Umai! ASX-listed Dominos chief Don Meij is counting on gimmicks like home delivery apps to differentiate in the Japanese pizza market.
Dominos Pizza expects the digital delivery strategy it has already rolled out in Australia and parts of Europe will help it grow quicker than its competitors in technology-obsessed Japan.
Dominos announced this morning it has executed a share sale agreement with private equity firm Bain Capital to acquire a 75 per cent equity interest in Domino’s Pizza Japan for ¥12.0 billion ($13.56 million).
The ASX-listed Dominos already holds the exclusive master franchise rights for the Domino’s brand and network in Australia, New Zealand, France, Belgium, the Netherlands and the Principality of Monaco, and is owned by Domino’s Pizza Inc, the NYSE-listed pizza parent.
Already more than half of Dominos pizza sales in Australia are executed online, says managing director of the ASX-listed entity, Don Meij.
He says around 60 per cent of Dominos pizza sales in Japan are online, but he expects that to increase to 80 per cent online sales in the next three years.
Online pizza sales in the European and Australian businesses are expected to continue to grow, but not as fast as Japan, he says.
“The digital pizza category is growing and that’s what will be driving our growth in Japan,” Meij says.
Pizza franchises in Japan including local brand Pizza-La and Pizza Hut, along with regional pizza chains, are already competing for a slice of the Japanese pizza market; Meij tells BRW he reckons he can grow within this category by appealing to the technology savvy Japanese with digital product innovation like pizza ordering smart phone applications.
The company also reported full year results this morning, a $30.4 million net profit after tax, up 13 per cent on the previous year.
Dominos will fund its portion of the Japan franchise acqusition through a $156 million capital raise in a 5-for-23 pro-rata renounceable entitlement offer at $10.20 per share. The company will also draw down approximately $101 million from new debt facilities it will lend to the Japanese business.
Dominos shares were trading at $11.82 when it was put into trading halt before markets opened this morning.
The partnership with Bain will provide management experience for the Japanese expansion, Meij says. Bain previously owned the NYSE-listed parent company before loating the business in 2004.
Dominos expects to grow its Japanese network by 40-50 locations per year to around 600 from the current 263-store network.
The ASX-listed Dominos network currently includes 970 stores in five countries including 585 in Australia and New Zealand.