Photo for illustrative purposes
Photo for illustrative purposes

Once again, the U.S. pizza franchise specializing in home delivery, Domino’s Pizza, has stopped operating in Costa Rica.

According to Tim McIntyre, VP of communications for the parent company, the three stores in Costa Rica, located in Guadalupe, Pavas and Desamparados, employing 35 people, stopped operations last week.

The general manager of Domino’s franchise in Costa Rica, Jorge Alcázar – also owner of AS restaurants –  declined to give reasons for the shut down, citing confidentiality.

In fact, the brand had already disappeared in Guadalupe and the Pavas location, across from the U.S. Embassy, had been converted to a Papa John’s pizza ahead of the closure announcement.

This is not the first time for Domino’s to close its doors in Costa Rica. In February 2009, the Mexican conglomortate, Grupo Mozzarella (BGM), decided to shut down operations in the country, putting 130 people out of work.

That same year, Alcázar purchased the franchise rights reportedly for not more than US$10.000 and by 2010 had three stores operating, with an average investment of US$170.000 for each store.

The chain projected opening stores in Escazú, Santa Ana, Curridabat and Heredia over a two year expansion. However, the growth never took place.

Increased competition from fast food franchises and a price war kept Domino’s expansion plans at bay.

In this time Domino’s faced an aggressive expansion by Pizza Hut, the leader in pizza franchises in Costa Rica, with 20 new stores bringing their total to 55. Papa John’s also expanded to 18 stores.

The Spanish group, Telepizza, focusing on express service, announced plans to enter the foray in 2014.

Experts say that a weakened image and stunted growth affected Domino’s poor performance and led to its demise.

Parent company, however, feels that Domino’s can still play a role in the Costa Rica pizza business. McIntyre told El Financiero that company is looking for a “suitable partner in the country”.

Domino’s presence in Costa Rica dates back to 1997 when oscar Cabada purchased the franchise rights, operating one store with 24 employees. In 2006 Cabad sold to Younger Generation Enterprises and 2009, again the franchise saw a new owner, Mexico’s GBM.

Founded in 1960, Domino’s is the second-largest pizza chain in the United States (after Pizza Hut) and the largest worldwide, with more than 10,000 corporate and franchised stores in 70 countries. Domino’s Pizza was sold to Bain Capital in 1998 and went public in 2004.

Source: El Financiero, Domino’s