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Patrick Doyle’s amazing tenure as Domino’s CEO

Doyle was one of the most consequential chief executives in industry history, and here’s the data to prove it, says RB’s Bottom Line.

The Bottom Line

Last week, Patrick Doyle had his final earnings call as CEO of Domino’s Pizza, and he went out on top. The chain’s same-store sales increased 8.3% in the first three months of the year, and the company’s stock soared 9%—at one point establishing yet another in a long series of all-time highs.

It’s pretty fitting, frankly. Doyle is winding down one of the most successful CEO tenures in industry history.

We will go one step further: Patrick Doyle is one of the most consequential restaurant executives of all time. Domino’s has surged since he took over for David Brandon in 2010, thanks to a business strategy that has focused on improving unit volumes by making it ridiculously easy to order a pizza.

Two-thirds of the chain’s orders now come through digital channels, including mobile and online ordering. The company manages its own point-of-sale system, enabling it to quickly add new functionality to gain advantages over its rivals.

Its success, including 28 straight quarters of domestic same-store sales growth, has provided a shining example for a restaurant industry long known for being resistant to such changes. It’s no coincidence that restaurants in recent years, seeing Domino’s report consistent, double-digit same-store sales increases, have eagerly jumped on the technology bandwagon.

Domino's same-store sales, 2010-2018

Doyle is “the top CEO in the industry,” Richard Allison, president of international for Domino’s and Doyle’s successor this June, said during the earnings call Thursday.

The best chart to demonstrate Doyle’s success is its stock price. Domino’s had some momentum when he took over, but was still in the single digits. Today it is one of the hottest momentum stocks on Wall Street, trading at around $250 a share.

Let’s put it another way: If you had invested $1,000 in Domino’s stock on the day Doyle took over as CEO, you’d have more than $33,000 right now. That’s a pretty good return.

Domino's stock price

Domino’s strategy has not been through unit growth. It has added 660 locations in the U.S. since the end of 2009, or more than 13%, according to data from Technomic's Top 500 Chain Restaurant Report. But 500 of those locations have opened since 2014. The company took a slow approach to unit growth in those early years, focusing instead on unit economics.

Domino's U.S. unit count

Those unit economics are now spectacular. The following is another chart to demonstrate just how strong Domino’s has been. All that same-store sales growth has taken the chain’s average unit volumes to more than $1 million per location, according to Technomic, from $621,000.

That’s really good for a pizza chain.

It now takes less than three years for a Domino’s franchisee to pay off a new location. Of course operators are now building new units.

Domino's average unit volumes

The result of all this has been a U.S. market that has simply flourished. Total domestic sales nearly doubled during Doyle’s Domino’s tenure. It is now the ninth largest restaurant chain in the U.S., according to Technomic, and last year passed Pizza Hut as the largest pizza chain in the country.

Domino's U.S. system sales

Amid all of this has come strong international growth, led by Allison.

The number of international locations has more than doubled. In 2011, in fact, the number of international Domino’s locations surpassed the number of U.S. units. And in 2016, system sales outside the U.S. surpassed domestic sales.

International same-store sales have increased an incredible 97 straight quarters. There are 24-year-olds out there who don’t know a world in which Domino’s same-store sales have declined in foreign markets.

To be sure, the foundation for all of Domino’s success since 2010 has been in place for a long time. The chain developed its POS system and required U.S. operators to add it into their stores. It improved its pizza recipe and used a popular ad campaign to get consumers to try their pizza.

But Domino’s under Patrick Doyle took that foundation and built the Amazon of the pizza business, unleashing a steady stream of innovation that isn’t stopping even as the CEO winds down his tenure.

In recent days, the company has announced plans to deliver pizzas to parks and other “hot spots” and also said it’s testing voice-activated artificial intelligence for phone orders. Both could drive sales in perpetuity.

Add it all up, and you have a CEO tenure that didn’t just change Domino’s—it might have changed the restaurant industry.

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