DMP ASX: Domino's Pizza faces market scepticism over France ...
As a result of a pause in new stores, Domino’s would not reach its targets for the number of outlets this financial year or next, Ms Deng said, adding that the company’s focus from its technology platform to its products was also underwhelming,
France, which Domino’s entered in 2006, has been a laggard for years. Growth in Japan has not matched expectations, with consumers buying less frequently, making it harder to assess whether special offers and new menu items will take off.
The fast food sector is extremely competitive as rivals vie for market share. Mexican-themed fast food group Guzman y Gomez last week announced it had raised $135 million to fuel growth, and Domino’s biggest rival, Pizza Hut, plotted an aggressive expansion in Australia after it was acquired by California’s Flynn Restaurant Group.
Citi’s Sam Teeger said it was possible there could even be several Domino’s store closures in Japan. “In Japan, Domino’s appears to have rolled out too fast and too broad geographically, when in hindsight it may have benefited from clustering stores in prefectures to achieve better scale, before moving on to the next prefecture,” he said.
Domino’s on Friday said it still aimed to have 2000 stores in Japan by 2033, a significant increase from its 1015 outlets.
Mr Teeger said there had been mixed results from a “sub-1000-yen menu from mid-February” and the company was yet to fill the role of chief marketing officer in Japan.
“Interestingly, to manage profits, the company is exploring third-party delivery over non-peak periods, which is something the company has historically avoided given this approach means less control over product quality,” he said.
Domino’s has investor meetings planned next month in Europe, where it is expanded to provide more details about its operations in France.
Following Friday’s investor day, analysts at Macquarie cut their earnings forecasts by 3 per cent for this year and 4 per cent for the next because of expectations of a slower store roll-out and softer margins in Asia.
“The issues facing some of the key markets for Domino’s have not improved, with the slowdown in France and Japan appearing to be structural,” they wrote in a note.
