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Domino’s US shares sink as analysts warn delivery apps are hitting its business model

Tom Richardson
Domino's Pizza

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is down 3.6% to $37.19 this morning and is now down around 8% over the past week on the back of investor worries its franchises and same-store sales in Europe, Japan and Australia may not grow as strongly as forecast.

Specifically, Domino’s original and flagship U.S business trading under the Domino’s Pizza, Inc. (NYSE: DPZ) ticker reported softer-than-expected same store sales overnight for the period ending June 30, 2019.

While Domino’s US same-store sales have no real bearing on what ASX-listed Domino’s may achieve in regions like Australia, Japan, France and Germany there is one globally-reaching trend analysts are blaming Domino’s slowing U.S. sales on. 

The rise of aggregated fast-food menu providers or delivery apps (often well funded and prepared to operate at a loss) such as UberEats, GrububDeliveroo and Menulog may mean spoilt-for-choice consumers start ordering Domino’s pizzas less in Australia or Japan for example. 

ASX-listed Domino’s shares are down around 23% over the past year as investors reassess its growth potential and as the company makes a habit of missing its own growth forecasts. 

I remain of the view that Domino’s best growth days are behind it. As such I’m not a buyer of shares. 

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Motley Fool contributor Tom Richardson owns shares in Just Eat PlC as the owner of Menulog.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019