How Domino’s Engineered a Comeback

Things weren’t looking good for Domino’s in 2009. It ranked at the bottom of a consumer survey, and pizza and its domestic business was floundering. So the pizza chain decided to engineer a comeback, and started by fixing its pizza.

“[We] brought the team in and said, look, everything is on the table. You can change anything, and we just simply want to have the best pizza out there,” CEO Patrick Doyle said.

The company then streamlined business and added online ordering for convenience and to drive sales.

“Digital orders have been growing about 5 percent a year as a mix of our total sales. So we’re now in the 25 percent to 45 percent range,” Doyle said. “Customer satisfaction is higher, order accuracy is higher.”

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The turnaround has been a boon for Domino’s. In April, it reported that its first quarter net income was up 66 percent to $34.4 million. Its domestic same-store sales grew 6.2 percent compared to the year-ago period, and international same-store sales saw a growth of 6.5 percent during the quarter.

Shareholders have also reaped the rewards. After hitting a low of $3.30 a share in November 2008, the stock has run up nearly 1,800 percent.

However, there are challenges ahead for Domino’s, including growing competition in China.

“I think one of the ways that Domino’s can succeed in China is having a broad menu approach or maybe specializing in chicken, which is very popular fast food staple in China,” said Stephen Anderson, senior analyst at Miller Tabak.

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He also thinks the stock doesn’t have much more room to run.

“I don’t think it moves much higher,” he said. “[Domino’s] will be up against a tougher year of comparisons, particularly in the U.S. coming off the introduction of pan pizza very late in the third quarter.”

-Reported by Jackie DeAngelis

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