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Domino's (US) Confident of Growth at Home and Abroad

13 Mar 2018 - Pizza chain celebrates 1,000th restaurant operated by Mexican franchise partner Alsea SAB

Domino’s Pizza Inc. DPZ 1.31% is betting on growth both at home and internationally as it marks a milestone 1,000th restaurant operated by Mexican franchise partner Alsea SAB, an early trailblazer in the company’s expansion overseas, company officials said Friday.

Alsea SAB, one of the four large publicly traded Domino’s master franchisees outside the U.S., this week surpassed 1,000 Domino’s pizza stores in Mexico, Spain and Colombia.

That coincided with Domino’s opening its 15,000th store globally, Domino’s Chief Executive J. Patrick Doyle said in an interview in Mexico City.

There are around 700 Domino’s restaurants in Mexico, where the brand competes with Little Caesar’s, Pizza Hut, Papa John’s and the homegrown Benedetti’s chain. With pizza store penetration around a third of what it is in the U.S., there is plenty of room for organic growth, but also in increasing use of technology.

“Consumer adoption of technology, of ordering digitally, is accelerating very fast in Mexico now, but it’s still a smaller part of the business than it is in a lot of markets,” Mr. Doyle said. “That’s good news for growth.”

Mr. Doyle, who is stepping down at the end of June, was accompanied by Richard Allison, the president of Domino’s Pizza International who will move into the CEO position on July 1.

Outside the U.S., Domino’s has doubled its number of pizza shops in the past seven years to more than 9,200, in a business that grows about 3% to 4% a year, said Mr. Allison. But the company also sees plenty of room to stretch in the U.S.

“It’s by far the largest market that we operate in—we’re the number one in the U.S.—but we still only sell about one in every six pizzas that go to a consumer on any given night. There’s five of six opportunities for us to go out and earn those consumers, so I see a lot of potential in the U.S. business,” he added.

Alsea, which also runs Burger King restaurants, Starbucks Coffee shops, and other casual dining brands in Mexico and abroad, is optimistic about the potential for its existing markets while also on the lookout to add new countries for Domino’s.

“It is on the radar. Today we don’t have anything firm, but there are a couple of projects on the agenda,” said Alsea Chief Executive Renzo Casillo.

“We’re celebrating 1,000 stores in three countries, and we expect and hope in a few years we’ll celebrate 1,000 stores in Mexico alone,” Mr. Casillo added.

The 54-year-old Mr. Doyle reiterated that he intends to take at least six months off before making any decisions about his future after leaving Domino’s.

“I’ve had a lot of phone calls, which is all very flattering, but I’m not committing to anything and I’ve no idea what I’m going to do,” he said.

One thing he and Mr. Allison haven’t agreed on, they joked, is who will be on call during the transition weekend.

The Wall Street Journal