The Domino’s Pizza China operator wants to go public in Hong Kong and eyes establishing more outlets in Beijing and Shanghai this year.
DPC Dash, the operator of Domino’s Pizza stores in China, applied for a Hong Kong stock exchange listing on Monday. So far, crucial details of the listing are not available and are mostly redacted in the public document. Although details such as pricing and timing are unknown, a filing report revealed that the Bank of America Securities is the sole sponsor.
DPC described itself in the filing as Domino’s Pizza’s “exclusive master franchisee” in several regions of China, including the mainland, Hong Kong and Macao. The company also listed the number of operational pizzerias in mainland China, specifying that there are 485 branded pizzerias across ten cities. A majority of these are in popular cities such as the Beijing capital and Shanghai, the commercial hub.
DPC further revealed that it is looking towards opening about 120 stores in 2022. Through wholly-owned entities, Domino’s Pizza owns 15.7% of the DPC.
Operational ‘Tale-of-the-Tape’ for Domino’s Pizza Hong Kong
Although reports state that same-store sales grew by 18.7% in 2021, DPC has been running at an increasing net loss. Said losses have occurred for the past three years now, and according to the filing, a number of reasons are attributable. These include expenses incurred on new stores, central kitchens, marketing and PR, as well as the staff hiring and training.
DPC stated that more than 73% of revenue realized from running the Domino’s Pizza stores came via delivery orders. This information is according to the same filing, which also gave the number of driver and staff hires at 5,375 in 2021. According to the company, hiring such a large number of workers was necessary to meet the 30-minute delivery promise time.
In the filing report, DPC acknowledged the relatively lengthy standard debt-offsetting period regarding the establishment of more Domino’s Pizza stores. This is because new stores typically take one to three months to break even. Furthermore, an accompanying typical cash investment payback period requires three to four years. However, the pizzeria chain operator in China noted shorter times for new stores in Beijing and Shanghai.
Like with most other establishments, it is worth noting that DPC, and Domino’s Pizza China, still face Covid-related restrictions. The company made sure to point this out alongside numerous other business risks.
Yum China, the operator of Pizza Hut in the East Asian country, also suffered strains from the Covid pandemic. According to the company on March 14th, same-store sales plunged by around 20% YoY during the first two weeks of the month. The decline in sales came about even before the most recently announced Shanghai lockdown.
About Domino’s Pizza
Founded in 1960, Domino’s Pizza is an American multinational pizza restaurant chain. As of 2018, the pizza chain giant had around 15,000 stores, in 5,701 cities spread across more than 83 countries.
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