Cheap burgers, local cuisine impede Domino's Pizza's Japan ambitions, says Citi

Dominos Pizza Enterprises

06/05/2024 21:57

** Cheaper fast food options, low popularity and product
quality are some hurdles for Australia-based Domino's Pizza
Enterprises'  DMP.AX  Japan ambitions, say analysts at Citi,
citing internal research
    ** DMP runs the master franchise for the pizza chain
Domino's Pizza  DPZ.N  in 12 countries across three continents,
with ~26% of its stores in Japan
    ** DMP plans to operate 2,000 stores in Japan by CY33 from
the current 1,017
    ** Citi says cheaper burgers, and other fast food options,
including local cuisine and traditional American fast-food
chains, provide "more value for money" than DMP or other pizza
chains
    ** Higher penetration of global and local quick service
restaurants risks pizza order frequency
    ** Review also indicates DMP's stores in Japan have the
lowest average customer rating among its key markets, suggesting
a need to improve brand perception, product quality
    ** Japanese people's preference for eating out or takeouts
and receiving fresh pizzas does not bode well for DMP,
considering weak store penetration and low customer ratings
    ** Citi says if these issues are not addressed, it will be
challenging for DMP to achieve its new stores target
    
    

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))