Consumer Sector Ideas

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Domino’s Pizza - >>> While McDonald’s only recently embraced delivery, Domino’s Pizza (NYSE:DPZ) long ago perfected the art of getting hot food to people quickly. With Domino’s locations largely tuned to carryout and delivery, the pandemic was a positive for the pizza chain.


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U.S. same-store sales jumped by more than 11% in 2020, and international markets posted solid growth as well. The company opened more than 600 new locations in 2020, something that many restaurant chains wouldn’t dream of doing during the uncertainty of the pandemic.

With an increasing number of restaurants turning to third-party delivery services to boost sales, Domino’s is facing more delivery competition than ever. The good news is that Domino’s has some key competitive advantages.

The company and its franchisees do all delivery in-house, and Domino’s charges franchisees a very small fee for digital orders. In contrast, a restaurant using a third-party service pays far higher fees, sometimes passing the cost on to consumers in the form of higher prices. For consumers, third-party delivery often comes with multiple layers of fees that can drastically raise the cost of a meal.

Delivery was necessary for restaurants during the pandemic, but it’s unclear whether many will stick with it once dine-in business fully recovers. Domino’s certainly has a cost advantage over any restaurant using a third-party delivery service.

Business has started to slow down a bit for Domino’s. U.S. comparable sales were down 3.6% in the first quarter of 2022 amid staffing shortages and rising inflation. International comparable sales grew about 1%, enough to drive overall revenue slightly higher, but elevated costs led to a significant decline in profits.

Domino’s sells convenience. It was a popular choice before the pandemic, a very popular choice during the pandemic, and it will likely remain a popular choice after the pandemic. Domino’s stock may be a bit volatile as a lofty valuation collides with a slowdown in growth, but the company is well-positioned to continue to be the undisputed leader in the pizza industry.

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