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Should investors take a slice of Domino’s Pizza US?

Domino's Pizza in a takeaway box

Shares in the UK-based Domino's Pizza Group (LON: DOM) have fallen by about 30% over the last year as the group has hit growth headwinds. But the firm's US parent Domino's Pizza Inc (US: DPZ) has gained 11% over the same period. US management remain bullish and have ambitious growth targets, many of which rely on international growth. But is their confidence justified?


Domino's says it is the world leader in pizza delivery. And, having enjoyed at least one Domino’s on four different continents and in more countries than I care to admit, I am inclined to agree. Its franchise business model has generated consistently high returns for shareholders and franchisees while building a valuable brand which is now recognised globally.

However, there is an apparent disconnect between the firm's US market commentary and the story coming from the UK, which is the second-largest overseas territory by revenue. This seems worth exploring - is there an investment opportunity here?

Understanding the 'system'

Before going any further, it's worth taking a moment to understand how Domino's business is structured. The founding US firm owns the brand and the Domino's 'system' which includes the core menu, store designs, supply chain concepts and IT systems.

The vast majority of the firm's 5,500 US stores are run by franchisees. In overseas markets, Domino's usually awards master franchise agreements to local companies who…

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