Thanks for posting that article AA. Worth reading the comments section too but that's definitely less insightful - I guess DT readers don't make up much of their clientele! And those EBITDA numbers do justify a good valuation for the Germany business.Interesting to hear about the lack of IT investment and, potentially squandered, returns. I had been wondering if DP had been trying to emulate McDonalds business model with their purchases/expansion of their London restaurants - I think 90% of McDonalds restaurants are franchisees, and they use their 10% to try out new ideas.Still bearish here as I don't see how the franchisee dispute can be easily resolved. In simple terms, to my simple mind, Franchisees want a bigger share of the cake and DPG would have to take a cut in their share to allow that, plus they're ain't too much growth left in the UK (in terms of store numbers). I agree tho, the business has held up remarkably well, against significant completion. |
There was an article in the Telegraph on Monday covering Domino's Uk's current situation focussing on management changes and franchisee dissatisfaction.
It also raised a new criticism that the distractions had meant a failure to really invest in improving IT over the last 10 years. An analyst was quoted as saying that McDonalds can recognise your car in a drive through, know what you like and use that to suggest other items to get you to spend more money.
Obviously Dominos doesnt have lots of drive throughs but the point was their competitors were getting ahead of them in personalising their use of data.
Dominos strong market position had helped keep the business growth going but performance could have been a lot better. |
DP Enterprises shares up almost 10% on their interim announcement. Europe especially Germany performing well.
Excerpt
'Europe: Positive sales momentum in all countries, with particularly strong performance in Germany, growing regional sales +9.4%, to €382.8m and increased EBITDA by +15.6%, to €29.4m
Similarly, the focus on a single brand in Germany, made possible because of the hard work in converting acquired Hallo Pizza stores to Domino’s, have allowed for our first national television campaigns, driving sales. Germany has led the region, with notably strong Same Store Sales growth, as a direct result of these efforts.' |
Domino’s can outperform, says Peel Hunt
Pizza delivery chain Domino’s (DOM) has started the sale of its international business and Peel Hunt believes there is scope for out performance. |
Personally, I'm not taking any punts at the moment.
@frazboy, in case you don't know the history. DPG got the master franchise for Germany several years ago and then got in a mess with the rollout (why they went into scandinavia after this, I don't know).
DPE who have France, Benelux, Japan, NZ, Australia essentially baled them out. I presume that DPE would be only current buyer under the terms of their joint venture and assuming nothing too drastic affects the world economy in the meantime, I would expect DPE to be taking full control as soon as they can in 2023. |
Where do you see Dominos in the next 6 month? Not sure about a punt on this one? |
With you on that AA. It's not managed by DPG, and isn't, as far as I'm aware devouring cash. And there has been no explicit statement that I'm aware of, that implies that it's on the chopping block, but I'm not sure what the logic is of keeping it?
Plus, I realise that it could be sold through the put/call options but, that presumably, just puts a downside limit/upside limit on price? So long as they're within the bounds, presumably a sale could be agreed? Happy to be corrected on this. |
Pretty sure Germany isn't part of the general international departure.
DPG do have a put option to sell its 33% Germany stake to DP Enterprises from Jan 2021 and DPE has a call option to buy from DPG starting in Jan 2023. |
£9m cash cost for the sale, not too bad. Interesting that they will own 100% of Domino's Sweden as part of the transaction. It'll also be interesting to see what they get for Iceland and Swizerland. Maybe a few quid for Iceland, and Switzerland will cost them a few quid? Germany is clearly an asset tho. |
 Looks like they found a buyer for the Norwegian business:
Domino's Pizza Group Plc
Proposed Disposal of the Norwegian Business
Domino's Pizza Group plc ("DPG" or the "Company"), is today announcing that, conditional on shareholder approval, it has agreed to sell its entire shareholding in DP Norway AS ("Domino's Norway" or "DPN") to Pizza Holding AS and EYJA Fjarfestingafelag III EHF, the existing minority shareholders ("Minority Shareholders") in Domino's Norway.
Transaction Summary
· Provides a complete exit for DPG from Norway for a cash outlay of up to £7.0 million, in addition to funding DPN's losses to completion
o DPN reported an underlying operating loss before tax of £6.6 million for the year ended 31 December 2018
· Facilitates an orderly exit from PPS Foods AB ("Domino's Sweden" or "DPS") in due course through the transfer of minority shareholdings in DPS to DPG as part of the transaction
· Transaction subject to shareholder approval and has unanimous support from the Board of Directors of the Company who intend to recommend that shareholders vote in favour of the resolution(s) to approve transaction at a General Meeting to be convened in due course |
So the pizza price has gone up from it's peak of £18.99 to £19.99 wow. Chicken Kickers price increased from £5.49 to £5.99. |
Yeah but your post implied that it was generally accepted wisdom - which it isn't |
Isn’t that true of all posts on any BB unless they simply state facts? |
In your opinion |
People eat pizza, I collect dividends. I also eat pizza |
It's gradually sinking in with the market that this is an expensive, relatively low growth business with limited prospects and lots of operating problems.
One caveat though - the new NED (who bought in at high 200s+) must be looking for a 15% CAGR return over the next 2-3 years...? I wonder how he anticipates that this should be achieved?
Good coverage of this by Bryce Elder on Markets Not Live yesterday for those who want to hear what the analysts have to say.
Good luck, long or short. |
Shooting star from 31st Jan still in play. Needs a close above 320 to reverse it. |
As you mentioned Tesla; I do get it, shorts are part of the ecosystem. But this move is a win for science and technology and I hope the shorters go bust up there! Well done Tesla! |
Learn what moves markets when |
Not an awful lot. On the analyst call this morning it was pointed out that the number of orders is basically flat, it's just inflation driving sales.Surprised at the market reaction here this morning. |
How much steam is left for DOM to grow? Has this become or about to become just a steady-good-revenue type of business? How are you analysing the future? |
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