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How Domino’s Pizza Is Handling the Coronavirus

By Demitri Kalogeropoulos – Aug 21, 2020 at 9:04AM

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Sales are booming, but competition is heating up.

What happened

The stock of Domino's (DPZ -1.01%) has trounced the market in the wake of the coronavirus pandemic, with shares up 42% in 2020 through mid-August. That performance puts the pizza chain ahead of nearly all its fast-food peers, with only Papa John's (PZZA -1.53%) and Chipotle (NYSE: CMG) shareholders faring better this year.

So what

Domino's delivery-focused business made it a popular choice among consumers who had to dramatically shift spending away from full-service and fast-food dining as restaurants closed in March, April, and May. Sales spiked 16% in the fiscal first quarter, and the supply chain held up well despite the surging volumes. Papa John's has enjoyed even faster growth, though, with comps running at nearly 30% in recent months.

Friends share a delivered pizza.

Image source: Getty Images.

Now what

In the second half of 2020, Domino's faces stepped-up challenges from Papa John's and other fast-food chains, which are all fighting to reestablish market share following COVID-19 shutdowns. Recessionary selling conditions could make that battle costly for many participants.

Among the most valuable assets that the chain brings to this fight are its efficient selling model, its tech innovation capabilities, and its fortress-like hold on most neighborhoods. These strengths have management predicting continued store expansion in the quarters to come, even in densely covered markets like the U.S.

Demitri Kalogeropoulos owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool recommends Domino's Pizza. The Motley Fool has a disclosure policy.

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