Domino’s is on track to have the best sales this quarter of any major restaurant chain in the US.
The pizza chain is estimated to increase same-store sales 6%, according to a new Nomura report. If Domino’s succeeds, the chain has a good chance of posting the best same-stores sales of the quarter of the 25 largest restaurant chains in the US that publicly report.
Domino’s first quarter earnings were less than ideal, reporting earnings per share of $0.89, missing analyst expectations of $0.98 per share. Revenue also fell short, at $539.2 million versus expectations $543.9 million.
However, channel checks have lead Nomura to believe that the second quarter will be more promising for the chain when earnings are reported on Thursday.
Nomura outlined four drivers of Domino’s momentum.
1. Improved quality
Sales at Domino’s have soared since the company came out with a new pizza recipe in 2009. The improved core product was key for business to turn around.
The company has emphasised quality as necessary in succeeding against rivals like Pizza Hut and Papa John’s.
2. Better marketing
Marketing guru Russell Weiner joined Domino’s from Pepsi in 2008, in the midst of a massive sales decline. He implemented a self-deprecating marketing strategy that resonated with consumers, and, in 2014, became president of Domino’s USA.
3. Digital ordering
Digital channels accounted for half of Domino’s US sales in the first quarter. The pizza chain offers payment options across 15 platforms, including the Apple Watch, Amazon Echo, and Samsung TV.
Since checks via digital channels tend to be higher than those made in-person or via phone, digital growth means sales growth at Domino’s — and, the chain and Papa John’s are leading the way in tech-centric restaurant innovation.
Domino’s has no other restaurant chains to manage, unlike Yum, the parent company of rival Pizza Hut as well as KFC and Taco Bell. Further it’s a brand that is, essentially, all about one thing: pizza.
It’s an advantage that Starbucks, another brand that Nomura predicts will publicly report 5% or better domestic same-store sales in the second quarter, shares — one company, one brand, and one product that the chain is best known for.
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