Domino’s Pizza’s exclusive master franchisee in China, DPC Dash Ltd., is experiencing a surge in popularity, leading to significant growth and profitability. The company, which has been aggressively expanding into new cities, has seen its revenue soar by 48% in the first half of 2024, driven by a rapid increase in new store openings and strong same-store sales growth. This performance is particularly notable in a market where many other food and beverage chains are facing challenges due to a slowing economy.
DPC Dash has attributed its success to its “value for money” strategy, which has resonated with Chinese consumers. While the company’s same-store sales growth has stabilized after the impressive gains seen during the pandemic, it remains healthy at 3.6% in the first half of 2024. To further attract customers, DPC Dash is focusing on enhancing its value-oriented meal options, introducing innovative products, and building up its loyalty program, which now boasts over 20 million members.
The company’s aggressive expansion strategy has seen it open 146 new stores in the first half of 2024, bringing its total to 914. The vast majority of these openings were in markets outside of Beijing and Shanghai, where DPC Dash has established a strong presence. This expansion has helped to increase the company’s brand awareness across China, with the brand now operating in 33 cities, up from 20 a year earlier.
Interestingly, DPC Dash has discovered that in many of its newly entered markets, customers prefer to dine-in or take away. This has led to long queues at newly opened stores, particularly among young people eager to try the new products. As a result, the company has temporarily suspended delivery service in some markets to ensure the quality of its products and service.
DPC Dash’s success has been reflected in its strong financial performance. Revenue in the first half of 2024 reached 2 billion yuan ($280 million), with new growth markets accounting for 61% of the total. The company’s average daily sales per store have also increased by 10.1% to 13,515 yuan. These impressive numbers highlight DPC Dash’s ability to attract customers and drive sales, even amidst a challenging economic environment.
DPC Dash’s cost controls and efficient operations have also contributed to its profitability. The company’s store-level operating margin has increased by 1 percentage point to 14.5%, leading to a 59% jump in store-level operating profit. This strong performance has resulted in both reported and adjusted profitability for the first time.
The company’s success has been reflected in its share price, which has outperformed most other China stocks since its listing. DPC Dash’s strong performance demonstrates the potential for Western brands to succeed in China’s dynamic and growing market by offering value, innovation, and a strong customer experience. The company’s expansion strategy and focus on profitability position it for continued growth and success in the years to come.
