A woman walks past a Domino’s Pizza poster in Shanghai in March. [Photo by Zhou Junxiang/For China Daily]
Recent attempts by China’s Domino’s Pizza Inc franchisee to seek a float in Hong Kong have shown increased efforts by the operator to tap into China’s thriving and competitive pizza market, experts said.
The comments came after the operator of Domino’s Pizza in China – DPC Dash Ltd – on Friday filed for an initial public offering on the Hong Kong Stock Exchange for the second time this year since March.
Buoyed by the increasing demand for pizza delivery over the past three years, DPC Dash has grown the number of Domino’s locations in China by 170 percent to 547 in three years.
By the end of June, the company was directly operating 508 branches in mainland China, around 56 percent of which were in Beijing and Shanghai.
The company has set up three processing and distribution facilities – “Center Kitchens” – in Shanghai, Sanhe in Hebei Province and Dongguan in Guangdong Province to fuel its rapid expansion in the country.
Revenue in China rose to 1.61 billion yuan (US$222.8 million) in 2021 from 837 million yuan in 2019, despite the cumulative net loss of 600 million yuan in three and a half years, according to the stock exchange of DPC Dash Ltd prospectus filed in Hong Kong .
In the first six months of this year, the operator reported revenue of 909 million yuan, surpassing its 2019 total revenue.
The company plans to use the raised capital to expand the network and open 300 new stores in China by the end of next year.
Globally, Domino’s Pizza Inc. (as of June) has more than 19,200 stores in over 90 markets.
With a directly operated company, DPC Dash still faces stiff competition in China from its rivals such as Pizza Hut. Pizza Hut has more than 2,700 stores nationwide.
Domino’s, which ranks third among the top five pizza brands in China in terms of sales in 2021, has plans for faster growth and larger market share, according to a report by consulting firm Frost & Sullivan.
His ambitions are supported by his plans to capitalize on rising demand in the delivered pizza segment, which is expected to grow faster than the overall pizza market in China.
Domino’s has a strong brand and scale, but needs to focus more on its product innovation to keep up with consumption updates in the local market, said Zhu Danpeng, a food and beverage analyst in Guangzhou, Guangdong Province.
In 2021, the turnover of delivered pizzas was 17.9 billion yuan, accounting for 49.2 percent of the total Chinese pizza market, the report said.
From 2021 to 2026, the compound annual growth of the pizza delivery segment in China is expected to reach 19.9 percent, with a market size of 44.3 billion yuan, accounting for 64.3 percent of the total, the report said.
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