So the discounting war will be financed by Flynn group to Australian operations. As it is Domino discounting as you pointed out earlier is no good for the business. They have been doing it for very long time too are in their cost structure. If profits are low it will be for both chains. However Domino has 4 to 1 advantage on their network infrastructure advantage as it is and are doing well in ANZ. Which Franchise will be prepared to invest ? Over last 30 years Domino dominated because they introduced home delivery to capture market share and invest further to build the massive network. Without a clear competitive advantage on new product or services I can’t see how Pizza Hut can hurt Domino now. DMP went on a massive expansion around the world over last 8 to 10 years using up its FCF and debt. With new CEO all that expansion mentality will be curtailed and FCF if $250M (pre interest) will be used to pay down debt further and make their BS even more robust. As European and Japanese network improve they want be short of any cash to take on further discounting, if necessary.
DMP Price at posting:
$30.22 Sentiment: Hold Disclosure: Not Held
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