Is Domino’s Borrowing a Page From Starbucks’s Book?
Investors would be wise not to overlook the recent impassioned efforts by Domino’s Pizza (NYSE:DPZ) to rejuvenate its image and re-imagine its menu. The pizza chain’s executive management has launched a bold, innovative campaign that has Domino’s primed for serious potential growth in the future.
The company is looking to step out of the fast-food shadow of Yum Brands’ (NYSE:YUM) Pizza Hut chain and redefine itself as more than simply a fast, cheap delivery service for greasy pizza. With new menu offerings – like the Artisan pizzas – geared toward freshness and quality, and plans to fancy up its in-store atmosphere, Domino’s is striving for a Starbucks (NASDAQ:SBUX)-like environment.
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But will it also be able to foster growth like Starbucks?
There is evidence that suggests it could. Domino’s has committed itself to innovation – the same principle that has made Starbucks so successful. This means new recipes, new TV commercials, a new logo, a new online ordering platform and mobile apps, and new, cleaner stores the company is calling “pizza theaters,” complete with fresh dough customers can witness being hand-tossed.
All of this symbolizes a willingness to compete, to identify what the competition does best and then beat them at their own game. For evidence of Domino’s doing this, one need not look further than its new deep-dish pizzas, which industry experts view as a direct assault on Pizza Hut’s best-selling product.
On top of all the innovations, Domino’s has a growing global presence that could be ready to explode. More than half of Domino’s growth story is outside of the U.S., and the company is becoming especially popular in India, a market that touts one billion potential consumers. The company already has 489 locations in India, with plans to open 100 more next year, and wants to eventually double its number of stores.
Domino’s saw its second-quarter earnings per share rise 17.5 percent from the previous year and its stock is up 11.2 percent since the start of 2012. And with new-found faith in innovation, more profound growth could be on the horizon.