Major blow for iconic Domino's pizza chain as stores 'culled': 'Disturbing for pizza lovers'

The worst thing you could have done in the height of the pandemic? Invest in pizza.

The year was 2021 and Domino's Pizza stock just crossed A$100 on the Australian stock exchange. It was about to rise another 60 per cent before the year was out.

But like a delivery margherita, the stock was only hot for a little while. And when it began to cool, it got ice-cold.

The next chart shows the stock price of Domino's Pizza Australia, the public company that owns the right to the brand in Australia, Japan and much of Europe.

It is trading at its lowest level in many years, dipping under $30 in the most recent day’s trading.

If you invested $2,000 into the stock at its peak in late 2021 your investment is worth a little under $400 now.

A painful journey for a company that was, amid the fervour for Silicon Valley, once hailed as … “one of our top technology companies.”

Dominos just released its financial results for the 2023-24 financial year and it makes disturbing viewing for pizza fans.

Revenue rose by a meagre 2.7 per cent, and given higher costs, that meant net profit before tax fell by 9.6 per cent. Shareholder dividends were cut.

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And the chain is desperately closing stores in Japan.

Outlets in East Asia have been performing poorly enough that Domino's is now culling them.

Up to 80 stores are on the chopping block in Japan, as well as 20 to 30 stores in France.

This is not the first year Dominos has had a profit downgrade, either. It’s become a habit.

Iconic Aussie service butchered in delivery revolution

Pizza is a natural casualty of the Uber Eats era.

Historically, most restaurants did not do delivery, but pizza restaurants did, especially the big chains.

It was their business model: You rang them, and they delivered.

They knew they’d have enough orders to justify buying a car with a light-up pizza box on the roof and hiring a dedicated delivery team.

And you knew if you ordered pizza you wouldn’t have to leave home to get it.

A few other local restaurants probably delivered, but the backbone of the delivery food system was pizza restaurants.

That fueled the Friday night parties, kids' video nights, the late-night study sessions, etc.

The current multi-millionaire CEO of Domino’s Pizza started off as a delivey driver in 1987.

What Uber Eats disrupted with their surge workforce of delivery staff was pizza.

Or at least the presumption that if you got takeaway it had to be pizza.

Now you can get basically anything.

McDonalds is extremely popular, for example, and they never had delivery sales before.

Even the tiniest taco place now has a bunch of guys waiting round with their motorcycle helmets to pick up their paper bags of food for delivery.

The pizza industry is being left behind.

What happens now?

Nevertheless, the stock price of the Australian franchise has performed worse than the American-listed operator or the UK operation.

This possibly suggests there has been some special hubris or over-reach in the Australian operations, or that perhaps the stock is oversold and ready to bounce back.

Independent non-executive Director Lynda O’Grady announced to the market that she bought 1,000 shares last week. Perhaps the pizza business has life in it yet?