![]() These rising costs will have an immediate impact on stores’ profitability. stores to see up to a 10% increase in its food supply costs. Management noted in its 4Q21 earnings call that it expects Domino’s U.S. Rising Costs Could Hurt Margins But Drive More Market Share Gains Despite an ever-increasing array of diet and healthy eating options, the American QSR pizza market grew from $35.9 billion in 2016 to $40.6 billion in 2021.įurthermore, Domino’s experience with innovation means that it can offer better-for-you options, such as gluten-free crust, should consumer preferences shift away from traditionally made pizza. However, this threat is not likely to keep the pizza market from growing. A change in dietary habits toward healthier options could pose a long-term headwind for the industry and its largest supplier. The rise of health consciousness poses a threat to the industry that serves loads of highly caloric carbs, fats, and processed meats. However, such dependence on one product means the company’s success is also tied to the popularity of pizza. The company’s operation is specifically configured to the mass production of quality pizza, which limits direct competition from most other QSRs. Retail Sales: 2017 – 2021ĭPZ Economic Earnings New Constructs, LLC ![]() Digital Retail Sales as a Percent of Total U.S. ![]() For comparison, McDonald’s systemwide sales from digital channels in 2021 were ~25% of systemwide sales in its top 6 markets.įigure 4: U.S. Per Figure 4, retail sales generated through Domino’s digital channel rose from 60% of total sales in 2017 to 75% in 2021. Domino’s carryout tickets that are ordered online are 25% higher than those ordered over the phone, and are less labor-intensive, which is helpful in a tight labor market.ĭomino’s digital capabilities paid off when customers relied upon ecommerce channels during the pandemic. Digital orders create more customer engagement, ensure a more consistent customer experience, and drive higher sales against lower costs.
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