Domino’s Pizza. Everyone’s heard of them, thanks to their slightly irritating advertising campaigns.
Their model is a franchise model so each shop is a Franchise. The shop owner pays a franchise fee, buys ingredients from Domino-dictated suppliers and makes pizzas to Domino’s standards. In return they get branding, advertising and Business support.
In a downturn the franchise money still rolls in and it’s down to the individual franchisees to remain profitable. Great for HQ to sustain a downturn. Whether that is good for the franchisee is debatable, but it does save having a multi-layered Corporate structure that you would normally get with an Organisation this size – less fat.
In a downturn, it’s the expensive meals out that go, not so much the takeaway end and, perhaps even a boost as people downgrade their treat spend.
I have been here before with Dominos, buying August last year (£2.54) and selling in December (£2.87) after a decent run, although I baled a little early.
They announced very good results today with earnings and profit up, along with the dividend, but the shares still took a drubbing.
With a Dividend yield of just under 5% I’ve bought in at £2.62