Source: Domino's Investor Day 2015
The three key reasons for continued out-performance
- Global opportunity
- Re-accelerating US business
- Technology adoption
Their second largest market is India
DPZ is now bigger outside of the US 6,300 out of their 11,250 stores are overseas. They have put together 20 years of consecutive quarterly same store sales a record for an international chain. Their second largest market outside of the US is surprisingly India. DPZ is the largest international foreign food chain in India with twice as many stores as McDonalds. Apparently pizza has plenty in common with local eating habits, they love share plates and food that can be eaten with your hands perfect for pizza. They can also continue to grow domestically as the US pizza industry is very fragmented. Market shares of the pizza majors are still well below that of other industries (see below).
The pie is growing and they're getting a larger slice of it
US franchise profitability is at all time highs (see below). This is important as the better the store returns the more units will get built out. DPZ has 11% market share in the US but only 4.5% internationally their edge in technology should help this grow. DPZ's online ordering apps are helping them to gain more share online. Almost a third of pizzas ordered online go to DPZ. This share of the pie still has room to grow as only 20% of purchases are made on the internet and mobile. The great thing about digital is that the customer comes back more often increasing the customer's lifetime value.
US franchise profitability is at all time highs (see below). This is important as the better the store returns the more units will get built out. DPZ has 11% market share in the US but only 4.5% internationally their edge in technology should help this grow. DPZ's online ordering apps are helping them to gain more share online. Almost a third of pizzas ordered online go to DPZ. This share of the pie still has room to grow as only 20% of purchases are made on the internet and mobile. The great thing about digital is that the customer comes back more often increasing the customer's lifetime value.
45% of DPZ's sales are digital. Their global run rate is $4 billion making DPZ one of the largest e-commerce companies. The average digital order internationally is 41%, four markets have digital sales over 50% Australia is one of them. Given DPZ's low market share and its increasing technological edge it looks like they will keep on delivering out performance for both customers and shareholders.
Jason
Disclosure: Decisive has a long position in Domino's Pizza (DPZ) companies mentioned.
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