In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser, Supernova and Rule Breakers' David Kretzmann, and Motley Fool Hidden Gems' Andy Cross check in on pizza delivery stalwart Domino's (NYSE:DPZ), which for a little perspective, has delivered 95 quarters in a a row of international same-store sales growth. How has the company done it and why wasn't the market more appreciative after this latest report?
A full transcript follows the video.
This video was recorded on Oct. 13, 2017.
Chris Hill: Domino's. Third quarter results were highlighted by the fact that Domino's grew same-store sales for the 26th quarter in a row. And somehow, David Kretzmann, shares falling this week. Are expectations may be just a tad high for Domino's?
David Kretzmann: Maybe just a tad high. They actually have 95 consecutive quarters of international same-store sales growth. That's almost 24 years now. Really incredible numbers for any company, let alone of restaurant in a time when a lot of restaurants have been struggling to grow traffic and sales over the past couple of years. A lot of credit goes to CEO Patrick Doyle, who came in around the end of 2009 and 2010 and really transformed the brand, acknowledged that, "Our product isn't really that great, we need to reinvest in the brand, put more focus on technology and our digital efforts." And they're still opening a lot of stores. They've opened nearly 1,200 stores over the past year. They're rolling out a loyalty program called Piece of Pie. They'll be rolling that out more later this year and putting more focus on that. So, a lot of things clicking for Domino's. And they still have relatively low market share when you look at that global pizza market. Still room for them to grow.
Andy Cross: Two things, Chris. The stock has done really well this year. It's up more than 30%. Not too surprised that when they come out with 8% comp store growth versus 13%, the stock may sell off a little bit. But, what they're really doing well, Domino's in particular, but a lot of the pizza chains, they are really embodying the best of automation, getting the technology right and making sure people can get their food and get it very quickly and do it very simply and with great convenience. That's hugely important in that business. And we're seeing this more and more in the casual food and fast food business.
Hill: And one of the things we've talked about before with other restaurants, and we'll include Starbucks, the challenge that a lot of them face, the traditional ones, is that as they ramp up their mobile ordering, it in some ways competes with the people who are actually coming into the stores. Domino's basically has never had that problem. No one is actually going to eat a pizza at Domino's. It's always been a delivery service. So, their ramp up to mobile has been so much smoother than everyone else's.
Kretzmann: Yeah. Domino's, most of their sales are either delivery or carryout. Very few people will go to the stores. They have done an entire remodel of their stores in North America. Now, they're doing a remodel internationally, as well. They are becoming a little bit more like a fast-casual operation, where you can see the food being prepared, you can sit in the restaurant. But most people are just eating this at home, and Domino's plays right into that.
Jason Moser: And can we recognize the fact that this is National Pizza month? I mean, I'm just throwing that out there. Folk, get out there, support your local pizza joints.
Kretzmann: Your local Domino's.
Moser: And we'll come back here next quarter and see how they've been able to embrace this opportunity.
Hill: Isn't Halloween something like second in terms of the day that the most pizza is ordered? I think Super Bowl Sunday is usually No. 1. I think Halloween is second, because parents don't want to deal with --
Cross: My family does every year. We order pizza, have it delivered, and boom, we're done.