RBC Capital Markets has initiated coverage of the UK-listed Domino’s Pizza Group with an ‘outperform’ rating, highlighting significant growth potential under new leadership and strategic initiatives. This endorsement comes as Domino’s Pizza Group, the master franchise for the global takeaway chain in the UK, appoints a new chief executive and outlines plans to enhance order growth and expand its store network.
The appointment of Andrew Rennie as the new CEO marks a pivotal moment for Domino’s Pizza Group. Rennie, the former COO of Domino’s Pizza Enterprises, has a proven track record of driving growth. During his tenure as CEO for Australia and New Zealand, Rennie oversaw a substantial increase in store numbers from 550 to 800 and achieved a shift from low single-digit to double-digit like-for-like (LFL) growth. This success in a perceived mature market is seen as highly relevant to the UK context.
RBC Capital Markets notes several strategic initiatives that could transform Domino’s Pizza Group into a significantly different business within the next two to three years:
Enhanced personalisation through the app and targeted marketing efforts are expected to boost order frequency and re-engage dormant customers.
The introduction of a proposed loyalty scheme aims to foster customer retention and increase repeat orders.
Domino’s plans to accelerate its store openings in the UK and Ireland, targeting 1,600 stores by 2028. This expansion is part of a broader strategy to increase market penetration and accessibility.
Discussions of launching a second brand, supported by some of the UK’s most successful franchisee entrepreneurs, could further diversify and strengthen the company’s market position. This initiative leverages the scale and infrastructure of the existing plc to introduce new offerings.
RBC Capital Markets believes that the current market valuation does not fully reflect the growth potential of Domino’s Pizza Group’s core operations. The broker has set a target price of 400p for the stock, which showed a slight increase of 0.2% to 322.2p by 0900 BST.
With the combination of new leadership, strategic growth initiatives, and an ambitious expansion plan, Domino’s Pizza Group appears well-positioned to capitalize on its potential and drive significant order growth in the coming years. RBC Capital Markets’ ‘outperform’ rating underscores confidence in the company’s future prospects, suggesting that investors may see substantial returns as these strategies are implemented.
