Domino’s has solidified its place as the second largest pizza chain with its strategic turnaround (implemented late 2009) which repositioned the chain towards quality and away from delivery speeds and cheap pizza. The chain’s 2010 sales performance (driven by traffic) speaks volumes about the effectiveness of the brand’s repositioning and observers should not be put-off by the possibility that very difficult 2011 y/y comparisons may give the appearance that the chain is losing ground as the game is to keep as much forward progress as possible. We believe the brand’s challenge will be to translate its new found quality perception into higher prices as much of the chain’s success here-to-for also has reflected the use of very attractive price points which may be good for sales but less good for margins. For Domino’s to accomplish this, we believe the brand must continue to execute on quality improvements such that its move upscale can completely translate from perception to accepted fact. This maybe a process that takes years but at least the brand is moving in the right direction.
