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Domino’s US shares sink as analysts warn delivery apps are hitting its business model

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is down 3.6% to $37.19 this morning and is now down around 8% over the past week on the back of investor worries its franchises and same-store sales in Europe, Japan and Australia may not grow as strongly as forecast.

Specifically, Domino’s original and flagship U.S business trading under the Domino’s Pizza, Inc. (NYSE: DPZ) ticker reported softer-than-expected same store sales overnight for the period ending June 30, 2019.

While Domino’s US same-store sales have no real bearing on what ASX-listed Domino’s may achieve in regions like Australia, Japan, France and Germany there is one globally-reaching trend analysts are blaming Domino’s slowing U.S. sales on. 

The rise of aggregated fast-food menu providers or delivery apps (often well funded and prepared to operate at a loss) such as UberEats, GrububDeliveroo and Menulog may mean spoilt-for-choice consumers start ordering Domino’s pizzas less in Australia or Japan for example. 

ASX-listed Domino’s shares are down around 23% over the past year as investors reassess its growth potential and as the company makes a habit of missing its own growth forecasts. 

I remain of the view that Domino’s best growth days are behind it. As such I’m not a buyer of shares. 

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Motley Fool contributor Tom Richardson owns shares in Just Eat PlC as the owner of Menulog.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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