Assado, by the way, completed 70 years. It currently has 26 stores, with an expansion project and we believe there is room to grow, since it is only in the state of So Paulo and has the possibility of becoming a national brand. It’s a very profitable business, a solid brand, the challenge is how to renew it to attract new customers. For the 70th anniversary, we launched a new brand image that features the new mascot. Now, let’s do a process of changing the new look in stores. Digitization is a very important part of this project so that Frango Assado has a more autonomous future as possible in terms of transaction, whether via drive-thru or pre-order. This is a multi-brand project, with DPZ helping with the slogan and communication and Superunion with the design, for example.
What are the company’s prospects for 2023?
continue to grow, further accelerate digital channels. In 2022, we spent the year basically planning and now the consumer is really going to see that impact. This has to do with renovating stores, covering new formats and expanding the offer of digital products for consumers. We have just launched, for example, the Frango Assado loyalty program, Fran-GO!. With Pizza Hut, we will continue the brand expansion and rejuvenation process with Paulo Vieira, DPZ in account service, new visual identity, and so far the result is very satisfactory, mainly to attract younger consumers. And recently, we announced a new expansion agreement for KFC. We want to open another 400 brand stores in Brazil. That is, to increase the number of stores by almost four times.
And how are the news in terms of innovation?
The innovation part of Pizza Hut involves both communication, with the use of brand ambassadors and new media, as well as product launches. We put several products on the streets, such as Festival do Requeijo and Cheddar. Pizza flavors, sizes and formats are also important, but the most important strategy is the focus on the channel itself. With its own channel, the brand reaches the consumer with more competitive prices, exclusive promotions and gets to know its customer better. When you enter a marketplace, a black box is on our side to understand consumer behavior.
Is food consumption at home higher than outside the home?
The number of consumption occasions, not in cash, is already a little higher at home. Obviously this varies quite a bit. Consumption has changed with the pandemic and some people no longer go back to work. In our office, for example, on average, people go there two or three times a week. We imagine that, for fast food, consumption at home will continue to grow. What will brands have to do? Create specific menus for consumption at home, if they want to keep growing, because it’s not exactly the same experience as in a restaurant. And the pocket is also not the same. At home, people are looking for more functional food. Delivery is a more promotional channel, because people compare prices. I think the great challenge of delivery in the world, not just in Brazil, is profitability. Neither end is very satisfied with the channel’s profitability. And even the consumer is not satisfied with the price. Hence the importance of the own channel, as the profitability is sustainable. But you can’t stay out of the marketplace either. Not one or the other, it’s both.
