Pizza consumption appears to be linked to total economic output per head of population.
Morgan Stanley noted in an analysis of the international expansion plans for Domino’s Pizza that, broadly speaking, the richer a country is relative to its population size, the more people spend on pizza.
Here’s a breakdown:
Why this matters for Domino’s is that some countries with high levels of GDP per capita such as Belgium and Germany currently seem to be eating less pizza than other countries, implying there is room to grow the market. Domino’s says it plans to expand its network to 4,250 stores long term.
But the analysts at Morgan Stanley think this is far too conservative, saying that the number should be at least 6,000.
Based on regional per capita store penetration rates and pizza consumption analysis we think DMP’s LT 4,250 target is too conservative. If Europeand Japan store penetration reaches ANZ per capita levels it implies c.10k stores and even adjusting for lower consumption in these regions implies c.6k stores. Our analysis of franchisee profitability highlights why DMP can support far more stores than its peers.
There is no explanation offered on the link between GDP per capita and pizza spend.
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