Domino’s Pizza Enterprises Limited (ASX: DMP) today released its presentation on 100% owned Domino’s Pizza Japan that has grown sales by taking market share within the pizza category.
Domino’s Pizza Japan has covered a long journey before becoming the wholly owned subsidiary of Domino’s Pizza Enterprises in 2017. Domino’s commenced operations in Japan in the year 1985 and started Franchise operations in 2004 before taking 75% stake of Domino’s Pizza Japan in 2013 and then to 100% in 2017.
Japan Network Sales has achieved 14.3% growth CAGR from 2014-2018 and Japan Underlying EBITDA has been up 16.8% in the same period.
The acquisition of Domino’s Pizza Japan provided an immediate third profit driver within its business. Domino’s Pizza Japan now contributes 20% of Domino’s Pizza Enterprises EBITDA which continues to be a key source of the company’s future growth.
Domino’s Pizza Japan is boosting its menu offerings, with 11 new pizzas in two new ranges aimed at reaching new customers on more customer occasions. The new pizzas, launched this week, reportedly include traditional American flavours including Philly cheese Steak in Philadelphia, BBQ chicken from New Orleans, and flavours from California’s West Coast.
Domino’s Pizza Japan President and CEO Josh Kilimnik said the new products included an American Classic range aimed to overturn the traditional view in Japan that pizza was expensive, and only for special occasions.
He stated that “The American Classic range targets the 50% of office workers who buy lunch at convenience stores and supermarkets, where their average lunch is less than 900 Yen – the company’s starting price for this range is just 799 Yen.”
Domino’s intends to continue building its reputation as a meal for premium occasions, with the new Super Star range. The management stated that with a range that includes premium wagyu and Italian Bocconcini, pizzas in the Super Star range start at 2500 Yen that represents a premium pricing for high-value ingredients.
Mr Kilimnik stated, “The Quatro Super Star pizza demonstrates this approach, with black tiger prawns, Japanese wagyu, and sirloin steak – premium ingredients aimed at a premium occasion.”
The franchise system of Domino’s Pizza Japan consists of around 43% Franchisees of its network while it plans to roll out 40-50 new stores per year in the near term. The company is further working to leverage DPE’s digital expertise in order to accelerate customer engagement and sales growth.
Domino’s Pizza Enterprises (DPE) was Australia’s first publicly-listed pizza company and is the master franchisor for the Domino’s Pizza brand across eight markets including New Zealand, Australia, France, Belgium, Japan, The Netherlands, and Luxembourg with over 2,400 stores.
In today’s trading session, DMP stock price declined by 0.914% to last trade at $44.460 on 5 April 2019. The stock closed at a price to earnings multiple of 33.160 x with a market capitalisation of $3.84 billion.
Over the past 12 months, the stock has surged up by 11.84% including a positive price change of 9.15% in the past three months.
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