Domino’s Pizza’s (DPZ) management has taken several initiatives in the past that have been positive for the company’s same-store sales growth. For example, the company introduced specialty chicken to its menu in the second quarter of 2014. Specialty chicken is ordered as a side. This move, combined with advertising, resulted in higher traffic and average ticket for the company, according to management.
Companies such as McDonald’s (MCD), Panera Bread (PNRA), and Dunkin’ Brands (DNKN) have used similar strategies, allowing a customer to order a side or a beverage. This is an effective strategy to increase the average check per customer, leading to a growth in same-store sales. For example, at Dunkin’ Donuts, a bagel with cream cheese and medium coffee combo costs $3.49. But purchased separately, the same items would cost $3.78. The combo clearly provides value to customers.
The Consumer Discretionary Select Sector SPDR Fund (XLY) holds 1% of CMG stock and ~4% of MCD stocks.
In the upcoming earnings call, we may also get an update on how DPZ’s iPad app and Voice orders performed. The company launched its iPad application in the third quarter. In its earnings call, management said that its iPad app had the highest ticket and conversion of all its digital ordering platforms. This app let’s you customize your pizza with options to choose the crust, toppings, cheese, and sauces you want. Domino’s also launched voice-ordering capabilities on its smartphone app, which allows a customer to place an order without having to type, according to AdAge.
Next, we’ll look at other earnings estimates for Domino’s.