Domino's Growth Continues Despite Changed CEO

Domino’s Pizza CEO Patrick Doyle is going to exit from his position this weekend, but analyst Matthew DiFrisco stated that the company has the right recipe for continued success.

“Personalized marketing is the key,” according to DiFrisco, who is the managing director at Guggenheim Securities.

“They’re combining the digital investment with value proposition and also a tremendous amount of menu innovation,” he said. “They’ve combined that with the connectivity that digital allows them to have with their customer base.”

DiFrisco indicated that 85 percent of the pizza chain’s menu falls under the $5.99 price point. It has also been added to the menu since 2010, which is the same year that Patrick Doyle became chief executive.

Meanwhile, on Sunday, Richard Allison, who is currently the president of international business for Domino’s, will step up and take the role of the CEO. This left some investors searching for clues regarding the company’s continued growth prospects.

During the eight years that Doyle has been chief executive, the company’s stock has gained almost 2,000 percent. Domino’s overall market share in the pizza category went from 9.7 percent during 2010 to 16.4 percent during 2017, according to analysts at BTIG. The company’s market share in the pizza delivery category has also gained around 10 percent since 2008.

In April, Domino’s topped earnings estimates by almost $100 million. This caused its shares to surge by over 7 percent. Domino’s attributed the growth to its investment in technologies like Hospots and artificial intelligence voice-ordering systems.

The company is presently piloting voice system in nearly 20 stores. On the other hand, customers can now order from around 200,000 Hotspots, or non-conventional locales like sports stadium and beaches. This means that those who want pizza and convenience can request their Domino’s meal from anywhere like a park bench or a bus stop, among other places, without having to talk to another person.

“It’s our path to being a 100 percent digital company,” said Allison.

Further, Guggenheim rates the stock a “buy” and set a price of $305. DiFrisco said that the restaurant’s low-priced fare has been a vital ingredient to its success.

“They’ve built their check to about $20 now, an average transaction,” said the analyst. “Not only the $5.99 price point, but people are getting the sodas and getting the bread sticks and adding to that.”

Domino’s, which started as a single store in Ypsilanti, Michigan in 1960, has the chance to expand its take-out menu as well as US store base, according to the analyst. The company has more than 14,000 shops internationally and sells over 2 million pizzas every day, or around 1 in 6 pizzas in the US.

“I think they could look at and have an opportunity to expand into the personalized pizza market,” said DiFrisco. “You’re seeing a lot of growth in the quick-casual pizza segment. That’s a new avenue that could elevate the brand further and help the health aspects of the food and the menu.”

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