Domino's Pizza profit up on strong U.S., foreign sales

Ann Arbor Township-based Domino's Pizza's hot streak accelerated in the fourth quarter of 2014, with sales at U.S. stores open at least a year rising 11.1% compared to the same period a year earlier.

For the full year, same-store sales in the U.S. increased 7.5%, the pizza chain said.

Domino's CEO J. Patrick Doyle told investors on a conference call that there's room for the company to add more than 1,000 new stores in the U.S. He identified the Midwest and northern California as two regions where there's a lot of room tor grow.

"I think you just have to attribute our success to the fundamental strengths of our business and arguably to the Domino's brand name being embraced throughout the world," Doyle said on the call.

The company's strong financial performance reflects a disciplined focus on its core products, creative marketing and successful online push.

By sticking to a simply menu and eliminating most limited-time items, Domino's has avoided the pitfalls that befell fast-food competitors like McDonald's, whose menu grew unwieldy, dragged down customer service and hurt the bottom line.

Domino's recorded net income of $48 million for the fourth quarter and $162.6 million for the year, up 7% and 14%, respectively.

One significant factor fueling the chain's growth is international growth. Same-store sales at foreign locations rose 6.1% for the quarter and 6.9% for the year.

The company has more stores outside the U.S. than it does inside the country. It opened 323 new foreign locations in the fourth quarter and closed 26 for a net gain of 297. It now has 11,629 stores worldwide.

In the U.S., the company is gradually rolling out a new look for its locations. The new design emphasizes an open kitchen.

About 1,000 of the 5,067 stores got the upgrade in 2014, and Doyle expects another 1,000 to be renovated in 2015.

Another factor boosting Domino's is the company's successful digital strategy. About half of the company's orders are now placed through its website or mobile app, fostering what Doyle called a "tech-to-table sector." Domino's reported about $4 billion in global digital orders in 2014.

Online orders are more profitable, too. About 40% of orders are placed by phone, with about 10% placed in person.

Domino's has seized market share from smaller independent competitors in part on the strength of its digital offerings. It's harder for small pizza shops to afford online ordering systems and apps.

"I'm incredibly pleased and energized about the possibilities for our brand," Doyle said.

The company's fourth-quarter profit took a hit from the sale of the Domino's corporate airplane, which led to a $3.6-million reduction in the company's net income.

Contact Nathan Bomey: 313-223-4743 or nbomey@freepress.com. Follow him on Twitter @NathanBomey.