Domino’s stock is up about 5,000 percent since 2008
As the severe recession took hold in 2008, Domino’s Pizza Inc. was sinking as well.
The pizza delivery chain was under siege for its lousy food and mediocre service. Complaints poured in that a Domino’s pizza crust tasted like cardboard and its tomato sauce like ketchup.
Investors weren’t happy, either; in late 2008, Domino’s stock had fallen to a paltry $3.85 a share. Domino’s even aired television ads acknowledging its problems, a public mea culpa in which the chain promised to do better. It did. Under the guidance of Chief Executive J. Patrick Doyle, Domino’s has enjoyed a remarkable resurgence.
That’s mainly because the chain completely overhauled its pizza recipe and rooted out poor franchisees. Domino’s also aggressively embraced digital technology to make ordering more efficient, customer friendly and maybe even cool.
The Ann Arbor, Mich., company’s revenue and profit have surged. Its same-store sales — or sales from stores open at least one year, a key measure of retail performance — have risen in the U.S. market for 24 consecutive quarters, a feat that analyst Brian Bittner of Oppenheimer & Co. recently called “incredible.”
Domino’s, which i s almost entirely a franchise operation, also kept expanding worldwide and it recently opened its 14,000th store, in Malaysia.
The chain delivers more than 1 million pizzas a day and its global sales, including those of franchisees, totaled $10.9 billion last year, nearly double the $5.5 billion it posted in 2008. Its biggest foreign presence? India, with 1,106 stores.
Yet Domino’s notes that in the U.S. market — where it has 5,400 stores — it accounts for only one of every seven or eight pizzas sold daily, and it plans to open roughly 1,000 domestic outlets.
Domino’s also is about threequarters through a yearslong project to remodel all of its stores, because 35 percent to 40 percent of its sales are still carry-out orders.
The stores “needed a freshening-up,” Doyle said.
It’s all been reflected in Domino’s skyrocketing stock, which closed Friday at $195.28 a share — a fiftyfold increase from late 2008.
One of Domino’s biggest chal- lenges is maintaining that growth. Its stock now trades for a rich 36 times the $5.40 a share it’s expected to earn this year, according to analysts polled by FactSet Research Systems Inc., and any slowdown could hurt the shares.
More than 60 percent of Domino’s orders are now executed on digital platforms, rather than by phone, and it often refers to itself as a “technology company.”
Customers can order on Domino’s own smartphone app, Amazon.com Inc.’s Echo speaker or online via Facebook, Twitter and other platforms as well as at the Domino’s website. Di scounts often are included when ordering online, and there’s a loyalty rewards program.
In the cool technology department, the Domino’s app includes an order tracker that lets customers follow the preparation and delivery of their food.