Domino's Should Be Well Positioned for Challenging Restaurant Industry Backdrop in 2024

With an 80% digital sales mix, a strong loyalty program, and a quickly growing carryout business, Domino's looks well positioned to navigate a turbulent industry environment. While the reopening of dine-in options has weighed on recent results, the firm has taken 220 basis points of market share in the quick-service restaurant, or QSR, pizza category since 2019, seeing its share of global sales swell to 20.6% in 2022, according to Euromonitor data and our calculations. While we expect a challenging couple of quarters, with evidence of consumer trade-down and declining industrywide traffic, we view the firm's long-term emphasis on defending franchisee profits, supporting its growing carryout business, and building store density at the market level (fortressing) as prudent.