Why Domino's Is Taking a More Realistic View of Growth
Give Domino's (NYSE: DPZ) management plaudits for situational awareness. In its Oct. 8 fiscal third-quarter 2019 earnings release, the company shortened its three-to-five-year outlook (which it traditionally addresses each quarter and updates periodically) and, in doing so, reduced various key expected growth rates for the more immediate two-to-three-year period.
The tweaked figures aren't the result of a lack of execution; rather they're an acknowledgment of the rise of delivery services. As I discussed in July, delivery platforms have enabled nontraditional competitors like fast-food restaurants to challenge Domino's for delivery mind share and market share. In the company's earnings conference call, CEO Richard Allison pointed to this upheaval in the competitive landscape as a primary reason Domino's has moved to the shorter two-to-three-year outlook:
We believe that the evolving market conditions and the resulting uncertainty have reduced the relevance of a three-to-five-year outlook. And in our view, the market is more dynamic now than it has ever been. The reality is that we don't have visibility into exactly how long some of these new entrants into the quick service delivery segment are going to benefit from the financial support of aggregators, who are seeking to buy market share.
Source Fool.com