Back to top

Analyst Blog

Domino’s Pizza Inc. (DPZ - Analyst Report), a leading pizza company, has continued to be on a growth trajectory with the opening of its 10,000th store. The company took 53 years, since it opened its first store in 1960 in Ypsilanti, Michigan, to achieve this milestone.

The new unit was unveiled in Turkey, in association with its franchise partner Fides, a private equity company. The franchise company operates more than 250 stores in Turkey, which is one of the fastest growing markets for the company.  

The company’s 10,000th store was opened in Kaligthane, a district within the city of Istanbul. Istanbul is the largest city in Turkey and is the country's economic and cultural centre. It is also among the largest cities in the world by population within city limits. Istanbul is host to the headquarters of many Turkish companies and media outlets, and accounts for more than a quarter of the country's gross domestic product (GDP). Hoping to capitalize on its revitalization and rapid expansion, Istanbul is currently bidding for the 2020 Summer Olympics. Thus, the store is expected to benefit immensely from its strategic location.

This Ann Arbor, Michigan-based company also recently opened its 9999th store in Carlsbad, California. At first, the company had started to achieve growth through stores in the domestic market. However, international markets have become its strength for expansion in the past decade.

The pizza restaurant chain generates more than half of its global retail sales from international stores, constituting over a third of its adjusted operating income. It surpassed 5,000 international Domino's Pizza stores in the recently concluded second-quarter of 2012. Its long-term global retail sales outlook calls for 5–8% growth.

Following the continued traction in the overseas market, as evident by the international same-store sales growth of 5.7% as against 1.7% domestic growth in second-quarter 2012, Domino’s intends to further widen its global footprint. Presently, Domino's has its presence in over 70 international markets of which Australia, Mexico, India and the United Kingdom are its leading markets. The company targets to maintain 3–6% growth in international same-store sales over the long term.

Domino’s is not the only quick service restaurant chain to focus on international expansion. Other restaurateurs, Yum! Brands Inc. (YUM - Analyst Report) and Papa John's International Inc. (PZZA - Snapshot Report) are also expanding in the international market.

Domino’s currently holds a Zacks #3 Rank, implying a short-term Hold rating. We also reiterate our long-term Neutral recommendation on the stock.
 

Please login to Zacks.com or register to post a comment.