KOTIPIZZA GROUP OYJ ANNUAL REPORT / 2018 1 CONTENTS 3 Review of the Board of Directors 4 Strategy 5 From the CEO 6 Kotipizza 7 Chalupa 8 Social Burgerjoint 9 No Pizza 10 Foodstock 11 Personnel 12 Market conditions 13 Sustainability 16 Group chains in numbers 17 Year in Kotipizza Group 18 Executive Board 19 Board of Directors 20 Key figures 21 Financial statements 2 ON TO NEW ADVENTURES A new chapter is beginning in the story of Kotipizza Group. otipizza Group was listed on communications. When the previous main ideas of high-quality and responsibly produced the main list of the Helsinki shareholder, Sentica Partners, sold its holdings ingredients, ambitious product development and stock exchange in July 2015. in the company in early 2017, Kotipizza Group a dynamic and entrepreneurial franchising model. Going public represented the became one of the most internationally held culmination of one chapter in companies in its size category on the Helsinki THE most important thing is that Kotipizza Group KKotipizza’s story, which already spanned stock exchange. The very strong performance and its new owner share very similar values. nearly 30 years at the time. The pizza of the share price was also indicative of the high Orkla ASA has been repeatedly ranked among chain established in 1987 had reached level of trust in the company. the world’s most responsible companies. I am a milestone in its evolution: it had completely confident that Kotipizza Group is in become a publicly listed company ANOTHER new chapter is now beginning in the good hands and in a position to continue writing whose shareholders included story of Kotipizza Group. In November 2018, the the next chapter of its story with new resources ordinary Finnish private investors Norwegian conglomerate Orkla ASA made a public yet the same values as before. Kotipizza Group as well as Finnish and international cash tender offer for all shares in Kotipizza will continue to make the world a better place, institutions. Group. This past January, it was confirmed that one bite at a time. an absolute majority of the shareholders had THE chapter that followed accepted Orkla’s tender offer. THE story of Kotipizza Group has shown that in Kotipizza Group was one successful business is built on genuine respect of continued success: as FROM the perspective of the Group’s restaurant for the environment and people. I look forward a listed company, the concepts and their customers, nothing much will to seeing what new adventures our next chapter Group won the trust of change. Kotipizza Group will continue to operate will bring. investors by focusing on as a Finnish company, managed from Finland, responsible business serving Finnish customers. The cornerstones and transparent of the Group’s concepts will still be the same ”I am completely confident that Kalle Ruuskanen Chairman of the Board Kotipizza Group is in good hands.” Kotipizza Group Oyj 3 REVIEW OF THE BOARD OF DIRECTORS 4 STRATEGY SUCCESS IS DRIVEN BY CULTURE Our home of brands is more than the sum of its parts. n its strategy announced in 2018, Kotipizza its products almost unanimously praised by food OUR CULTURE project will continue through this Group characterised itself as a home of industry experts and ordinary customers alike. year, and a company culture is never truly brands. In other words, the Group focuses finished, as it must be dynamic and always on developing and operating fast casual AT KOTIPIZZA Group, we all celebrate each evolving. Nevertheless, we have already restaurant concepts and chains. other’s success. The success of the individual identified one of the cornerstones of our I brands also creates concrete benefits for the culture and our internal cooperation: we talk THE GROUP’S largest and best-known concept other concepts. In our home of brands, we a big game, but we also deliver. is Kotipizza, a national chain of some 280 openly share knowledge and experiences. Best restaurants that nearly everyone in Finland is practices and the lessons learnt from mistakes familiar with. In 2015, Kotipizza was complemented help each chain improve their operations by the Mexican fast casual Chalupa chain, further. This makes us more than the sum of followed in 2017 by the Social Burgerjoint our parts. restaurant, which has since begun to evolve into a national burger chain. In 2018, the international A CULTURE of cooperation and openness must No Pizza restaurant concept was added to the be built through conscious effort. To this end, portfolio, with a proof-of-concept restaurant we have launched a project in Kotipizza Group Tommi Tervanen currently operating in Helsinki. Our brand to define our company culture and develop it CEO portfolio also includes the Kotipizza Go concept towards even greater openness. The premise Kotipizza Group Oyj for eating on the go, and the Tasty Market lunch for this development is the idea that culture restaurant concept announced in 2018. concerns every employee, which is why everyone must have the opportunity to participate in its THE STRATEGY of being a home of brands has creation. proved to be a successful one. The growth of the Kotipizza chain has continuously exceeded the overall growth of the Finnish restaurant and fast food market. ”A culture of cooperation and openness must be built through conscious effort.” SOCIAL Burgerjoint has also grown at a good rate, even faster than expected. The chain has enjoyed a great deal of positive publicity, with 5 FROM THE CEO OUR BRAND IS STRONGER THAN EVER Investments in digital and deliveries increased Kotipizza’s sales. he past financial year was another introduced during the past financial year the financial year, we exceeded this target. We successful period for the Kotipizza played an especially important role in elevating believe that there is still room in the market for chain. Our sales hit an all-time it. Launched during the year under review, the the expansion of Kotipizza, especially in growth high, we achieved excellent results rainbow trout plank pizza, cold-smoked rainbow centres. During the financial year, we opened 22 in a reputation survey and we trout kotzone and seasonal mushroom pizza all new restaurants, closed a few and made certain Tintroduced many new elements to our represent the quality and values that reflect changes to business premises and franchisees. concept. The renewal of our online store Kotipizza’s current image and investments in and delivery service, in particular, will sustainability. The brand has an attractive look IN spite of the chain’s growth and concept strengthen our position as a leader in and taste, which has helped us reach entirely new renewal initiatives, satisfaction among Kotipizza the fast casual dining business in the target audiences. franchisees has remained at a record-high level. coming years. Our investments in As many as 75 per cent of Kotipizza franchisees digitality are also reflected in the OUR sales continued to grow and we improved would recommend becoming a franchisee. enhanced assurance of food safety our monthly record twice during the year. We aim to maintain a high level of satisfaction and the digital gift cards launched The sales growth of our online store was even among our franchisees by investing further in December. more dramatic, about 50 per cent per month in training and the development of multi- on average. The growth in online sales was franchisee capabilities and by supporting KOTIPIZZA’S brand awareness significantly boosted by the redesigned online franchisees in employee recruitment. and reputation are stronger store launched in August and our marketing than they have ever been. investments in the development of the delivery IN the coming financial year, we will focus on Consumer perceptions concept. Cumulative chain sales grew by 15 per further improving our online store and delivery of Kotipizza’s quality, cent, which is three times higher than the growth service as well as the other concept updates we in particular, have rate of the fast casual market on average. began last year. Responsibility is at the heart improved significantly. of what we do, and this will not change. We will Perceived quality THE target we set in our roadmap published continue to be a responsible pioneer among fast is influenced by in the previous financial year was to have 275 casual restaurant chains in Finland. many factors, but restaurants in the Kotipizza chain by the end of the new pizzas 2018. With 280 (266) restaurants at the end of ”75% would recommend becoming Heidi Stirkkinen COO a Kotipizza franchisee.” Kotipizza Group Oyj 6 KOTIPIZZA PRODUCT DEVELOPMENT IS KEY TO GROWTH Chalupa continues to refine its concept to become the perfect example of contemporary Mexican fast casual dining. he past financial year was a significant campaign in the autumn to increase Chalupa’s locations near office buildings, which benefit period for Chalupa in terms of concept brand awareness within our target group. The from a high volume of lunch customers. Our development. In the preceding campaign was a success, with our visibility rising plan is to introduce the buffet concept at year, we had opened several new from seven to 30 per cent. Our sales also showed approximately half of the existing Chalupa restaurants — also outside the a slight increase towards the end of the year. In restaurants this year, while the rest will THelsinki metropolitan area — and grown into a addition to digital marketing, we engaged in local operate under the current concept. genuinely national chain. This past year, our marketing in the streets around our restaurants. focus was on refining the concept, the renewal WE will continue to develop our existing of the menu as well as marketing. WE are a pioneer in offering vegan options.