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How Is Domino’s Pizza Planning to Expand Its Business?

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Domino’s Pizza’s operations

Having discussed the same-store sales growth in our previous article, we’ll discuss another revenue driver, unit growth, in this article. By the end of fiscal 2015, Domino’s Pizza (DPZ) was operating 12,534 restaurants, with 7,303 internationally and 5,204 in the United States, compared with 6,652 international restaurants and 5,067 domestic restaurants in 4Q14.

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Unit growth

In 4Q15, DPZ increased its overall unit count from 12,119 to 12,534, an increase of 3.4%, against the overall unit growth of 3.1% in 4Q15. The unit growth of 3.4% happens to be the company’s highest unit growth in 15 years. International restaurants added 323 units in 4Q15, a growth of 4.6% against the 4.7% seen in 4Q14. During the same period, domestic franchised restaurants’ unit count grew by 1.7% and company-owned restaurants’ grew by 1.9%, compared with 1.1% and 0.3%, respectively, in 4Q14. In 2015, the company added 133 domestic restaurants and 768 international restaurants. India, a major Domino’s market outside of the United States, reached the mark of 1,000 restaurants recently.

You could gain exposure to DPZ by investing in the iShares Core S&P Mid-Cap ETF (IJH), which has invested 0.53% of its portfolio in Domino’s Pizza (DPZ). Also, IJH has invested 0.36% in Panera Bread (PNRA), 0.31% in Dunkin’ Brands (DNKN), and 0.22% in Buffalo Wild Wings (BWLD).

Outlook for 2016

With the momentum of unit growth set in 2015, analysts are expecting DPZ to add 842 more restaurants in fiscal 2016. During the company’s 4Q15 earnings call, J. Patrick Doyle said that “as we look at the business and the growth we’ve had in the business and the returns that are getting generated at the store level, it has clearly helped accelerate the store growth. And we still see 1,000-plus stores that can be built in the U.S. The ramp up in growth is a reflection of the growth in the business and the great returns that our franchisees are getting by investing in building new stores. We’re getting strong returns from those new stores as they’re opening.”

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