Domino’s Pizza Rakes in the Dough
The pandemic is making the world's largest pizza restaurant by sales even stronger. In Q2, sales of $920 million and earnings of $2.99 a share grew by about 13% and 36% from a year ago, respectively. U.S. same-store sales surged 16.1% in Q2 from a year earlier. 2019’s Q2 growth was just 3%.
Digital strength: Domino’s focus on digital and analytics positioned the company to capitalize on a population forced into lockdown during the pandemic. Cowen analyst Andrew Charles pointed to Domino's “off-premise and digital strengths amid a sedentary population sheltered in place, leaving us constructive on near-term prospects.”
Wedbush’s Take: “We expect DPZ's relative value and brand equity in both delivery and takeout to remain the primary drivers of SSS growth above expectations, supported by continued menu innovation, retention of incremental digital transactions (~75% of mix), ongoing rationalization of 3PD behavior, and higher marketing dollars.”
Menu Innovation: Domino's has been teasing menu innovation, and it finally revealed that the change would be reformulated chicken wings, with increased sauce selection. Cowen highlights that Domino’s is promoting 10-piece wings as part of the $7.99 carry-out special that previously featured a 3-topping pizza.
Cauliflower-crust Pizza: Domino’s also hinted at further menu innovation. Cowen predicts that this will be in the form of cauliflower-crust pizza.
In Grubhub’s 2019 “Year in Food” report, the delivery company lists cauliflower pizza as the number one trend, rising 650% in popularity throughout the year.
