In the first half of 2024, the restaurant industry faced significant challenges due to shifting consumer preferences, changing spending habits and intensified competition. The increasing cost of goods and fiercely competitive pricing have resulted in an overall decline in industry profitability, with several large-scale restaurants reporting losses. Despite this challenging environment, DPC Dash ("Domino’s Pizza China" or the "Company") (1405.HK) has leveraged these changes as a catalyst for growth, developing a new competitive edge focused on high quality-to-price ratios, allowing the company to flourish against prevailing trends.DPC Dash, Domino's Pizza's exclusive master franchisee in the China Mainland, the Hong Kong Special Administrative Region of China, and the Macau Special Administrative Region of China, has successfully implemented its 4D strategy of Development, Delicious Pizza at Value, Delivery, and Digital. This approach has driven sustainable growth and profitability in the underserved Chinese pizza market in the first half of 2024, as reported in the company’s recently released interim financial report.
In the first half of 2024, DPC Dash generated record-high revenue of RMB2.04 billion, representing a year-over-year increase of 48.3%. This steady revenue growth reflects DPC Dash’s sustainable business model and resilient counter-cyclical strategy, which have significantly improved its profitability.
The Company’s financial improvement is demonstrated by its positive adjusted net profit and net profit after tax. Adjusted net profit turned positive in the first half of 2024 to reach RMB 50.9 million, compared to an adjusted net loss of RMB17.4 million in the same period of 2023. The company also reported a net profit after tax of RMB10.9 million, a 24.6% year-over-year increase compared to RMB8.8 million of the same period of 2023, positively impacted by the fair value gain of approximately RMB119.3 million on convertible senior ordinary shares.
Another testament to the company’s strong profitability is its same-store sales growth (SSSG), which compares the sales generated by same stores during the relevant period year-on-year. In the face of recent market challenges, it is extremely difficult to maintain positive SSSG momentum. DPC Dash has demonstrated its ability to deliver sustainable growth, achieving 28 consecutive quarters of SSSG, while continuing its expansion efforts.
As a franchisor of Domino’s Pizza, Inc., one of the world’s largest pizza companies, DPC Dash leverages this global strength to execute its 4D strategy, which continues to drive the company’s success in the underserved China pizza market.
DPC Dash has continued to execute its “go-deeper, go-broader” strategy, as DPC Dash added 146 stores and entered 4 cities in the first half of 2024. Total stores reached 914 across 33 cities as of June 30, 2024. This represents more than an eightfold increase in store numbers since the current management took over in 2017.
Newly-opened stores have been delivering exceptional performance. In the first half of 2024, revenue generated from new growth markets accounted for 61% of the total revenue, making new growth markets the Company’s main growth driver. Store numbers in the new growth markets exceeded 50% of all stores. At the beginning of May, DPC Dash expanded its presence by entering three new cities: Taizhou, Huizhou, and Jinhua in one week.
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