On November 15, 2024, DPC Dash Ltd ("Domino’s Pizza China"or the "Company", stock code: 01405.HK), a renowned pizza brand, held a 1,000-store celebration ceremony in Chengdu, officially announcing that it has entered into the "1,000-store era". It is not only a milestone moment in the Company's history, but also marks the beginning of a new era of development.
Domino’s Pizza China expanded from over 100 to 1,000 stores over the past seven years since the current management team onboard, becoming one of the leading pizza brands in China. A pivotal moment came in May 2017 when Aileen Wang became CEO, driving a strategy of localized management and rapid expansion. In June 2017, the Company renewed its Master Franchise Agreement and extending its franchise area to Chinese mainland, Hong Kong, and Macau.
Moreover, alongside its rapid expansion, Domino’s Pizza China has also achieved strong result growth. As of September 30, 2024, the Company has achieved 29 consecutive quarters of positive same-store sales growth (SSSG) since 3Q2017. In 1H24, while the catering industry suffered from weak consumer spending, the Company bucked the trend and managed to turn losses into gains, with revenue increasing by 48.3% year on year and both adjusted and reported net profit turning positive.
Domino’s Pizza China's impressive performance is built on its “4D” strategies, including high-quality store development, delicious Pizza at value, efficient delivery, and digital capabilities.
Combining Store Expansion and Efficiency Improvement to Deliver Impressive Operating Performance
In terms of store expansion, Domino’s Pizza China adheres to its “Go Deeper, Go Broader” strategy, and continues to expand into new markets while deepening its existing ones. From 2021 to 2023, the growth rate of the Company's store counts remained at a high level of approximately 25%-30%; the number of cities newly entered during the period increased from 1 to 6 and further to 13. Domino’s Pizza China operates a total of 1,000 stores in 33 cities as of November 15, 2024, with 232 net new openings year to date. The total number of net new stores opened this year, stores currently under construction and stores that have signed has reached approximately 100% full-year 2024 opening target. The company maintains a good pace of store openings constantly challenging itself to open 300-350 stores each year in 2025 and 2026, with a constant increase in the number of new stores added yearly.
It is worth mentioning that Domino’s Pizza China not only pursues store expansion in terms of quantity but also quality. In terms of new stores, the Company held 28 out of the top 30 positions in Domino’s global record for first 30-day sales. In addition, the Company's store-level profitability continued to grow. According to the interim results, the Company's store-level operating profit increased by 59.0% year on year in 1H2024, while the store-level operating profit margin reached 14.5%, an increase of 1% over the same period in 2023.
With high operating efficiency of its stores, Domino's Pizza China was able to continuously optimize the payback period, providing strong support for its long-term sustainable development, boosting its confidence of continuous store expansion, and further enhancing its brand awareness.
Enhancing Customer Value Based on Customer Orientation and Efforts in Multiple Aspects
Competition in catering industry is fierce with the occurrence of “survival of the fittest” every day. Nowadays, consumers' pursuit of food and beverage is not only to fill their bellies but also to satisfy their multiple demand. Domino’s Pizza China’s qualitative growth in scale is attributable to its insistence on putting customers' needs first and putting its “4D” strategy into practice, winning favor from consumers with delicious pizza at value, and enhancing users' experience with efficient delivery and digital capabilities.
In terms of products, Domino’s Pizza China insists on localized innovation, consistently launching new products to enhance customer experience and market competitiveness. The renew cycle of its products is 6-8 weeks and the Company currently offers more than 30 SKUs, along with over 20 industry-leading crusts. In 2024, the Company launched the brand new “Volcano Crust” and Durian Pizza Series with high strike rate from customers. In terms of product quality, the Company standardizes the products in its stores through central kitchens and supply chain management to ensure consistency in product quality and enhance customers' trust. Traditional company promotions, such as “Mega Week” and “Crazy Tuesday & Wednesday”, consistently offer customers with excellent, affordable options.
Efficient delivery service is another core competitive advantage of Domino’s Pizza China, highlighted by the “30-minute Delivery Promise” and compensation coupons for late deliveries, reinforcing its reputation as a "delivery expert." Additionally, Domino’s Pizza China optimizes delivery routes digitally, allowing real-time order tracking and enhancing overall service quality. According to its prospectus, the Company fulfilled the delivery promise for above 90% of delivery orders, with an average order time of 23 minutes.
By enhancing user value on all fronts, Domino’s Pizza China is attracting more and more consumers. As of September 30, 2024, the Company owned 21.7 million loyalty program members, representing a significant yearly growth. 11.0 million new customers placed their first orders during the past 12 months.
The share price of DPC Dash, leveraging on excellent financial performance and sound momentum of growth, has risen by approximately 60% cumulatively since its listing on March 28, 2023, up to the close of trading on November 14, 2024, far exceeding the performance of the Hang Seng Composite Index Series over the same period. Besides, the Company's comprehensive strength and development prospects have also been recognized by the capital market. In 3Q2024, the Company was included in the constituent stock of the Hong Kong Hang Seng Composite Index and the Hong Kong Stock Connect, further enhancing the stock liquidity and increasing its investment appeal on an ongoing basis. The Company has also been included in other key indexes such as FTSE, S&P Global, and MSCI index.
On November 14, 2024, according to disclosures in a Form 13F filing, Warren Buffett's Berkshire Hathaway (BRK.A; BRK.B) made new investments in Domino's Pizza (DPZ) in the third quarter. Barron’s reported, “Domino’s is the only sizable new equity holding by Berkshire in the period.” Some investors believe this movement highlights Buffett's confidence in the long-term potential of the Domino's Pizza brand. The share price of DPC Dash (1405.HK) was up more than 6% by the close of trading on November 15, 2024.
What’s past is prologue. It is a fresh starting point for Domino’s Pizza China after owning 1,000 stores. Looking ahead, the Company will continue to practice the “4D” strategy to realize the organic unification of scale expansion and efficiency improvement, so as to create more excitement in China's pizza market with a stronger growth momentum.
