You mentioned that eating out at restaurants has gotten expensive in the US - this is true, but I think Dominos is a pretty big exception here. I just looked at my local Dominos and I can get a large 3 topping pizza for $10.99. That's enough food to feed 2 people and maybe a third less hungry person. That Dominos pizza is going to be better than anything I could make at home of that quantity for that price. For comparison, and since you mentioned it, at my local Papa Johns I can get a medium 1 topping pizza for $10.99. So, for the same amount of money I would get a notably smaller pizza. Not sure how Dominos is able to keep their prices so low in comparison, but the only deal that's better than theirs right now is the Costco hot dog and rotisserie chicken. It would make sense that as food prices keep picking up that demand for Dominos would actually increase as they are one of the cheapest options out there. For further comparison, the regular sized sandwich I got for lunch from Jersey Mike's today is $11.39 before taxes and other fees, so you can see that Dominos is quite cheap in comparison.
Dominos is interesting - list price in UK is quite high - often £20 pounds for a pizza, but then they seem to have constant coupons and other offers.
Dominos do say they are taking market share - but then we can also see that profitability is declining at franchisees.... which would explain why DPZ is doing well, but Dominos australia is in the toilet.
Oh, good observation. It's essentially the same here. You have to do one of the deals or else you're paying double the price. Also, I wonder if demographics play a role at all. My girlfriend is Hispanic and comes from a large family. For dinner some nights when they have family over, they'll order 4-5 pizzas because that's just the most economical food choice for a large group. Which, interestingly enough, if you look at the Mexican Dominos franchisee, it has been doing quite well - the best performer of the franchisees. I wonder how much of it is just regional demographic differences that are causing these divergences. My viewpoint is North American-centric, so it makes perfect sense to me why DPZ is doing well given what I'm seeing on the ground, but I have no insight into what is occurring with the non-NA franchisees other than their published numbers and share price performance. And, like you say, the numbers and performance would indicate that Dominos is not doing so well outside of NA.
Also, if you look at what people used to order when they wanted to eat economically - places like McDonald's - they have all gotten way more expensive. I just checked, and what used to be a $1 McChicken a few years ago is now $3.29, so alternatives to Dominos have gotten quite a bit more expensive, in the case of the McChicken, more than 3x! Dominos prices have gone up a little if I recall what the prices used to be, but not by that much - maybe 30% more expensive now. Much less than the price increases at other places.
Assuming you saw Bloomberg’s 5 things to start your day. At the end they excerpt earnings call statements from several fast food CEOs including Dominoes, McDonalds, and Restaurant Brands. Dominoes’ CEO was upbeat and talking about driving growth with their lower end consumers through promotional weeks that bring in new customers who then go on to keep ordering. Kind of like an annuity. I was also interested that McDonald’s said they had gotten franchisees back to 2019 margins but that wage inflation bleeding in from CA was a threat to that. Food and paper costs are back at normal inflation rates but labor isn’t. Is there some story about the difference between food and labor costs here or something around how to make lower income customers regular orders?
Domino's presentation suggests they are taking market share from other pizza players, so I think we are getting close to price war type scenario... SBUX had numbers last night, so want to take a look at those more closely before commenting anymore
Talked to a guy who owns 22 Dominoes franchises in Maryland last night. He said that the franchisees are doing great and didn’t have a sense that the price wars were any different than usual. One data point.
I think Europeans tend to be less willing to eat/pay up for junk food... making profitability more of a challenge. The European numbers are very week in the australian listed firm
You mentioned that eating out at restaurants has gotten expensive in the US - this is true, but I think Dominos is a pretty big exception here. I just looked at my local Dominos and I can get a large 3 topping pizza for $10.99. That's enough food to feed 2 people and maybe a third less hungry person. That Dominos pizza is going to be better than anything I could make at home of that quantity for that price. For comparison, and since you mentioned it, at my local Papa Johns I can get a medium 1 topping pizza for $10.99. So, for the same amount of money I would get a notably smaller pizza. Not sure how Dominos is able to keep their prices so low in comparison, but the only deal that's better than theirs right now is the Costco hot dog and rotisserie chicken. It would make sense that as food prices keep picking up that demand for Dominos would actually increase as they are one of the cheapest options out there. For further comparison, the regular sized sandwich I got for lunch from Jersey Mike's today is $11.39 before taxes and other fees, so you can see that Dominos is quite cheap in comparison.
Dominos is interesting - list price in UK is quite high - often £20 pounds for a pizza, but then they seem to have constant coupons and other offers.
Dominos do say they are taking market share - but then we can also see that profitability is declining at franchisees.... which would explain why DPZ is doing well, but Dominos australia is in the toilet.
Oh, good observation. It's essentially the same here. You have to do one of the deals or else you're paying double the price. Also, I wonder if demographics play a role at all. My girlfriend is Hispanic and comes from a large family. For dinner some nights when they have family over, they'll order 4-5 pizzas because that's just the most economical food choice for a large group. Which, interestingly enough, if you look at the Mexican Dominos franchisee, it has been doing quite well - the best performer of the franchisees. I wonder how much of it is just regional demographic differences that are causing these divergences. My viewpoint is North American-centric, so it makes perfect sense to me why DPZ is doing well given what I'm seeing on the ground, but I have no insight into what is occurring with the non-NA franchisees other than their published numbers and share price performance. And, like you say, the numbers and performance would indicate that Dominos is not doing so well outside of NA.
Also, if you look at what people used to order when they wanted to eat economically - places like McDonald's - they have all gotten way more expensive. I just checked, and what used to be a $1 McChicken a few years ago is now $3.29, so alternatives to Dominos have gotten quite a bit more expensive, in the case of the McChicken, more than 3x! Dominos prices have gone up a little if I recall what the prices used to be, but not by that much - maybe 30% more expensive now. Much less than the price increases at other places.
Assuming you saw Bloomberg’s 5 things to start your day. At the end they excerpt earnings call statements from several fast food CEOs including Dominoes, McDonalds, and Restaurant Brands. Dominoes’ CEO was upbeat and talking about driving growth with their lower end consumers through promotional weeks that bring in new customers who then go on to keep ordering. Kind of like an annuity. I was also interested that McDonald’s said they had gotten franchisees back to 2019 margins but that wage inflation bleeding in from CA was a threat to that. Food and paper costs are back at normal inflation rates but labor isn’t. Is there some story about the difference between food and labor costs here or something around how to make lower income customers regular orders?
Domino's presentation suggests they are taking market share from other pizza players, so I think we are getting close to price war type scenario... SBUX had numbers last night, so want to take a look at those more closely before commenting anymore
Talked to a guy who owns 22 Dominoes franchises in Maryland last night. He said that the franchisees are doing great and didn’t have a sense that the price wars were any different than usual. One data point.
US seems to be doing better
Passive investing boosting the US corp? Domino´s is the S&P500/SPY and presumably a lot of other ETF's, creating a bid not in the Australian corp?
I think Europeans tend to be less willing to eat/pay up for junk food... making profitability more of a challenge. The European numbers are very week in the australian listed firm
does dominoes trend with the QQQ? ie get treated sort of like a tech stock?
To be fair their app is very good - but if their franchisees are suffering they should.be too
Apparently you aren’t allow to use the term “Master” Franchiser anymore 😔
Comrade Franchiser