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How the Domino’s Pizza (ASX: DMP) share price rocketed over 60% last year

The Domino’s Pizza share price went crazy during 2020. We talk about how Domino’s managed to achieve such massive gains.
The post How the Domino’s Pizza (ASX: DMP) share price rocketed over 60% last year appeared first on The Motley Fool Australia. –

woman holding pizza

Domino’s Pizza Enterprises Ltd (ASX: DMP) had a ripper 2020. The Domino’s share price had a 52-week range between roughly $41 to $98 last year, and is currently trading around $88.

So what went down last year that led to such monstrous growth, and will the Domino’s share price be able to keep up momentum as we welcome 2021?

Digital orders and new store openings

According to the company’s FY20 results, Domino’s online sales jumped over 21% year-on-year. People are so happy to order from Domino’s that its latest Investor Day Presentation notes that the company spent time as the number one most downloaded app in Australia. In fact, Dominos has now reached monopoly status when comparing its app downloads to those of McDonald’s, KFC, Uber Eats and Menulog.

The market presentation further notes that the company added 163 new stores during FY20 — 75 of those stores were opened in Japan, resulting in an impressive sales bump of 25.9%. Europe sales and sales in the Australia and New Zealand market also posted gains of 5.1% and 4.1%, respectively.

Improving pizza quality with the DOM Pizza Checker

In its 2020 annual report, Domino’s advised that the company has now used the DOM Pizza Checker to scan more than 50 million pizzas since first launching the technology in May 2019.

According to the Pizza Checker website, “DOM Pizza Checker uses advanced machine learning, artificial intelligence and sensor technology to identify pizza type, even topping distribution and correct toppings.”

The Pizza Checker then assigns a grade to each pizza. If the grade doesn’t meet standards, meaning the pizza doesn’t quite look the way a customer will expect, the pizza is remade. 

What will the Domino’s share price do in 2021?

Throughout the reports produced during FY20, the company reiterates an aggressive strategy to both maintain and grow its present customer base. Will Domino’s be able to keep up its digital dominance as we take off into 2021? Will the DOM Pizza Checker continue to hold up the promise that pizzas delivered consistently meet expectations?

Goldman Sachs thinks so. Goldman pointed to Domino’s expansion in Germany and Japan as positive indicators of what lies ahead. The broker also noted some downside risk based on last year’s underperformance in France due to COVID-19 restrictions. With six months left of FY21, Domino’s will no doubt have many investors keeping an eye out.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods Limited and Domino’s Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post How the Domino’s Pizza (ASX: DMP) share price rocketed over 60% last year appeared first on The Motley Fool Australia.

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