In India, for instance, Domino’s fortressing strategy ultimately pushed out rival Papa John’s.
The company said it has proven this strategy out in a number of markets. By splitting stores’ trade area, Weiner said, franchisees generate more carryout revenue, improve delivery efficiency and ultimately increase their total earnings. Over that time, Weiner said, franchisees’ total earnings before interest, taxes, depreciation and amortization, or EBITDA, has tripled to $707 million from $223 million.
The company over the years has relied more on multiunit operators than single-store franchisees-the chain had 278 single-store franchisees in 2017, half the number it had a decade earlier. “Fortressing is going to continue to help that,” he said.ĭomino’s says the strategy will help with operators’ overall profits. “We’ve got to be better and better and better.”Īllison noted that if a pizza can be delivered in 17 minutes then the company is competitive even with the length of time it takes to prepare a frozen pizza. “Thirty minutes, which is what the business was founded on, is not good enough anymore,” Allison said, referring to Domino’s old guarantee of delivery in 30 minutes or less. It can improve delivery times, Weiner said, which improves the freshness of the product and makes Domino’s more competitive with frozen pizza made at home. That improves the quality of delivery in an era in which more consumers are ordering their food delivered. “Nobody is even doing half of what we’re doing,” said Russell Weiner, Domino’s chief operating officer and president of the Americas division.īy building new locations, Domino’s says it can increase carryout business because those customers will only travel so far for that pizza.īut they also say delivery is more efficient, which improves the economics and opportunities for the company’s delivery drivers, who can make more deliveries and get more tips and income. Same-store sales in the first three quarters of 2018, for instance, rose 7.1% despite the headwind from new locations-growth that easily outdistanced other publicly traded restaurant chains. same-store sales in 2018 by 1% to 1.5%.īut they argue that the company needs more locations after quarterly same-store sales growth averaged 7.4% since 2010. Building more stores can cannibalize existing locations and hurt overall unit economics and create dissension among operators worried about lower profits.ĭomino’s executives said on Thursday that its fortressing strategy hurt U.S. market in particular is loaded with restaurants and the pizza market is largely saturated. “It’s a no-brainer investment on our part,” Allison told analysts and investors.īut building so many units is a risk. And they say operators are buying into the strategy, which is backed by the company’s considerable data capabilities. Yet Domino’s executives argue that adding more units would enable the company to grow overall retail sales and help franchisees improve their overall profits. That’s massive growth for a company that until just a few years ago hadn’t added new units in two decades. footprint by more than a third in less than a decade. The 2,000-unit domestic growth would increase Domino’s U.S.