Shares in Domino's Pizza Enterprises Ltd (ASX: DMP) have been killed in 2022. The Domino's share price has fallen 60% from a 52-week high of $167.15 in September 2021 to $66.15 at market close on Friday.
Domino's was among the pandemic winners on the ASX. Immediately before the crash, the Domino's share price was trading at about $62 — a few dollars lower than today's share price.
Then people were put into lockdown. Takeaway and delivery meals became extremely popular. Brands like Domino's actively leveraged the pandemic to grow their business through measures such as a 'zero contact delivery service' to entice more customers.
Now that lockdowns are over, has the Domino's share price simply come back down to Earth?
Domino's grew alongside its share price during COVID-19
In a recent presentation, Domino's outlined its growth during the pandemic and plans for future growth.
Domino's has franchises all over the world. According to its presentation, there are currently 3,327 stores across 10 markets. Six are in Europe and four are in the Asia-Pacific region.
Over the two years of the pandemic, network sales increased by 29.5%. EBIT increased by 25.2% and the network's store count increased by 24.3%. They're the stats for H122 compared to H120.
What Domino's is going to do next…
Over the long term, Domino's is aiming for 3,600 stores in Asia-Pacific (83.8% growth) and 3,050 stores in Europe (123% growth).
The presentation described the "engine of our growth" as digital sales, with a compound annual growth rate (CAGR) of 26.75% since FY14. Online sales accounted for $557 million in sales in FY14 compared to $2.93 billion in FY21.
Customers are increasingly wanting their food delivered. In Domino's markets, online food delivery orders in the quick service restaurant (QSR) sector are forecast to rise 46.9% by 2026, according to Statista.
The challenge of this rising trend is finding enough staff to meet the increasing demand for delivery. So, growing the labour pool is a priority.
Domino's intends to grow its customer base by spending more on advertising, particularly television, and growing its store network.
The company says it's also possible to reduce delivery costs by a third in every market. One way to do this is to reduce the reliance on cars to deliver food and instead use bicycles.
Domino's acknowledged current global economic headwinds in its presentation.
"We face historic headwinds, including inflation, conflict in Europe, and currency movements, but we are focused on the long-term".
