Damela's in China can't beat Pizza Hut.

Pizza Hut has a 37.4 percent market share in China's pizza market, with Delta ranking third at 4.4 percent, according to 2021 statistics. By Jan. 1, 2023, Delta will have less than 1/4 of Pizza Hut's stores in China.

Pizza Hut has the advantage of first mover in China, having opened its first store only in 1990, which was seven years before Delta. Pizza Hut captured the hearts and minds of many in China with its "happy restaurant" positioning long before other international pizza brands joined the fray.

Damela's also struggled to compete with Pizza Hut in terms of regional coverage. It was not until 2016 that Delta opened its first store outside of Beijing and Shanghai, in Hangzhou. In many second- and third-tier cities, consumers will basically only see Pizza Hut, the non-chain pizza brand.

Damela's growth at home

Damela's IPO proposal for Dasheen, the operator of Damela's stores in the Chinese mainland, Hong Kong, China, and Macau, China, hasn't been smooth sailing either. The company was due to be formally listed on the Hong Kong Stock Exchange by December 23, 2022, after being heard by the Hong Kong Exchanges and Clearing Limited (HKEx), but ultimately decided to postpone the offering due to "prevailing market conditions". Underperformance was apparently a major factor in the delay.

The success of Delta, which focuses on the takeout route and has nearly 20,000 stores worldwide, is due to its unique business model and strong supply chain capabilities. Whether measured by revenue or number of stores, Delta is the world's No. 1. Yet Delta's domestic performance has consistently lagged far behind Pizza Hut.

Also, Delta's early development in China was slow due to decentralized operations. 2017 saw Dasheen become the exclusive franchisee of Delta, Hong Kong, China, and Macau, China, in mainland China. Since then, a clear expansion strategy has allowed Delta's stores in China to start growing rapidly.