Domino’s Pizza gets a new CEO – but analysts aren’t worried
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Domino’s Pizza gets a new CEO – but analysts aren’t worried

Over the weekend, leading pizza chain Domino’s Pizza got a new CEO. Former helmsman Patrick Doyle stepped down from his post on Sunday, and Richard Allison (formerly the company’s president of international business), stepped up to take his place. Some investors are concerned that Domino’s, which saw incredibly growth under Doyle, will suffer as a result. But by and large, analysts do not share those fears.

Domino’s share price has appreciated by 48% so far this year

graph 0507 dominos

SOURCE: Yahoo Finance

Speaking to CNBC last week, analyst Matthew DiFrisco, who is also managing director at Guggenheim Securities, made the case that Domino’s is in a great position to continue courting success – whoever is at the helm. He said: “Personalized marketing is the key. They’re combining the digital investment with value proposition and also a tremendous amount of menu innovation," he said. "They’ve combined that with the connectivity that digital allows them to have with their customer base."

Doyle was unquestionably a great CEO for Domino’s. In his time with the company, its market share grew from 9.7% to 16.4% (as of 2017), while the overall category of pizza deliveries grew by 10%. Perhaps most impressively, the company’s share price has risen by 2,000% during his tenure, and it overshot on earnings estimates by almost $100 million on its last call.

Allison is a safe pair of hands with significant experience at Domino’s, and he’s committed to continuing the trajectory that Doyle set the company on. That means continuing to embrace innovations like “hotspots” (public places where people can order and receive pizza deliveries, which the company has around 200,000 of to date) and voice systems, which are active in around 20 stores. “It’s our path to being a 100% digital company,” he said.

DiFrisco thinks that the market is ripe for Domino to find new ways to grow, too. He said: "I think they could look at and have an opportunity to expand into the personalized pizza market," DiFrisco said. "You’re seeing a lot of growth in the quick-casual pizza segment. That’s a new avenue that could elevate the brand further and help the health aspects of the food and the menu."

Disclosure

Dominion holds Domino’s Pizza in its Global Trends Managed Fund.


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