Earlier this week, we discussed how Pizza Hut will be digging deeper into our Guilty Pleasure tailwind by expanding its offering to include the delivery of beer. Today, we have Domino’s Pizza sharing that it looks to deliver significant growth as it expands its footprint. The details are below, but with expansion in India and other emerging markets, Domino’s is clearly tapping into our Rise of the New Middle-class investing theme and using our Digital Lifestyle to do so.
While many think of it as a pizza company, with some 65% of its US business digital in nature we have to wonder how long until Domino’s formally removes “Pizza” from its name the way Apple did with “Computer” and Starbucks did with “Coffee.” Those name changes signaled a major shift in those business models, and Domino’s is already feeling some lift from our Clean Living investing theme with its gluten-free crust here in the US. that signals flexibility on the company’s part when it comes to catering to changing food preferences. Odds are that Domino’s will be serving up more than just pizza as it looks to crack the various emerging markets.
Domino’s Pizza, Inc. unveiled ambitious growth goals during its 2019 Investor Relations Day on Thursday. The Ann Arbor, Mich.-based pizza chain — which currently includes 15,300 stores globally — expects to grow by nearly 60 percent over the next six years, with a target goal of 9,700 new stores by 2025. That goal would nearly double the company’s growth rate of 5,260 stores over the past six years. Domino’s is also projecting $25 billion in annual sales globally by 2025 — a number that doubles the pizza chain’s fiscal 2017 sales of $12.25 billion
Fortressing. Domino’s execs spoke a lot about “fortressing” — increasing the number of restaurants in the same market — as a strategy for strengthening dominance. The company cited a fortressing attempt in India where they forced out a competitor. In response to concerns that Domino’s would be competing with itself and therefore same-store sales would suffer, the company said “order count requires capacity,” meaning that they are looking to the long-term effects of fortressing.
· Technology. As a technology leader, Domino’s is not planning on slowing down anytime soon.
“[The company] is now more than 65 percent digital in our U.S. business,” Allison said. Domino’s will be creating a “Tech Garage” in Ann Arbor that will serve as a technology innovation laboratory, where team members will work on and roll out customer-facing and back-of-the-house technology, including a next-generation point-of-sales system.
· International growth. Domino’s sees growth potential of 2,000 stores in the U.S. over the next six years. But even more growth will occur abroad, with unit expansion potential of 6,500-plus locations in the company’s largest international markets alone by the end of 2025.
Source: Domino’s plans to grow in size by 60 percent in next six years
We are seeing more restaurant companies highlight their ingredient choices in the food and drinks they serve in their marketing campaigns. These companies are looking to build consumer awareness as they look to the growing portion of the population that are opting for foods, drinks, and snacks that are better for you. In other words, look to ride the tailwind associated with our Clean Living
Recent companies looking to embrace this tailwind and distinguish themselves from their competition include Chipotle and to some extent McDonald’s, but Panera, as well as Yum Brands’ Pizza Hut and Taco Bell, were some of the early adopters. Panera, in particular, has made several strides in recent years to inform consumers about the ingredients in their offerings and in 2016 phased out artificial ingredients from its menu.
We suspect we will be seeing far more companies embrace this investing theme with their marketing materials in the days and weeks to come. Of course, it’s one thing to market that you have better for you ingredients, but a cheeseburger no matter how you make it is still going to be part of our Guilty Pleasure
investing theme. Sorry, McDonald’s.
Panera is betting that customers want to know more about what’s in their food.
The restaurant chain announced on Tuesday that it has started identifying the amount of whole grain per serving, as well as the overall percentage of whole grain, on all of their whole-grain bread.
The strategy anticipates that health-conscious consumers will shop more at Panera if they have a better idea of what they’re eating and an easier way to incorporate healthy foods into their diets.
In 2016, the company finished phasing out artificial ingredients from its menu. Last year, Panera began disclosing the amount of added sugar and calories in its fountain drinks, and it introduced a new line of drinks with lower sugar and no artificial sweeteners, flavors, colors or preservatives. Panera observed that customers were choosing healthier drinks.
Source: Panera wants you to know exactly what’s in its bread – CNN
Grubhub was one of the first companies with its mobile and online ordering platforms to disrupt how we order food takeout and delivery. The company continues to expand its restaurant offering, which now spans more than 80,000 local restaurants in 1,600 cities under its Grubhub, Seamless, and Eat24 applications. With sales up 50% in the June 2018 quarter, it continues to fend off competition, winning a space in consumer wallets due most likely in part to our busy schedules and certain aspects of our Digital Lifestyle.
Looking to further disrupt the restaurant industry and its reach, Grubhub recently acquired digital payment and customer loyalty program company LevelUp and began accepting PayPal’s Venmo – all to expand what it sees as its scope and scale in the delivery space.
Sales were up more than 50% in the second quarter and earnings more than doubled.
Despite competition from the likes of DoorDash, Uber Eats and even the formidable Amazon (AMZN), Grubhub continues to wow investors with its impressive growth.
Grubhub is also partnering with more big national restaurant chains as well as local eateries. The company announced a deal with KFC, Taco Bell and Pizza Hut owner Yum! Brands (YUM) earlier this year.
Grubhub may soon be able to add more chains following its acquisition of mobile technology company LevelUp, which was also announced Wednesday.
LevelUp helps restaurants develop digital payment services and customer loyalty programs. Bareburger, Chop’t and Potbelly (PBPB) are some of LevelUp’s more than 200 clients.
Source: Grubhub is winning the food delivery wars
As the incomes have risen in emerging economies, quick service restaurants ranging from KFC and Pizza Hut at Yum Brands to McDonald’s, and Burger King among others have looked to capitalize on this. What this means is our Fattening of the Population theme is global in nature and is expanding past China into India and taking root in the Africa, which is now home to the fastest growing middle-class.
Rapid urbanization, population growth and expanding economies which swell the ranks of middle-income families, are leading to more Africans indulging in fast foods.
And like seen in more advanced economies, this has led to an increasing overweight and obesity levels across Africa.
A new report from the Malabo Montpellier Panel, a group of international agriculture experts, says African children are increasingly exposed to high-sugar, energy-dense, processed foods that are cheap in cost but lower in nutrients. Obesity among 7- to 11-year-olds increased from 4% in 1990 to 7% in 2011 and is expected to reach 11% in 2025.The change in eating habits is also seen among older middle-class Africans, who are increasingly desk-bound and are not engage in much physical activity such as sports.
Africa now has the fastest growing middle class in the world with current trajectories showing they will grow to 1.1 billion by 2060. Over the last few years, big fast food brands like Burger King, McDonald’s, KFC, Pizza Hut, and Subway all set shop in the continent in the hope of taking advantage from the expanding middle class who have disposable income and a palate for processed food. Given that, an obesity epidemicis now unraveling in countries like Egypt, Ghana, South Africa, and Nigeria.
Source: Obesity, diabetes rises Africa thanks to fast food. — Quartz
On this week’s Cocktail Investing, we touch on issues that are plaguing fast food restaurants, better known as quick service restaurants. While some might focus on improving the food or getting in tune with consumers that are shifting their preferences more in line with our Food with Integrity investing theme, some QSRs like Pizza Hut, a division of Yum Brands, is rolling out gimmicks like the new Pie Top shoes. Yeah, you can place an order through the Pie Tops, but that sure sounds like a novelty item especially when the shoes go out of style in today’s crowded athletic shoe market from Nike, Under Armour and Adidas.
Pizza Hut is stepping up its game with high-top sneakers that allow their wearers to order pizza with a push of a button and rolling out a major discount offer for people who cannot get the special shoes.
The high-tops, which of course are being called Pie Tops, are the latest marketing stunt from a major pizza chain hungry for a bigger piece of America’s pizza-ordering pie.
While the Pie Tops are not for everyone, they will appear in a major marketing push. Basketball star-turned-analyst Grant Hill appears in a new TV spot set to air beginning March 3 and throughout the upcoming NCAA March Madness basketball tournament. The shoe concept will also be featured in NCAA March Madness integrations through the company’s deal with Turner.
Source: Press a Button on These Sneakers to Get Instant Pizza Hut Delivery – Print (video) – Creativity Online
A step in the right direction for Cashless Consumption, and we have to wonder if KFC is a test bed for other Yum Brands (YUM) chains such as Pizza Hut and Taco Bell. One more step toward the Cashless Consumption tipping point that is being spurred on by our Fattening of the Population investing theme.
The option is now available at “some” U.S. locations, and should eventually reach all of them by the end of the summer, KFC said. Like some other restaurants, people will be able to use Apple Pay both at the counter and in drivethroughs. The rollout is part of a broader adoption of mobile payments at KFC, as the restaurant is now also accepting Android Pay and Samsung Pay.
Source: KFC officially launches Apple Pay at US restaurants