The operator of Domino's Pizza restaurants in China said its revenue rose 41% last year, as it announced plans to accelerate its new store openings in 2025
Key Takeaways:
- DPC Dash reported its first-ever annual profit in 2024, as its revenue rose 41% and it passed the 1,000-store milestone
- The operator of Domino's Pizza restaurants in China plans to open 300 new restaurants this year, with a strong focus on ‘new growth markets' outside Beijing and Shanghai
2024 was a year filled with milestones for DPC Dash Ltd. (1405.HK), operator of the Domino's Pizza chain in China. Topping the list was the company's first-ever annual profit. It also became Domino's (DPZ.US) undisputed global leader by claiming all of the top 30 spots for the brand's best-performing stores worldwide in their first month.
The company was also one of only a handful of restaurants operators in China to record same-store sales growth throughout the year. And last but not least, it also passed a more symbolic milestone with the opening of its 1,000th store, making it one of only three pizza chains in China to reach that mark.
Despite that list of achievements, DPC isn't immune to the broader economic slowdown that's currently dampening demand for a wide range of industries as Chinese consumers grow more cautious.
Beijing is hoping to change things with a wide range of stimulus measures, including a growing number aimed at boosting consumer spending. At the annual meeting of the country's legislature earlier last month, it gave cause for optimism that the situation would stabilize by keeping its annual GDP growth target at about 5% for 2025, the same as last year.
DPC appears to be placing its bets in the same direction, announcing in its latest annual results plans to accelerate its new store openings this year as it dives deeper into China's many underserved smaller cities. After opening 240 stores last year to cross the 1,000-store milestone, with 1,008 at the end of 2024, DPC said it is aiming to open another 300 new stores this year.
The company also announced a capital spending budget of 570 million yuan ($78.6 million) for that ambitious expansion. It requires that relatively small amount because many of its stores are earning back their investment at breakneck speed, as diners in these smaller markets flock to the stores to try out offerings often considered relatively exotic. Payback periods for the 80 stores DPC opened in 18 new cities between Christmas 2023 and the end of 2024 averaged within 12 months, far shorter than the global average of three years or more.
"We will continue our store opening strategy of ‘going deeper' in existing markets and ‘go broader' into new markets prudently to build up our national footprint and enhance Domino's Pizza brand," the company said in its 2024 annual results announcement.
DPC's partnership with Domino's dates back to 2010, and the company became Domino's master franchisee for the Mainland China, Hong Kong and Macao markets in 2017. In a major milestone in that relationship, DPC announced last October that U.S.-based Domino's was cutting its stake in their partnership by about half to 6.2%, reflecting DPC's growing ability to stand on its own, including attracting outside investors.
Those investors have gobbled up DPC stock since its March 2023 Hong Kong listing that raised more than HK$600 million ($77 million). The stock has more than doubled since then, including a rise of about 30% so far this year. At that level, its shares now trade at a forward price-to-earnings (P/E) ratio of 42, more than double the 20 for Yum China (YUMC.US; 9987.HK), operator of the rival Pizza Hut chain in China, and even further ahead of the 16 for local hotpot favorite Haidilao (6862.HK).
Moving beyond the big cities
DPC began its life by focusing on Beijing and Shanghai, two of China's largest and most affluent cities that not only boast higher consumption power but were also more open to foreign tastes. But more recently the company has found gold in smaller markets, which have become the focus of its rapid expansion. Large lines often form outside its new stores in such cities, leading the company to take the unusual step of sometimes temporarily halting its trademark delivery service until business ultimately subsidies to more normal levels.
The company previously held 28 of the top 30 spots for Domino's in terms of best-performing stores globally in their first 30 days and subsequently took all 40 top spots. Among those, the latest entrant was a new store in the Northeastern city of Shenyang that generated 11.1 million yuan ($1.53 million) in its first 30 days.
DPC Dash entered 10 new markets last year, expanding its footprint to 39 cities across China at the end of 2024. Its markets outside Beijing and Shanghai, which the company calls its "new growth markets" are taking up a growing slice of its business, accounting for 62% of its revenue last year. It continued that footprint expansion this year, entering six new cities since the start of 2025.
The company's revenue last year rose 41.4% to 4.31 billion yuan as it opened new stores and same-store sales rose. But the contribution from new growth markets grew by a far faster 77%, as the company opened the big majority of its 240 new stores for the year in markets outside Beijing and Shanghai. Around 90% of the new stores are located in second- and third-tier cities.
Despite weakening consumer demand, DPC Dash was able to maintain positive same-store sales growth throughout the year, with the figure up 2.5% for the year, modest compared with the previous period that was higher partly because it included new stores that usually record high sales in their first year but eventually decline after 18 months. DPC Dash's figure already beat nearly all its rivals, which mostly posted declines, including Pizza Hut's 5% same-store sales decline for the year.
The company has built up a loyal fan base to strengthen its position by relying on repeat customers. It said its loyalty program rose strongly to 24.5 million members by the end of last year from 14.6 million a year earlier. As that number grew, loyalty members accounted for 64.5% of its revenue last year, up from 59.2% in 2023.
Also worth noting is the company's positive momentum with its store-level operating margin, which rose to 14.5% last year from 13.8% a year earlier as it gained economies of scale. That helped it to report its first-ever full-year profit of 55.2 million yuan in 2024, reversing a 26.6-million-yuan loss in 2023.
