Dominos India Recovery in Same Store Sales Growth (SSSG) will take longer than market expectations.
Biggest pushback by Dominos consumers is product pricing. While it is likely that 5-6% weighted average pricing growth p.a. will continue, management is relying on softening consumer inflation to exercise this pricing power for pizza consumption. We remain less sanguine on pricing power in an environment where competition is rising and western QSR's remain focussed on value-for-money meal options. In the event that SSSG does not track macro recovery, management will need to work on improving value perception of Dominos pizzas in India.
Competitive intensity has clearly increased with competition replicating the business strategy of Dominos including store location, menu, promotions, pricing and express delivery promise. According to the management, YUM! India has become more agile over the past few quarters. However, the macro environment is the overarching factor for sluggish SSSG
