- Domino’s plans to be the dominant pizza chain in the world with a goal of growing to 25,000 stores and $25 billion in retail sales by 2025, executives said during a Thursday investor presentation.
- The QSR pizza chain’s focus on order/traffic growth instead of ticket growth has helped it continually boost sales in the low double-digits over the last five years, executives said. Unlike other QSR brands, which have posted continual declines in traffic growth, Domino’s order growth was 7.4% in 2017 with ticket growth at 3.1%.
- The company's growth strategy also includes fortressing, which allows franchisees to split existing territories with new units to better serve carryout and delivery customers. Executives said this strategy has given the brand a better competitive advantage, led to higher average sales and improved delivery times.
Domino’s goals would lead to the pizza chain growing global sales twofold — its 2017 global retails sales were just over $12.2 billion — and add about 10,000 units. This would be a tall order for some QSR brands, but not Domino’s, which already has the largest slice of the pizza industry. The company has been one of the only top pizza chains to consistently post same-store sales growth in the last few years, with Pizza Hut and Papa John’s reporting declining sales, so it is definitely headed on a path toward world pizza domination.
Its investments in technology also seem to be paying off, and digital sales now account for 65% of its U.S. business, Domino’s CEO Richard Allison said. It will further invest in technology and is rolling out a new point-of-sales system that will improve digital and in-store experiences. The company also will open an innovation lab in Ann Arbor, Michigan, later this year to develop and test new technologies.
One of Domino's most impactful strategies has been fortressing, which has not only led to unit growth, but also an uptick in sales for franchisees. In Las Vegas, for example, a franchise split its three-territory market into four territories, which led to an uptick in average store sales, carryout sales and EBIDTA for that franchisee, Russell Weiner, Domino’s chief operating officer and president of Americas, told investors. Average EBIDTA across all franchisees is approaching $1 million compared to $300,000 in 2012 when it started fortressing.
Fortressing also is a defensive play that can keep competitors out. Without Domino’s growing within its territories, it could lose out. Weiner said Domino’s saw a competitor grow its market share in the 1990s when Domino’s stopped growing stores. Fortressing in India led to a competitor leaving the market entirely, Weiner said.
This strategy also led to the success of Domino’s Hotspots, which helped add to a franchisee’s territory and bring pizza even closer to customers.
The downside to this strategy is that it did lead to a dip in comparable sales of 1% to 1.5%, Domino’s chief financial officer Jeff Lawrence said. But executives were not worried about this drop, explaining that more locations helped the brand average same-store sales growth of about 7% each quarter since 2010. Executives said they expect comparable store sales will rise 3% to 6% by 2022.