HONG KONG, Apr 9, 2024 - (ACN Newswire) - Since 2023, with the effective implementation of consumer promotion policies, the catering consumption market has been steadily recovering. China's per capita disposable income has been steadily increasing, and the total retail sales of consumer goods have maintained an upward trend. Consumption has become one of the important drivers of China's economic growth.

China's young consumers have been increasingly exposed to Western lifestyles and culture, driving the rise in the popularity of Western cuisine, including pizza. According to a Frost & Sullivan report, China's pizza market size reached RMB37.5 billion in 2022, and is expected to double to RMB68.9 billion by 2027, with a 5-year compound annual growth rate of 15.5%.

Domino’s Pizza China (referred to as “DPC Dash Ltd” or the “Company” , Stock Code: 01405.HK) , is Domino's Pizza's exclusive master franchisee in the China mainland, the Hong Kong Special Administrative Region of China and the Macau Special Administrative Region of China. Domino's Pizza (NYSE: DPZ), DPC Dash's global franchisor, is one of the most widely-recognized global consumer brands and the world's largest pizza company.

On March 27, 2024, Domino’s Pizza China released its first audited annual results announcement after its IPO in 2023. In 2023, the Company achieved a revenue of RMB3,050 million, representing a 51.0% growth compared to 2022; achieved an adjusted EBITDA of RMB300 million, reflecting a 117.7% growth compared to the 2022 financial year; and achieved a positive adjusted net profit of RMB8.8 million as compared with an adjusted net loss in 2022 financial year. Since company's core management team joined the company in the third quarter of 2017, the company has achieved 26 consecutive quarters of positive same-store sales growth.

Accelerating expansion of stores with excellent performance of new stores

Due to growing acceptance among domestic consumers, the diversification of pizza consumption scenarios and localized innovation, the pizza market in China continued to grow. To seize the growth opportunities in the industry, Domino’s Pizza China has implemented a strategy of “go-deeper and go-broader” to expand its business in the China’s pizza market.

As of December 31, 2023, Domino’s Pizza China had 768 stores in 29 cities in China. In 2023, Domino’s Pizza China added 180 net new stores and entered 13 new cities. In addition to increasing store density in well-established markets of Beijing and Shanghai, the Company also expanded into other first-tier, new first-tier and second-tier cities, penetrating potential untapped markets.

Since last year, the Company has operated with new store openings in Tangshan, Xi’an, Changsha, Xiamen, Yangzhou and Hefei. Four of these stores are located in Xi’an, Changsha, Xiamen and Hefei, representing stores in Northern, Central & Western, Southern and Eastern China respectively. Each of these four stores exceeded RMB5 million in sales in the first 30 days of opening, holding the top-four places globally. According to its financial  results announcement, as of March 22, 2024, Domino’s Pizza China held the top 19 places in terms of first 30-day sales of Domino’s stores worldwide.

The strong market performance of the newly opened stores sent a clear signal to the market that Domino’s Pizza China has already won the market recognition and consumers’ trust with its high-quality pizzas and outstanding services, and has established a good brand reputation in the China’s pizza market, which is well evidenced by the fast-growing loyalty membership numbers. As of December 31, 2023, the loyalty membership numbers of the Company reached to 14.6 million, representing a 69.8% growth from 8.6 million at the end of 2022. In the future, along with the continuous improvement of brand potential, Domino’s Pizza China will next gain more incremental revenue in the China’s pizza market.

In 2024, Domino’s Pizza China continued its rapid expansion. According to its plan, Domino’s Pizza China is expected to open approximately 240 stores in 2024 and planned to reach the 1,000 stores milestone in the fourth quarter of 2024. From the beginning of 2024 and as of March 22, 2024, the company had a net opening of 55 new stores, 35 stores under construction, 88 stores signed or approved, accounting for over 74% of the total targeted store opening plan for the full year. It is foreseeable that Domino’s Pizza China is expected to continue its strong growth momentum, supported by accelerated expansion.

According to the company's plans, Domino’s Pizza China aims to accelerate store expansion plan of over 300 new stores per year in 2025 and 2026. Domino’s Pizza China is well-positioned to sustain its strong growth momentum going forward.

With continuous improvement in operational efficiency, store profitability is effectively enhanced

While realizing strong revenue growth, Domino’s Pizza China continued to strengthen cost management and enhance store operational efficiency in 2023, resulting in a significant increase in profitability at the store level.

In 2023, the Company’s store-level EBITDA was RMB580 million, representing an increase of 80.1% from 2022 financial year; store-level EBITDA margin was 18.9%, representing an increase of 3.1 percentage points from 15.8% in 2022 financial year; store-level operating profit was RMB420 million, representing an increase of 105.1% from 2022 financial year; store-level operating margin was 13.8%, representing an increase of 3.7 percentage points from 10.1% in 2022 financial year.

Meanwhile, the same-store sales growth (“SSSG”) of Domino’s Pizza China also remained solid, with SSSG of 8.9% in 2023; average daily sales per store was RMB12,580, a year-on-year increase of 9.9%. The continuous improvement in a number of financial and operational indicators reflects the effectiveness of the operational management of Domino’s Pizza China.

In addition, the improvement of profitability of stores may further shorten the investment payback period of new stores, thus reducing the capital deposition of the Company, ensuring the sustainable operation of stores and maximizing the value, and providing solid support for Domino’s Pizza China to rapidly expand its store network.

"Delivering in 30 minutes, Free pizza coupons for overtime" builds a core competitive advantage with membership continues to grow

Efficient and reliable delivery service is one of the company's core competitive advantages. Leveraging its "delivery in 30 minutes" slogan and service, the company has earned the trust of consumers in China's pizza delivery market. Domino’s Pizza China provides professional delivery services, while also actively utilizing advanced digital technologies to optimize delivery routes and improve delivery efficiency. In 2023, Domino’s Pizza China's delivery revenue accounted for 59.2% of total revenue, with over 76% of revenue coming from delivery orders in its Shanghai and Beijing stores.

Furthermore, to better cater to the tastes of Chinese consumers, Domino’s Pizza China updates its menu every 6-8 weeks, continuously innovating its products to localize and provide customers with a greater variety of options and experiences. Supported by efficient delivery services and delicious products, the company's membership has grown rapidly.

Looking ahead, driven by the economic rebound and supported by policies that promote consumption, China’s catering industry is poised for gradual recovery, which may offer promising opportunities for catering companies like Domino’s Pizza China. With steady advance of its store expansion plan, and continuous improvement in the operational efficiency of stores, Domino’s Pizza China anticipates a surge in profits.

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