Deep Dive: Matt Cochrane Discusses Domino's Pizza Stock
This week we brought back 7investing Lead Advisor Matt Cochrane to discuss Domino's Pizza. Everyone knows this restaurant brand, but few know that it is one of the best-performing stocks of the past decade, outperforming almost every popular technology stock since the bottom of the GFC. Here are some questions we asked Matt about the stock:
Can you describe the basics of the business model? How has Domino’s evolved over the years? (People used to hate their pizza, right?)
What % of stores are franchised vs. wholly owned?
How do the economics work with franchised stores? What costs does Domino’s incur vs. what profits does it get?
One of the few players in the QSR space who hasn’t succumbed to the food delivery platforms. What are the advantages of keeping delivery in-house? Any potential for autonomous pizza delivery?
How high do you think its margins can get?
International expansion opportunity?
What is fortressing and why does it work in pizza but not as well in other industries?
Thoughts on valuation at a P/FCF of around 27.5?
Domino’s has put up consistent same-store sales growth, something few retail/restaurant companies can boast. What moves helped them achieve this?
What threats are there to Domino’s dominant position in the market? What could disrupt them?
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Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.