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Domino’s flexes new sales muscle in supply chain

Domino’s flexes new sales muscle in supply chain

Brand’s 2017 global total eclipses that of competitor Pizza Hut

As Domino’s Pizza Inc. builds sales muscle, the chain is flexing its weight in its supply chain, company executives said Tuesday.

The Ann Arbor, Mich.-based pizza company added 1,045 net new restaurants in fiscal 2017 and said its systemwide sales surpassed those of Pizza Hut in the past year.

Yum! Brands Inc.’s Plano, Texas-based Pizza Hut division earlier this month reported ending 2017 with 16,748 restaurants and systemwide sales of $12 billion.

On Tuesday, Domino’s said it ended 2017 with 14,856 restaurants and global retail sales of more than $12.2 billion in 2017, with more than $5.9 billion in the U.S. sales and more than $6.3 billion internationally. Analysts late last year had been predicting Domino’s would take the top spot in sales.

In last year’s Nation’s Restaurant News Top 100 census, Pizza Hut was the largest pizza chain in U.S. sales. It ranked No. 9 overall with $5.75 billion in U.S. systemwide sales for fiscal 2016, edging out Domino’s at No. 10 with $5.3 billion in U.S. sales for the period.

Domino’s sales strength has helped it produce savings in the supply chain, executives said on a fourth-quarter analyst call.

“The procurement savings are really what you would come to expect from a brand that's really scaling pretty rapidly and has a little bit more market power than it had, even two or three years ago,” said Jeffrey Lawrence, Domino’s chief financial officer.

J. Patrick Doyle, Domino’s CEO and president, added that the company’s sales strength has given the brand buying power.

“I will tell you, our terrific procurement team may have made sure that all of our supply partners are aware of the fact that we are the largest and expect to be treated that way,” Doyle said.

Scale matters, Doyle added. “And the fact that we are now the largest globally and in the U.S. in the pizza industry, matters,” he said. “And clearly, we're going to price that with our partners.”

Doyle will be stepping down as president and CEO on June 30 after eight years in the position. Richard Allison, president of Domino’s International, will take over as CEO, the company announced in January.

For the fourth quarter ended Dec. 31, Domino’s net income rose 28.3 percent to $93.3 million, or $2.09 a share, compared to $72.7 million, or $1.48 a share, in the same period last year. Revenues were up 8.8 percent to $891.5 million from $819.4 in the year-ago quarter.

The consensus at Earnings Whispers had been for income per share of $1.94 and revenues of $904 million. Despite falling short on revenues, Domino’s stock at mid-afternoon Tuesday was up about 1.3 percent over Friday’s close of $220.74 a share.

Domestic same-store sales grew 4.2 percent during the quarter versus the year-ago period, and 7.7 percent for the full year. The international division reported same-store sales growth of 2.5 percent during the quarter and 3.4 percent for the full year.

“Without question, we are pleased with our fourth quarter and full-year 2017 performance — with results that continued to outpace the industry,” Doyle said in a statement.

Contact Ron Ruggless at [email protected] 

Follow him on Twitter: @RonRuggless

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