Domino's Pizza, Inc. (DPZ)

System sales growing ~7-8% globally (same-store + net new units). US comps of 3-5% are outperforming Pizza Hut and Papa John's. International same-store sales have recovered from the post-COVID pullback. DPZ is the fastest-growing major pizza chain globally and competitive with the best QSR performers (CMG, MCD).

Domino's is the #1 pizza chain globally by store count (20,500+) and has been gaining share in the US for over a decade. The Uber Eats partnership expanded addressable delivery occasions. However, the US pizza market is mature and share gains come at the expense of independent pizzerias and weaker chains — the easy gains are behind them.

Moderate pricing power constrained by the value-focused positioning. DPZ has raised prices 15-20% since 2020 but must offset with promotions (Emergency Pizza, mix-and-match) to maintain traffic. Delivery fees provide a secondary pricing lever. Not premium pricing power, but the combination of pricing, mix, and delivery fees drives 3-4% ticket growth.

Domino's innovates primarily on the operational and technology side rather than menu. The ordering app, GPS tracking, and delivery optimization are category-leading. Menu innovation is incremental (new crusts, toppings, sides). The Pinpoint Delivery system (delivering to non-address locations) is clever. But at the end of the day, it's pizza — there's a ceiling on product innovation.

Low consumer switching costs — ordering from a different pizza chain takes 30 seconds. However, habitual ordering behavior, rewards programs (30M+ members), and the quality of the Domino's app create soft switching costs. Franchisee switching costs are very high (contractual, operational, supply chain dependency). Consumer lock-in is weak; system lock-in is strong.

Store density creates meaningful delivery speed advantages — the fortressing strategy ensures 15-20 minute delivery in dense markets, which is extremely difficult for competitors to match without equivalent density. The supply chain network (dough production, logistics) becomes more efficient with more stores. These are operational network effects that compound over time.

The franchise model creates contractual moats — 10+ year franchise agreements with territorial exclusivity. Domino's proprietary supply chain, dough formulas, and technology platform are difficult to replicate. The brand trademark is one of the most recognized in QSR globally. No meaningful regulatory risk beyond standard food safety requirements.

The 98% franchise model is brilliantly asset-light — DPZ generates ~$600M+ in FCF annually with minimal capex requirements. Franchisees fund store buildouts. DPZ collects royalties, supply chain margins, and technology fees. This capital efficiency enables aggressive share buybacks ($1B+/year) and makes DPZ one of the highest-ROIC businesses in QSR.

FY2026 EPS estimates have been revised up ~5-7% over the past 6 months as US comps surprised to the upside and international recovered. The street is modeling 10-12% EPS growth driven by unit expansion, same-store sales growth, and buyback-driven share count reduction. Positive but not accelerating revisions.

The narrative has flipped from 'DPZ is losing to aggregators' to 'DPZ figured out how to use aggregators as a growth channel.' The Uber Eats partnership success story is well-received. International expansion provides a positive long-term narrative. The only headwind is occasional concerns about consumer spending and delivery demand sensitivity.

CEO Russell Weiner has executed the Uber partnership pivot and restored same-store sales momentum. Capital allocation is aggressive and shareholder-friendly — recapitalizing the franchise model to return capital via buybacks has been the DPZ playbook for a decade and it works. The balance sheet is leveraged (~6x EBITDA) by design, which is appropriate for a franchise model but adds financial risk.