Domino’s Pizza, Inc. (DPZ): A Bull Case Theory

Core Thesis - The bullish thesis on Domino's Pizza, Inc. emphasizes its tech-enabled, asset-light franchising model, which allows for consistent cash flows and minimal capital intensity [2][4]. Business Model - Domino's operates with over 98% of its stores franchised globally, enabling the company to collect royalties and supply chain profits while franchisees manage store-level risks [2]. - The company has more than 20,000 stores across over 90 markets, providing strong brand recognition and supplier leverage [2]. - Early adoption of digital ordering has resulted in over 70% of U.S. sales coming from digital channels, enhancing customer loyalty and reducing acquisition costs [2]. Delivery and Supply Chain - Domino's has one of the largest in-house delivery networks globally, offering faster and more reliable service compared to third-party platforms [3]. - The vertically integrated supply chain requires franchisees to purchase ingredients through Domino's system, ensuring quality control and steady revenue [3]. Economic Resilience - The company's value positioning, including affordable offerings like the $7.99 carryout deal, supports traffic resilience during economic downturns [3]. - The capital-light model allows for rapid, debt-free unit expansion, enabling faster growth compared to competitors reliant on corporate-owned stores [3]. Competitive Landscape - While facing competitive pressure from aggregators and food inflation, Domino's scale and procurement power help mitigate these challenges [4]. - The company is characterized as a digital-first, cash-generative compounder, combining technology, global logistics, and scale advantages [4]. Historical Context - Previous analyses highlighted Domino's franchise-driven model and consistent free cash flow growth, although the stock price has depreciated by approximately 8% due to compressed valuation multiples [5].