One of the few winners of the country-wide lockdown is Domino’s Pizza (DOM) as demand surges for takeaway food. Over the first week of the lockdown the company saw an acceleration in deliveries which more than offset the lack of collection business, which account for around a fifth of sales.

Like-for-like sales growth was driven by an increase in items per order and a higher overall ticket price.

Stockpiling of essential foods resulted in empty supermarket shelves, driving more people to takeaways. While supermarkets are now starting to have better availability of food and drink, it is still very hard to get a slot for home delivery. That should encourage people to keep using takeaway providers like Domino’s more frequently, particularly if the media keep showing images of large queues to get into supermarket stores.

The general uncertainty around the factors driving the spread of coronavirus has raised the public’s consciousness around food safety and hygiene practices. In times of uncertainty people tend to gravitate towards products they know and trust. Domino’s has reminded customers that it operates to the highest standards of hygiene, ensuring the safety of its products.

In addition, the company has worked closely with its suppliers and distribution network in order to stay fully operational with minimal disruptions, something the supermarkets have found more challenging. All of the company’s drivers and supply chain workers are categorised as key workers. These factors reinforce the strength of the brand and make life difficult for smaller competitors.

Analysts have been steadily upgrading their earnings expectations over the last three months, in contrast to the great majority of companies which have seen downgrades.

Domino’s is taking advantage of the freeze in business rates and the VAT payments referral, which will benefit its franchisees, and the board is looking at other measures to support them as required.

Also important to the investment case is the long-awaited appointment of a new chief executive. Dominic Paul, the former boss of Costa Coffee, will join in May and his first job will be to repair shattered relationships with Domino’s franchisees who want a greater share of profits.

The company has been in limbo for some time due to the franchisees’ reluctance to keep investing in new stores for diminishing returns. Its overseas expansion has also been a flop and it is now exiting those territories.

We’re now at a crucial point for the business where Domino’s becomes more streamlined and all the problems are hopefully rectified.

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